1. Book Depot Inc. sells on terms of 3/10, net 60. What is the implicit cost of trade credit under these terms? Use a 365-day year.
2. Watters Umbrella Corp. issued 10-year bonds 2 years ago at a coupon rate of 8.7 percent. The bonds make semiannual payments. If these bonds currently sell for 108 percent of par value, what is the YTM?
3. UF Company has the following financial data for FY2017 and FY2016. FY2017 FY2016 Sales Revenue 300 280 PP&E, net 70 50 CAPEX 20 10 Depreciation Expense 8 5 Sales revenue will grow at 20% next year (FY2018) What is the most reasonable estimate of PP&E, net for FY2018? (Hint: Follow the approach introduced in the textbook)
A) $94.20 B) $90 C) $ 85.40 D) $82.80