1 answer

##### Year 1 2 3 4 5 FCF -$22.32 $38.3 $43.7 $51.7 $56.4 The weighted average cost...

Year 1 2 3 4 5 FCF -$22.32 $38.3 $43.7 $51.7 $56.4 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $26 million of market value debt, but it has no preferred stock or any other outstanding claims. There are 18 million ...

1 answer

##### P Daves Inc. red you as a consultant to help them estimate their cost of equity....

P Daves Inc. red you as a consultant to help them estimate their cost of equity. investment bankers believe that the cost of equity can be estimated using a nsk premium o 3 of equity from retained earnings? The yield on the firm's bonds is 6.5%, and Daves %. What is an estimate of Daves cost A. ...

1 answer

##### Question 55 1 pts Royce Corp's sales last year were $250,000, and its net income was...

Question 55 1 pts Royce Corp's sales last year were $250,000, and its net income was $23,000. What was its proft margin? 9.57% 8.37% 9.20% 11.32% 9.38% Previous Nex FS F6 F7 8 3 4...

1 answer

##### Suppose your friend Bill is considering buying a Ford F150 Lariat truck. He is going to...

Suppose your friend Bill is considering buying a Ford F150 Lariat truck. He is going to make monthly payments (at the end of each month) of $819.48 on a loan of $47,000. If the annual percentage rate is 7.80% how long in years is the loan for? Please show ALL work with finance formulas. Please show ...

1 answer

##### . a) Vita plc has currently no debt in its capital structure, and it is valued...

. a) Vita plc has currently no debt in its capital structure, and it is valued at £250 million. The return on the unlevered equity is 15%. The company has decided to modify its capital structure to enjoy the tax benefits of debt, by issuing £50 million of perpetual debt and using the pro...

1 answer

##### Your firm has identified three potential investment projects. The projects and their cash flows are shown...

Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Cash Flow Today (millions) $7 $7 $18 Cash Flow in One Year (millions) $23 $3 -$8 Project Suppose all cash flows are certain and the risk-free interest rate is 11%. a. What is the NPV of ea...

1 answer

##### Sensitivity Analysis. Emperor’s Clothes Fashions can invest $5 million in a new plant for producing invisible...

Sensitivity Analysis. Emperor’s Clothes Fashions can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 6 million jars of makeup a year. Fixed costs are $2 million a year, and variable costs are $1 per jar. The pro...

1 answer

##### The risk-free rate is 4%; the market risk premium is 8%. Prestige World Wide's stock has...

The risk-free rate is 4%; the market risk premium is 8%. Prestige World Wide's stock has a beta of 3. The last dividend was $4 per share. The dividend is expected to grow at 5%. What is the expected price of the stock? Select one: a. $20.77 b. $21.21 c. $18.26 d. $19.21 Please explain steps and ...

1 answer

##### Problem 10 Intro A new project is expected to generate annual sales of $130,000 and annual...

Problem 10 Intro A new project is expected to generate annual sales of $130,000 and annual costs of $123,500. Annual depreciation attributable to the project is $60,000. The marginal tax rate is 34%. Part 1 IB Attempt 1/5 for 10 pts. What is the supplemental operating cash flow in each year of opera...

1 answer

##### Glope Manufacturing has 9,161,454 shares of common stock outstanding. The current share price is $39.51, and...

Glope Manufacturing has 9,161,454 shares of common stock outstanding. The current share price is $39.51, and the book value per share is $3.95. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $44,225,980, has a 0.05 coupon, matures in 10 years and s...

1 answer

##### Pretax cost of debt

Waterford Corp. issued a 30 year, 8 % semi-annual bond 7 years ago. The bond currently sells for 95% of its face value. The company’s tax rate is 34%. What is thepretax cost of debt? What is the after-tax cost of debt?...

1 answer

##### Aviation Inc. is considering a new inventory system that will cost $375,00. The system is expected...

Aviation Inc. is considering a new inventory system that will cost $375,00. The system is expected to generate $315,000 in year one, -$25,000 (negative) in year two, $110,000 in year three, and $150,000 in year four. Aviation's required rate of return is 10%. What is the MIRR (modified internal ...

1 answer

##### 1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a...

1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a notional principal amount of Euros 10 million (US$11 million at current spot rate). Aron agrees to pay Brun 5% semi-annually in Euros. Brun Inc agrees to pay US$ LIBOR6 +50 bps semi-annual rate. Based on the following market da...

1 answer

##### Suppose a 10-year, $1,000 bond with a 8% coupon rate and semiannual coupons is trading for...

Suppose a 10-year, $1,000 bond with a 8% coupon rate and semiannual coupons is trading for a price of $1,135.41. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 8% R...

1 answer

##### Expected return of a portfolio using beta. The beta of four stocks—G, H, I, and J—are...

Expected return of a portfolio using beta. The beta of four stocks—G, H, I, and J—are 0.44, 0.75, 1.18, and 1.58, respectively and the beta of portfolio 1 is 0.99, the beta of portfolio 2 is 0.83, and the beta of portfolio 3 is 1.14. What are the expected returns of ...

1 answer

##### Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows...

Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFS) during the next 3 years, after which FCF is expected to grow at a constant 6% rate. Dantzler's WACC is 14%. 0 1 2 3 Year $58 FCF (S millions) $17 - $24 a. What is Dantzler...

1 answer

##### Amanda will receive a $20 000 annual payment from a family trust fund. This will continue...

Amanda will receive a $20 000 annual payment from a family trust fund. This will continue until she reached age 40. She is currently 25 years old and will receive one payment per a year. Inflation is 5% and the interest rate of the trust fund is 6% compounded monthly. What is the value of the trust ...

1 answer

##### Please solve, show work, and give detail explanation 6. A firm offers a 6.4 percent bond...

Please solve, show work, and give detail explanation 6. A firm offers a 6.4 percent bond with a current market price of $760.50. The yield-to- maturity (YTM) is 8.52 percent. The face value is $1,000. Interest is paid semi-annually. How many years until this bond matures? stereo 7. A bond that pays ...

1 answer

##### Why are institutional investors important in today’s business world? Why is trend analysis helpful in analyzing...

Why are institutional investors important in today’s business world? Why is trend analysis helpful in analyzing ratios? Explain how the break-even point and operating leverage are affected by the choice of manufacturing facilities (labor intensive versus capital intensive)....

1 answer

##### Tobin Supplies Company expects sales next year to be $540,000. Inventory and accounts receivable will increase...

Tobin Supplies Company expects sales next year to be $540,000. Inventory and accounts receivable will increase $100,000 to accommodate this sales level. The company has a steady profit margin of 30 percent with a 50 percent dividend payout How much external financing will Tobin Supplies Company have...