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Assume an organization’s debt-to-equity ratio is less than 1.0. Which of the following statements is most correct?
a. The organization’s creditors have provided less than $1 in capital per dollar of equity capital.
b. The organization has more equity than debt in its capital structure.
c. An increase in the debt-to-equity ratio would increase the riskiness of the creditors’ position.
d. Answers a. and b. are correct.
e. Answers a., b., and c. are correct. (Hint: Option D is incorrect. It has been marked as incorrect.)
Chamberlain Corp. is evaluating a project with the following cash flows. The company uses a discount rate of 10 percent and a reinvestment rate of 7 percent on all of its projects. Year Cash Flow 0 –$ 15,400 1 6,500 2 7,700 3 7,300 4 6,100 5 – 3,500 ..
$100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. - What will it sell at today to yield the purchaser 4.48%?
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Wells Fargo sells a call option on pounds (contract size is POUNDS500,000) at a premium of $0.03 per pound. If the exercise price is $1.54 and the spot price of the pound at date of expiration is $1.56, what is Wells Fargo's profit t(loss) on the cal..
Per the IRC, losses and deductions of an S corporation pass through to the shareholders of the corporation and are limited to the shareholders’ basis in the S corporation. Suggest a plan for a client to increase the deductible pass through loss and d..
A company is considering a 5-year project to open a new product line. A new machine with an installed cost of $110,000 would be required to manufacture their new product, which is estimated to produce sales of $80,000 in new revenues each year. If st..
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