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EXTERNAL EQUITY FINANCING Coastal Carolina Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 45% with a $20 million investment m plant and machinery. The firm wants to maintain a 35% debt level in its capital structure. It also wants to maintain its past dividend policy of distributing 55% of last year's net income. In 2016, net income was $5 million. How much external equity must Coastal Carolina seek at the beginning of 2017 to expand capacity as desired? Assume that the firm uses only debt and common equity in its capital structure.
An investment will pay you $87,000 in five years. Assume the appropriate discount rate is 7.75 percent compounded daily. What is the present value?
Suppose that the spread between the yield on a three-year riskless zero-coupon bond and a three-year zero-coupon bond issued by a bank is 210 basis points. The black-Scholes-Merton price of an option is $4.10. How much should you be prepared to pay f..
Both bond A and bond B have 6.6 percent coupons and are priced at par value. Bond A has 8 years to maturity, while bond B has 15 years to maturity. a. If interest rates suddenly rise by 1.2 percent, what is the percentage change in price of bond A an..
Construct a table showing the charges and credits to the margin account. The daily prices on the intervening days are as follows:
Does the importing country still gain from free trade in furniture?- Does the exporting country still gain from free trade in furniture?
to develop a schedule for a project we will use the concept of a project network which shows work activities taken from
Both bond A and bond B have 8.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while bond B has 18 years to maturity. If interest rates suddenly fall by 1 percent instead, what would be the percentage change in price of ..
A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 1.87 percent, what is the price and bond equivalent yield?
Suppose I wish to start my own delivery service. I buy a light truck for $75,000. At the end of year zero, I purchase the truck with a 3 year loan, with 20% down, at an interest rate of 9%. Payments are scheduled to be made at the end of years 1, 2, ..
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.30 per share on its stock. What will the stock price be in three years?
Explain how a firm that uses a single supplier for the best price on that good or service has a concentration risk (as Segal calls it), and how that might be addressed with basic risk management techniques.
If the growth rate is 6% per annum and the earnings are $ 4 per share. What is the required rate of return of the common stock?
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