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The Denny Company is planning to expand production because of the increased volume of sales. The current income statement (before expansion) is as follows:Denny Company Income Statement2006Sales $4,000,000Less: Variable costs (40%) $1,200,000Fixed costs 800,000Earnings before interest and taxes 2,000,000Less: Interest expense 400,000Earnings before taxes 1,600,000Less: Taxes (@ 35%) 560,000Earnings after taxes 1,040,000Shares 100,000Earnings per share $3.90
Based on the data provided:a. Calculate the degree of operating leverage using the following formula:DOL = S-TVCS-TVC-FC
b.Calculate the degree of financial leverage using the following formula: (5 pts)DFL = EBITEBIT-I
c. Calculate the degree of combined leverage before expansion using the following formula: (5 pts)DCL = S-TVCS-TVC-FC-I
The financial manager has estimated the following schedules for the cost of funds: Determine the company optimal capital structure.
Computing efficient frontier for strategic decision and Plot the graph of the resulting portfolio returns and standard deviations
Actuarial estimates project 2,500 visits per 1,000 persons per year. You have contracted with a Primary Care Medical group at dollar 45.00 per visit with a dollar 5.00 co-payment that you will receive.
Garner company $12 of vaiable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 per.
Participant in a stock bonus plan
Drawing on literature, critically evaluate all these hedging techniques. Illustrate your arguments with appropriate examples / cases / empirical studies review.
If, over first year, there are quarterly repayments of $5 million on mortgage pool, how are the funds distributed.
The difference between the cost of funds used to finance an investment and after-tax operating profits is called;
Computation of beta of the firm and market portfolio and how does this compare with the stock's actual expected return
McKinnley Company is constructing a plan to finance its asset base. The firm has $5,000,000 in current assets, of which 20 percent are permanent, and $12,000,000 in fixed assets.
Compare the performance of the evenly weighted portfolio with each of the individual stock by comparing the alphas also the Sharpe Ratios.
A frequent occurrence is for an IT acquisition project that is behind schedule and over budget to continue out of control till the costs become intolerable or some other event causes it to end, resulting in much waste of resources with few or no b..
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