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Question: Caballos, Inc., has a debt to capital ratio of 10%, a beta of 1.9 and a pre-tax cost of debt of 5.5%. The firm had earnings before interest and taxes of $ 657 million for the last fiscal year, after depreciation charges of $ 261 million. The firm had capital expenditures of $ 342 million, and non-cash working capital increased by $ 51 million. The firm also had a book value of capital of $ 2.1 billion at the beginning of the last fiscal year. (The treasury bond rate is 4.6 %, the market risk premium is 6.3 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever. Estimate the FCFF.
Calculate the net present value (NPV) for the following 20-year projects. Comment on the acceptability of each. Assume that the firm has an opportunity cost of 14%
Compare and contrast the internal rate of return approach and the net present value approach to capital rationing. Which is better? Why?
Identify and analyze the effect of the payment of interest and the amortization of premium on December 31,2014 (the third year), and determine the balance sheet presentation of the bonds on that date.
Develop a program that you feel can help promote personal effectiveness and minimise this issue. What type of resources would you need?
compute net profits and losses per share (actual dollar profits and losses, not rates of return) at expiration (February 1994) for the following investment strategies buying a call on Lotus's stocks
1. What are underlying objectives for the definition of risk? 2. What are three major categories of risk attitudes? 3. Explain the categories and risk and provide examples for each category.
1. Why are sales forecasts important to developing a firm's financial forecast? 2. Give some examples of spontaneous and discretionary sources of financing.
The following bonds have a par value of $1,000 and the required rate of return is 10%.
briefly describe each of the following phases of the capital budgeting process a identification phase b evaluation
Explain the factors that a company should consist
Calculating Cash Flows. Consider the following abbreviated financial statements for Cabo Wabo, Inc.: What is owners' equity for 2015 and 2016?
calculate the one year bond equivalent yield for the Swiss government security that would support the interest rate parity condition.
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