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Question:
Julie Smith, an analyst with ABC Company, has collected the following data about the firm:
EBITDA = $3.5 million
Tax rate = 38%
Debt outstanding = $2.5 million
Cost of debt = 10.5%
Cost of common equity = 14%
Shares of stock outstanding = 800,000
BV of the stock per share = $12
The firm's product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends. Assuming depreciation & amortization costs of $500,000 per year, calculate the firm's net income and EPS.
Suppose that ITC's degree of combined leverage (DCL) is 3.00 at a sales volume of $9 million. Determine ITC's percentage change in earnings per share (EPS) if forecasted sales increase by 20 percent to $10,800,000.
Give a logical brief explanation, based on reinvestment rates and opportunity costs, as to why the NPV method is better that the IRR method when the firm's cost of capital is constant at some value such as 10%.
The Daily Tribune is performing an impairment test of its printing press as of December 31, 200X, and estimates that the press will generate net cash flows of $8,000 per year for the next 4 years.
What is the after tax weighted average cost of capital (WACC) of this firm?
Why is critical thinking important?
How might the Indonesian government use a counterpurchase to its advantage?
determine the present values if 5000 in the future i.e. at the end of each indicated time period in each of the
Why are cash flows that are connected to common stock difficult to estimate? How does this compare to those related to bonds.
a firm sells 100000 of its accounts receivable to factors at a 2 percent discount. the firms average collection period
Mr. Frost controls proxies for 32,000 of the 60,000 outstanding shares of Express Frozen Foods, Corporation Mr. Cooke heads a dissident group that controls the remaining 28,000 shares.
Discuss the dividend payment requirements of a common stock versus preferred stock, in terms of which type of stock has a primary claim on dividend distributions. Explain why the common stock investor demands a higher dividend rate.
1. if all the assumptions of perfect competition hold why would firms in such an industry have little incentive to
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