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Neighborhood Savings Bank is considering leasing $100,000 worth of computer equipment. A 4 year lease would require payments in advance of $22,000 per year. The bank does not currently pay income taxes and does not expect to have to pay income taxes in the foreseeable future. If the bank purchased the computer equipment, it would depreciate the equipment on a straight-line basis down to an estimated salvage value of $20,000 at the end of the 4th year. The bank's cost of secured debt is 14%, and its cost of capital is 20%. Calculate the net advantage to leasing.
Meiston Press has a debt-equity ratio of 2.10. The pre-tax cost of debt is 9.15 percent and the cost of equity is 14.4 percent. What is the firm's weighted average cost of capital (WACC) if the tax rate is 34 percent? 8.74 percent 9.89 percent 10...
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ow might the bank be able to involve its own customers in designing its web site and pricing its Internet service package?
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Corporation just completed a 3 for 1 stock split. Prior to the split, the stock price was $120 per share. The total market value increased by 5 percent as a result of the split.
Short-run exposure to exchange rate risk is best illustrated by which one of the following?
If net income next year is $1.8 million and Perkin follows a residual distribution policy with all distributions as dividends, what will be its dividend payout ratio? Round your answer to two decimal places.
What type of capital structure should the firm choose and why? Please comprise capital structure fallacies and their effects on a firm's decision.
If the offer price is $45 per share and the company's underwriters charge an 8.25 percent spread, how many shares need to be sold?
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