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Calculate the Project and Equity Free Cash Flows for the following scenario. We want to finance a project with 30% debt (70% equity). We expect $1,000,000 in sales for next year; COGS to be 55% of sales; depreciation will be $400,000 and offset with $400,000 in new CAPEX. Assume that Year 1 is the first year of a perpetuity with no growth (you get the t1 cash flow for ever). The firm's cost of debt is 4% (assume the debt is perpetual and you never pay down any principal); the cost of equity is 12%; the tax rate is 35%. Hint: to determine the EFCF, you will need to determine the value of the firm and the value of "D" so you can find the interest payment. Please use Excel.
Starting a new product or service line that will require new kinds of employees - The current plan is to use savings from reduced marketing and distribution costs for training.
Ghost Rider Corporation has bonds on the market with 16 years to maturity, a YTM of 7 percent, and a current price of $968. What must the coupon rate be on the company’s bonds?
We learn from Gorton’s book that banks in August 2007 went right to the Federal Reserve discount window to replace other sources of liquidity that were becoming scarcer. In addition managers of the bank made public announcements that they were using ..
Prepare a three page paper that responds to the coca-cola research case questions Using the web, access the Coca-Cola Company's 2010 financial statements
Stock A has an expected dividend of $1.30 payable as of two years from now (i.e. it is not expected to pay any dividends over the first two years). After that, dividends are expected to grow at an annual rate of 1% forever. If the discount rate is 5%..
Should preferred stock be classified as debt or equity/Does it matter if the classification is being made by the firm's a. management b. creditors, or c. equity investors?
Consider a project to supply 104 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,940,000 five years ago; if the land were sold today, it would net you $2,140,0..
Bond Y is no callable, has 10 years to maturity, a 8% annual coupon, and a $1,000 par value. If you buy it, you plan to hold it for 4 years. You and the market have expectations that in 4 years the yield to maturity on a 6-year bond with similar risk..
Garcia Industries has sales of $215,000 and accounts receivable of $18,500, and it gives its customers 25 days to pay. The industry average DSO is 27 days, based on a 365-day year. how would that affect its net income, assuming other things are held ..
An investor is looking to buy a $1,000,000 T-bill issue at an Ask Discount of 1.13 on January 22 for a maturity date of February 27 (36 days to maturity), what is the discount rate, dollar discount, purchase price, and the holding period yield and an..
Hag Lund Department Store is located in the downtown area of a small city. While the store had been profitable for many years, it is facing increasing competition from large national chains that have set up stores on the outskirts of the city. Use ar..
According to the efficient markets hypothesis, professional investors will earn: excess profits over the long-term. a dollar return equal to the value paid for an investment. excess profits, but only on short-term investments. a return that "beats th..
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