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You are a CEO of Daniel Thomas Inc. Your manager, Ali, comes to you with two alternate proposals, named: GrowthProject and NonGrowthProject. If you select GrowthProject, you expect to receive the first cash flow of $50,000 at the end of year three; there after cash flow would increase by 2% over the next years, in perpetuity. On the other hand, if you choose NoGrowthProject, then you would start getting first cash flow of $55,000 at the end of year, and subsequently over the next years, in perpetuity. Ali argues that as GrowthProject is more risky compared to NonGrowthProject, your required rate of return of GrowthProject should be higher than the same of NonGrowthProject. If the required rate of returns for the GrowthProject and NonGrowthProject are respectively 10% and 9%, then: a) Calculate the PV of GrowthProject and NonGrowthProject b) As a CEO, which project you should select, based your calculations in (a)
Micro Spinoffs, Inc., issued 10-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,210. If the firm's tax bracket is 20%, what is its after-tax cost of debt?
Suppose that IBM stock is selling for $110 per share and that you short sell 200 shares of the stock determine your dollar return if the price of IBM stock drops to $95 per share?
Suppose that Loras Corporation imported goods from New Zealand and needs 100,000 New Zealand dollars 180 days from now.
You are comparing two possible capital structures for a firm. The first option is an all-equity firm. The second option involves the use of $3.8 million of debt.
GMX Resources, an independent oil and gas exploration and production company, has a tax rate of 38%. If it purchases $2,000,000 of drilling pipe, what is the after-tax cost of this expenditure?
Jia Hua Enterprises desire to issue sixty 20-year, $1,000 par value, zero-coupon bonds. If each bond is priced to yield 7 percent, how much will Jia Hua receive when the bonds are 1st sold?
Prepare an executive level report related to the target acquisition company's financial and operational strengths and weaknesses that addresses the acquiring company's internal management team
The CFO believes that a move from zero debt to 55.0% debt would cause the cost of equity to increase from 10.0% to 13.0%, and the interest rate on the new debt would be 8.0%. What would the firm's total market value be if it makes this change?
Karl Stick is president of Stock Corporation. He also owns 100% of its stock. Karl's salary is $120,000. At the end of the year, Karl was paid a bonus of $100,000 because the firm had a good year.
Rate of Return. Steady As She Goes, Corporation will pay a year-end dividend of $3 per share. Investors expect the dividend to increase at a rate of 4% indefinitely.
You earned 10.3 percent nominal rate over the past year, but find that your purchasing power in terms of real stuff you can buy with your money has increased only by 5.2 percent. What was the rate of inflation?
What is the cash flow to stockholders for 2011? 2010 sales 5,831 COGS 3,670 interrest 291 depreciation 125 cash 250 Accounts receivables 1,092 current liabilities 717 inventory.
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