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Illinois Tool Corporation fixed operating expenses are $1,260,000 and its variable cost ratio (ie. variable costs are as a fraction of sales) is 0.70. The firm has $3,000,000 in bonds outstanding at an interest rate of 8 percent. ITC has 30,000 shares of $5 preferred stock and 150,000 shares of common stock outstanding. ITC is in the 50% corporate income tax bracket. Forecasted sales for next year are $9 million.
What is the ITC's degree of financial leverage (DFL) at an EBIT level of $1,440,000?
The answer to this problem is one of the following;a. 1.20b. 2.40c. 3.00d. 1.60
Computation of actual nominal rate of return on the bond and A bond produces a real rate of return of 5.03 percent for a time period when the inflation rate is 3.30 percent
Computation of Present value of Medical Research Corporation (MRC) was thrilled with the response he had received from drug companies for his latest discovery, a unique electronic stimulator that reduces the pain from arthritis
Compute. (i) New BEP (ii) Sales to earn present level of profit (iii) Sales to earn expected profit on proposed investment (iv) Maximum profit potential after tax and plant expansion
Create a scenario where an investor would benefit from using forward and future contracts to hedge and Explain how interest rates impact the scenario.
If a company can expect an extra $2 million in sales if it enters a new market and it knows that 15 percent of its sales will be uncollectible, collection costs will be 2 percent on all new sales,
Rodeo Supply Corporation is considering to increase its sales by 20% next year. The sales increase will need a total additional investment in receivables, inventory, and fixed assets of $750,000.
Determine how could a country risk assessment be used to adjust a project's required rate of return? How could such an assessment be used instead to adjust a project's estimated cash flows?
Solve for the future value given these assumptions
Elucidate the process you will utilize to accomplish this task, including the information you will want also the important steps in the process.
From last three years, the common stock of Makkeny Corporation sold for $63.29 on the NYSE. Today, the current share price for the firm is $38.61. The company paid no dividends over this period of time and Makkeny executed a two for one stock split 2..
Chamberlain Canadian Imports has agreed to buy 15,000 cases of Canadian beer for four million Canadian dollars at today's spot rate. The firm's financial manager, James Churchill, has noted the following current spot and forward rates:
As a financial manager you will often have to compare cash payments which take place at different dates. To make optimal decisions, you must understand the relationship between a dollar today [present value] and a dollar in the future [future valu..
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