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David owns 75 percent of the stock of Smith Industries, which is operated as an S corporation. Walter owns the remaining 25 percent. - David is the driving force behind the company. It is doubtful the company could survive without David. - Walter is a purely passive investor. Smith Industries has a standard cross-purchase buy-sell agreement that is triggered if one of the shareholders dies. The other shareholder is obligated to buy the stock of the deceased shareholder. - The company is now valued at $12 million. - Walter owns a $9 million policy on David's life, and David owns a $3 million policy on Walter's life. The company funds the premiums on the policies through bonuses to the shareholders. You represent David. What is wrong with this situation? What changes would you recommend? How would you implement those changes?
The valuation basis of the Balance Sheet is principally current market value.___ ‘Retained Earnings’ reflects cumulative net income kept in the business.___ Current Liabilities are obligations due to be paid within a year of the Balance Sheet date.__..
Briefly describe bankruptcy law. If a firm were to default on its bonds, would the company be liquidated immediately? Would the bondholders be assured of receiving all of their promised payments?
Find the some ratio analysis for Disney for 2014. Would you be able to help me complete some of the other answers and check if the ones I've done are correct?
Mervyn's Fine Fashions has an average collection period of 50 days. The accounts receivable balance is $95,000. What is the value of its credit sales?
Frey Corp. is experiencing rapid growth. Dividends are expected to grow at 25 percent per year during the next three years, 15 percent over the following year, and then 7 percent per year indefinitely. The required return on this stock is 12 percent,..
If 6% coupon three year Commonwealth bond Futures contracts are currently trading at a price of 95.505, how many contracts does the portfolio manager need to buy/sell to hedge the portfolio? Explain the reasons why you think this may be an incompl..
You have decided to invest 30 percent in X; 30 percent in Y; and 40 percent in Z. The probability of the state of the economy is Boom 20%; Normal 55%; and, Bust 25%. The rate of return for stock X is Boom .15; Normal .10; and, Bust .00. What is the p..
We would expect that, all else being equal, investors would pay less for a stock that they view as having become more risky. Assume a stock has just paid a $2.00-per-share dividend. Analysts believe that future dividends will grow at a 14% rate. T..
You own a security that provides an annual dividend of $135 forever. The security’s annual return is 5%. What is the present value of this security? Round your answer to the nearest cent.
Consider a 10-year bond that pays a 5 percent coupon semi-annually with a face value of $1000. What is the price of this bond if the annualized yield to maturity of 4 percent
You have purchased a call option contract on Smith & Smith common stock. The option contract is for 100 shares. The option has an exercise price of $ 43.00 and S&S’s stock currently trades at $40.00. The option premium is quoted at $ 2.00. If the sto..
Suppose sales for the entire year were 100,000 and the COGS were 80% of sales. The inventory conversion period is 40 days. The accounts payable deferral period is 15 days, and the cash conversion cycle is 30 days. What is the accounts receivable bala..
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