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Backhaus Beer Brewers (BBB) just announced that the current fiscal year's income statement reports its net income to be $1.2 million. BBB's marginal tax rate is 40 percent, and its interest expense for the year was $1.5 million. The company has $8.0 million of invested capital, of which 60 percent is debt. In addition, BBB tries to maintain a weighted average cost of capital (WACC) near 12 percent.
a. Compute the operating income (EBIT) that BBB earned in the current yearb. What is BBB's economic value added (EVA) for the current year?c. BBB has 500,000 shares of common stock outstanding. According to the EVA value you computed in question B, how much can BBB pay in dividends per share before the value of the firm would start to decrease? If BBB doesn't pay any dividends, what would you expect to happen to the value of the firm?
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This is a risky project, so a WACC of 16.0% is to be used. If NPC chooses to wait a year before proceeding, what is the value of the timing option today?
Cassandra sells property for a sales valueof $150,000. In addition, Lana, the buyer, pays $5,000 in property taxes that had accrued during th year while property was still legally owned through Cassandra.
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what is its yield to call YTC? Hint set up the cash flows on a timeline. if the bond is called, in vestors will receive interest payments for five year and then receve $1,050 $ 1,000 in principal and call premium of five years. the YTM on this cas..
This assignment address the possible benefit of to shareholders of T-Mobile and Sprint in a possible merger of the two companies.
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