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Baldwin Corporation is considering adding capacity to their Bell product, currently automated to 7.0. Assume: - They will use the new capacity next year to make and sell 200 additional units (000). - Each unit of capacity will cost $34.00. - Bell's price will be unchanged at $34.00. - Material costs will remain $13.04 next year. - Labor costs will remain $5.34 on first shift, and $7.91 on second shift. - Bond interest will remain 10.8% next year. - Depreciation will be straight line over 15 years. - SG&A costs can be ignored because they would be the same with or without the new capacity. Which of the following tactics will yield the highest ROI in their first year of production?
Buy 100 units of capacity. Finance the $3,400 purchase entirely with a new bond.
Buy 100 units of capacity. Finance the $3,400 purchase entirely with a stock issue.
Buy 200 units of capacity. Finance the $6,800 purchase entirely with a new bond.
Buy 200 units of capacity. Finance the $6,800 purchase entirely with a stock issue.
discuss the following topic should the reduced tax rate on dividends affect a multinational firms capital structure?a
Achieving the goal of price stability with low and steady inflation allows the Fed to achieve other goals, such as stable interest rates and stable foreign exchange rates.- why will it be hard to achieve stable interest rates?
Volbeat Corporation has bonds on the market with 19 years to maturity, a YTM of 11.1 percent, and a current price of $937. The bonds make semi annual payments. What must the coupon rate be on the bonds?
In early 2006 Giant Inc's management was considering making an offer to buy Micro Corporation. Micro's projected operating income (EBIT) for 2006 was $30 million, but Giant believes that if the two firms were merged, it could consolidate some operati..
you are working with a company selling building material to builders. you predict the quarterly purchases of customers
Rudy Sandberg wants to invest in 5-year bonds that are currently priced at $850.00. The bonds have a coupon rate of 10 percent and semiannual coupon payments. If the par value of the bonds is $1,000, what is the bond's effective annual yield (EAY)?
Find the value of a bond maturing in 9 years, with a 1,000 par value and a coupon interest rate of 8% (4% paid semiannually) if the required return on similar-risk bonds is 16% annual interest (8%paid semiannually).
what was the addition to net working capital or NWC?
what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan?
Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method. What is the internal rate of return?
You are considering investing in a small, apartment building with six units. You beleive you can charge $500 rent per month and borrow $185,000 using a FRM with annual paymentsat 10% for 25 years. Calculate the Following Items: purchase price under c..
Series Average return Large stocks 12.06 % Small stocks 16.76 Long-term corporate bonds 6.38 Long-term government bonds 6.1 U.S. Treasury bills 3.98 Inflation 3.1. Determine the return on a portfolio that was equally invested in large-company stocks ..
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