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Question: Guardian Inc. is trying to develop an asset-financing plan. The firm has $460,000 in temporary current assets and $360,000 in permanent current assets. Guardian also has $560,000 in fixed assets. Assume a tax rate of 25 percent.
a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 80 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest rate is 14 percent on long-term funds and 8 percent on short-term financing. Compute the annual interest payments under each plan.
b. Given that Guardian's earnings before interest and taxes are $340,000, calculate earnings after taxes for each of your alternatives.
c. What would the annual interest and earnings after taxes for the conservative and aggressive strategies be if the short-term and long-term interest rates were reversed?
Calculate the average rate of return for each year from the above information. What is the arithmetic average rate of return earned by investing in Caswell's.
Identify a sample of food companies. For example, you could try Campbell Soup (CPB), General Mills (GIS), Kellogg (K), Kraft Foods (KFT), and Sara Lee (SLE). a. Estimate beta and R2 for each company, using five years of monthly returns and Excel fu..
ABC Bank is one of the second-tier banks in Hong Kong, providing a variety of banking services and products to a broad range of customers in Hong Kong.
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You have $10,000 for investment. What are the expected return and standard deviation for a portfolio with an investment of $6,000 in asset X and $4,000 in asset Z?
DoubleD believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Double D's after tax?
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most firms generate cash inflows every day not just once at the end of the year. in capital budgeting should we
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