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KLM Inc. just paid a dividend of $3.25 per share on 180,000 shares outstanding. Dividends are expected to grow at a constant rate indefinitely. The firm's ROE is 12 percent, beta is 1.3 and the dividend payout ratio is 55 percent. Treasury notes are yielding 2.75 percent and the market risk premium is estimated at 7.25 percent. The firm has 15,000 bonds outstanding that will mature in 6 years. The bonds are quoted at 105 percent of par and pay a 6.8 percent semiannual coupon. The firm's tax rate is 21 percent.
What is the change in the firm's WACC if it sells 10,000 7-year zero coupon bonds ($1,000 par value) with an 8.2 percent market required rate of return, other costs of capital kept constant? Assume semi-annual compounding for the zero-coupon bonds.
On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 102. What is the adjusting entry on December 31 using the straight-line method?
A project will produce after-tax operating cash flows of $45,000 a year for four years. During the life of the project, net working capital will be reduced.
As a reminder, we are trying to market an energy efficient light bulb which uses various forms of energy sources (wind, solar,etc.), produced by General
1. At what price would you face a margin call? If the price is $110 at the end of the period, what is your margin ratio at that point?
A similar bond without a conversion feature would have sold with a 9% coupon interest rate.What is the minimum price that the Crystal Cafes' convertible bond should sell for?
Turbo Co. purchased 1,000 shares of DBC for $23 each this year and classified the investment as atrading security. Turbo sold 400 shares of the stock for $24 each. At year end the price per share of the DBC Company had increased to $26.
Last year, Blakely's Fashions earned net income of $68,400 and had 12,000 shares of stock outstanding. The dividends per share were $2.20. What is the dividend payout ratio?
United snack company sells 50 pound bags of peanuts to university dormitories for $10 a bag the fixed costs of this operation are 80 000 while the variable cost of peanuts are $.10 per round.
Suppose that the plastic gear creates additional warranty cost due higher failure rates. The cost to the company is $50 per gear failure. Should the company still convert to the plastic gear? Estimate the expected financial impact.
To better understand the rules for offsetting capital losses and how to treat capital losses carried forward, analyze the following data for an unmarried individual for the period for the period 2007 through 2010. No capital loss carryforwards are..
What duties do you assume you will be responsible for? What questions would you ask before deciding?
You are the owner and operator of Grains Plus located at Bathurst NSW. The rain during the spring have been the best in a decade and you are expecting a bumper.
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