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Debt versus Equity Financing. You are considering a stock investment in one of two firms (AllDebt, Inc., and AllEquity, Inc.), both of which operate in the same industry and have identical operating income of $7.00 million. AllDebt, Inc., finances its $20 million in assets with $19 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AllEquity, Inc., finances its $20 million in assets with no debt and $20 million in equity. Both firms pay a tax rate of 30 percent on their taxable income. Calculate the income available to pay the asset funders (the debt holders and stockholders) and resulting return on asset-funders' investment for the two firms. (Enter your dollar answers in millions of dollars. Round all answers to 2 decimal places.)
Phone Home inc is considering a new 4 year expension project that requires an initial fixed asset investment of $3 million. What is the npv for this project?
Having taken a finance course, Ellie decides to go to the bank and borrow money using the inheritance ($1,000,000) as collateral. She negotiates a deal where she borrows $XXX,XXX. How much will Ellie be able to borrow? How much interest will she pay..
each bond is convertible into 30 shares of common stock 6% convertible, cumulative preferred stock, $100 par value;
Each year, Sunshine Motos surveys 7,500 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to Global Associates, who have offered to conduct the survey ..
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 25%; Normal 60%; and, Bust 15%. The rate of return for stock X is Boom .20; Normal .15; and, Bust .00. The rate of r..
An active strategy utilized for common stocks
Determine if Intercontinental should purchase the equipment using rate of return analysis
Bond J has a coupon rate of 4.1 percent. Bond S has a coupon rate of 14.1 percent. Both bonds have nine years to maturity, make semiannual payments, a par value of $1,000, and have a YTM of 9.2 percent. If interest rates suddenly rise by 3 percent, w..
Your client is a biotechnology startup looking to develop a plan to expand their operations.
A bank purchased bonds for 102.5 million that has a par value of $100 million. The bonds have three years to maturity. The coupon rate is 12 percent. Calculate the yield to maturity on these bonds. Using your answer to part a, compute the duration of..
what is the present value of the cash flows associated with this transaction?
(Stock splits and large stock dividends?) Marston Mfg. recently declared a 4?-for-1 stock split for its common shares. Before the split the? firm's share price had risen to? $600 per share and the? firm's CFO felt that this high stock price inhibited..
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