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1. Duchon Industries had the following balance sheet at the time it defaulted on its interest payments and filed for liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $900 million, while the current assets were sold for another $400 million. Thus, the total proceeds from the liquidation sales were $1,300 million. Trustee's costs amounted to $1 million; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan liabilities. Determine the amount available for distribution to all claimants.
Consider the purchase of a $10,000 capper, a three year asset, in year zero and its sale in year four for $2,000. Show in the table below, the pre-tax cash flow, depreciation, tax savings from depreciation, gains tax, and after tax cash flow with a t..
For the given cash flows below, assume the cash flow is the same in the next 2 years. Compute the NPV for each project, and compute the incremental IRR. Compare and explain why NPV always gives the correct decision. What is the best way to select a p..
Murphy Company's total liabilities on December 31, 2014, amounted to $1,465,200. The debt-to-equity ratio on this date was 1.48 to 1. Net income for 2014 was $260,604, and the profit margin was 5.13%. Determine Murphy's net sales for 2014. Determine ..
Chandeliers Corp. has no debt but can borrow at 7.8 percent. The firm’s WACC is currently 9.6 percent, and the tax rate is 35 percent. What is the company’s cost of equity? If the firm converts to 30 percent debt, what will its cost of equity be? If ..
When the intrinsic value of an asset exceeds the market value
Determining Profit or Loss from an Investment. Three years ago, you purchased 150 shares of IBM stock for $88 a share. Today, you sold your IBM stock for $103 a share. For this problem, ignore commissions that would be charged to buy and sell your IB..
Scot and Vidia, married taxpayers, earn $184,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. (Use the U.S. tax rate schedule). This year, Fred and Wilma sold their home (sales price $750,000; cost $200,000). Al..
On October 1, 2013, Chief Corporation declared and issued a 14% stock dividend. Before this date, Chief had 89,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a res..
Let us say that you know all about Beta and you decide to invest $10,000 and borrowed $10,000 to purchase shares in IBM. IBM was selling at $100 per share. How many shares could you have bought if you paid $250 in commission and did not use margin?
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 million in anticipation of using it as a warehouse and distribution site, but the comp..
A bond that pays interest annually yields a rate of return of 6.00 percent. The inflation rate for the same period is 2 percent. What is the real rate of return on this bond?
All interest rates are given as p.a. You must a just to the period. Take money and interest rates to four decimals before rounding. During 1995, the Mexican peso to Us dollar exchange rate changed from Mex$5.33/U.S.$ to Mex$7.46/U.S.$. At the same ti..
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