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Degree of financial leverage Northwestern Savings and Loan has a current capital structure consisting of $250,000 of 16% (annual interest) debt and 2,000 shares of common stock. The firm pays taxes at the rate of 40%.
a. Using EBIT values of $80,000 and $120,000, determine the associated earnings per share (EPS).
b. Using $80,000 of EBIT as a base, calculate the degree of financial leverage (DFL).
c. Rework parts a and b assuming that the firm has $100,000 of 16% (annual interest) debt and 3,000 shares of common stock.
General Cereal common stock dividends have been growing at an annual rate of 7% per year over the last ten years. Current dividend is 1.70 each share.
Objective type questions on selecting lease option and What is the net advantage to leasing NAL
ourteen years ago, the U.S. Aluminum Corporation borrowed $9.9 million. To sustain the original $9.9 million purchasing power, how much must the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation).
Morton Industries is planning opening a new subsidiary in Boston, to be operated as a separate corporation. The corporation's financial analysts expect the new facility's average EBIT level to be $6 million per year.
Walters Manufacturing Corporation has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the company. The dealer indicates that Walters could sell a $5 million issue maturing in 182 days at an interest rate..
Define the different way of transfer of suppliers of capital, describe the different methods of transfer of suppliers of capital to demanding capital
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What do you think will be results on employment of using this new target for monetary policy.
You expect KT Industries will have earnings per share of dollar 3 this year and expect that they will pay out $1.50 of these earnings to shareholders in the form of a dividend.
Using the option prices given below, give an example of a zero cost collar and describe how it could be used to hedge a long position in the underlying asset.
Suppose you recently graduated from college, and your job search led you to S&S Air. Because you felt the corporation's business was taking off, you accepted a job offer.
A manufacturer of electronic items provides the following data relating to revenues, costs and plant capacity. The purpose is to find answers to the questions that are of primary concern to the corporation.
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