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1.The Millennium Charitable Foundation, which is tax-exempt, issued debt last year at 8 percent to help finance a new playground facility in Chicago. This year the cost of debt is 15 percent higher; that is, firms that paid 10 percent for debt last year would be paying 11.5 percent this year.A. If the Millennium Charitable Foundation borrowed money this year, what would the after tax cost of the debt be, based on its cost last year and the 15 percent increase?B. If the foundation was found to be taxable by the IRS (at a rate of 35 percent) because it was involved in political activities, what would the after tax cost of the debt be?
2. Mary Ott Hotels wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans:Cost (after tax) WeightsPlan ADebt..................... 6.0% 20%Preferred stock......... 10.0 10Common equity............ 13.0 70
Plan B.Debt.......................... 6.5% 30%Preferred stock............. 10.5 10Common equity............ 13.5 60
Plan C.Debt........................ 7.0% 40%Preferred stock............ 10.7 10Common equity.......... 14.2 50
Plan D.Debt........................ 9.0% 50%Preferred stock............ 11.2 10Common equity.......... 16.0 40
The returns for IMB over the last 3 years are given below.
A bond matures in 15 years, par value of $1,000, and annual coupon of 5.7%. Current interest rate is 9.7%. At what price will the bond sell?
Discuss the concept of investing in bonds. With a definition of what kind of investment a bond is, how bonds are bought and sold, how bond prices are affected by interest rate fluctuations.
Before-tax yield to maturity on company’s bonds is 9%. What is the company’s weighted average cost of capital (WACC)?
If revenue is realized isn't always easily determined. In the normal cash for product or service exchange is easy as recognition is almost always immediate. How about when the ticket is purchased for the concert or travel for some future period? W..
Suppose you receive $5,000 three years from now. The discount rate is 8 percent. Determine the value of your investment two years from now?
Which of the following correctly describe Black, Inc.'s obligation to permit any of its employees to diversify his account?
Compare your findings in parts a.1. and a.2. All else being identical, which type of annuity-ordinary or annuity due-is preferable? Explain why.
The Thompson Company projects an increase in sales from $18 million to $25 million, but it needs an additional $500,000 of current assets to support this expansion.
Computation of cost of capital for the funds needed to meet the expansion goal and This capital structure is believed to be optimal
Jack corporation paid $800,000 for all of Ann company issued and outstanding common stock. Ann's recorded assets and liabilities on April 1, 20X2, were as follows:
Determine the approximate annual rate return in investment of the following cash discount and also compute the amount of interest income earned by Moiton Corporation during fiscal 2010.
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