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1.)Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return. a. Compute the market value of the bonds. b. What will the net price be if flotation costs are 10.5 percent of the market price? c. How many bonds will the firm have to issue to receive the needed funds? d. What is the firm’s after-tax cost of debt if its average tax rate is 25 percent and its marginal tax rate is 34 percent?2.)Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,950,000, and the project would generate incremental free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 9 percent. a. Calculate the NPV. b. Calculate the PI. c. Calculate the IRR. d. Should this project be accepted?3.)Spartan Stores is expanding operations with the introduction of a new distribution center. Not only will sales increase, but investment in inventory will decline due to increased efficiencies in getting inventory to showrooms. As a result of this new distribution center, Spartan expects a change in EBIT of $900,000. While inventory is expected to drop from $90,000 to $70,000, accounts receivables are expected to climb as a result of increased credit sales from $80,000 to $110,000. In addition, accounts payable are expected to increase from $65,000 to $80,000. This project will also produce $300,000 of depreciation per year and Spartan Stores is in the 34 percent marginal tax rate. What is the project’s free cash flow in year 1??
Assume a State of Maryland bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.5%, how much is the bond worth today?
Discuss the challenges related to regulating a complex global financial firm and make suggestions for regulatory improvements.
To complete your Individual Assignment, do the following: Please answer the Individual Assignment in a single Word document ------------------------ Individual Assignment 1E: Final Project A recurring theme of this module has been the value of data t..
Compute accumulated interest due to seller from buyer at settlement. Compute dirty price of this transaction.
What is the effective, compound rate of interest you earn if you enter into a repurchase agreement in which you buy a Treasury bill that costs $98760 and will be redeemed for $100000 after 90 days?
Explain Recommendation for a project based on NPV and What is the project's annual after tax cash flows for years
What is the implied growth rate of the Federal Express dividend based on the constant growth dividend discount model? Assume the required rate of return is 10% and price is 5000 for 100 share. Current dividend is 3.40 show your steps?
What would the minimum yield on a similarly-rated ten-year corporate bond have to be in order to make the investor choose it over the Maplewood bond? 1. 1.302% 2. 3.577% 3. 4.152% 4. 5.284%
Computation of Net present Value of the project and the decision making and what is the meaning of the computed net present value figure
A project has an initial cost of $52,125, expected net cast inflows of $12,000 per year for 8 years, and a cost of capital of 12%. Show work for each.
On January 1, 2006, Miller Corporation borrowed cash from First City bank by issuing a $60,000 face value, three-year installment note that had a 7% yearly interest rate.
Alternatively the company can lease the boat and make end-of-year payments in the amount of $120,000. The company can issue bonds at 10%. If the tax rate is 35%, should the company buy or lease?
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