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John Tye was hired as the new corporate finance analyst at I-EII Enterprises and received his first assignment. John is to take the $25 million in cash received from a recent divestiture, to use part of these proceeds to retire an outstanding $10 million bond issue, and to use the remainder to repurchase common stock. However, the bond issue cannot be retired for another two years. If John can place the funds necessary to retire this $10 million debt into an account earning a 6 percent annual return compounded monthly, how much of the $25 million remains to repurchase stock?
The Dallas Electronics Company is considering replacing an old, 1,000-pound-capacity industrial forklift truck. The truck has been used primarily to move goods from production machines into storage. If Dallas decided to purchase the truck, it would g..
Sawchuck Consulting has been profitable for the last 5 years, but it has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to..
5 years ago, Barton Industries issued 25-year no callable, semi annual bonds with a $1,900 face value and a 10% coupon, semi annual payment ($95 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 40%, wh..
A bond with a call provision would generally be sold to yield
How should you manage operating exposure? What about translation exposure? Explain your reasons behind the answers to both.
Jordan Enterprises is considering a capital expenditure that requires an initial investment of $42,000 and returns after-tax cash inflows of $7,000 per year for ten years. The firm has a maximum acceptable payback period of eight years. Determine the..
Your investments increased in value by 11.1 percent last year but your purchasing power increased by only 8.4 percent. What was the approximate inflation rate?
a non-parent entity l ltd acquired on 1 july 2010 a 21 voting interest in p ltd for 190000 cash.nbsp the recorded
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $6,300,000, and it would be depreciated straight-line to zero ove..
You are a banker considering the issuance of a guaranteed note with stock index participation for a client. The current yield curve is flat at 4 percent for all maturities. Your supervisor asks you to compute the “fair” participation rate that would ..
A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 5 years from now?
Southern Fields has an inventory of 838,000 pounds of sugar. The firm placed a partial hedge on this inventory by selling 6 futures contracts at 9.56. The futures contracts are based on 112,000 pounds and quoted in cents per pound. At the time the fi..
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