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Finance is Fun Ltd has the following structure: $10,000,000 four year bonds with a coupon of 8.5% trading at 94% and 3 million shares trading at $3.90. The market rate of return 13% and the risk free rate of return is 5%. Finance is Fun has a beta of 1.25 and pays tax at 35%. Calculate the WACC of Finance is Fun.
Your company "Digitup Ltd" needs a new earth moving machine which it can buy for USD 80,000 or lease for 5 years, with lease payments due at the start of each year.
If the leasing company can get a superior discount and buy the machine for USD 70,000 and depreciate it over 5 years to zero terminal value with maintenance and administration costs of $13,500 p.a. with zero inflation, cost of capital at 6% and taxation at 28% what is the break even lease that the company will charge?
Is this lease attractive to Digitup if its cost of capital is 8%?
Your company has a bond in issue with one year to run and a coupon of 9% which is your normal cost of capital. You notice that it has been trading at 55% lately and you are told that there is a market rumour that you will only pay back 40% of the debt. What is the implicit market estimate of the probability of your company defaulting?
Finally, explain the concept of a real option and how this can help Joshua and Jim as they continue with their business.
Estimate the cost function using simultaneous equations for the following information. Manchester Foundry produced 45,000 tons of steel in March at a cost of £1,150,000.
Analyze personal expenses on a variable and fixed basis. What are some of your personal fixed costs and variable costs? What would cause them to change?
Ryngaert Inc. recently issued noncallable bonds that mature in 15 years. They have a par value of $1,000 and an annual coupon of 5.7%. If the current market interest rate is 7.0%, at what price should the bonds sell?
Fritz Corporation has 800,000 shares of preferred stock and 1,800,000 shares of common stock. The cumulative preferred stock has a stated dividend of $1.75 per share.
On August 1, 201, Colombo, Co's treasurer signed a note promising to pay $240,000 on December 31, 2010. Compute the effective interest rate (APR) on loan.
What is the YTM for a 20 year bond with an 8% coupon if the price is 98.50?
Floatation cost for debt is 4% and 8% for equity. What is the project's NPV before and after adjusting for floatation cost?
If the interest rate is 9 percent compounded monthly, what is the PV for both the options?
The depreciation expense for the past year is $9,600 and the interest paid is $8,700. What is the amount of the change in net working capital?
Circle K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break-even point? a) $1060,800 b) $1,105,000 c) $282,880 d)$208,476
You have just been hired by Hewlett Packard (HP) in its capital budgeting division. Your first assignment is to determine the net cash flows and NPV of a proposed new type of portable computer similar in size to an iPhone, but which has the op..
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