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Your firm successfully issued new debt last year, but the debt carries covenants. Specifically, you can only pay dividends out of earnings made after the debt issue and you must maintain a minimum quick (acid-test) ratio left parenthesis Current Assets minus Inventory right parenthesis divided by Current Liabilities (Current Assets−Inventory)/Current Liabilities of 1.2. Your net income this year was $ 69.6 million. Your cash is $ 10.5 million, your receivables are $ 7.8 million, and your inventory is $ 5.4 million. You have current liabilities of $ 19.1 million. What is the maximum dividend you could pay (in cash and in stock) this year and still comply with your covenants?
Joe is long a forward contract with a forward price of $75. Kate is short the forward contract at the same strike.
What is the return expected on investment measured in dollar terms if the opportunity cost rate is 10 percent and provide an explanation, in economic terms, of your answer.
Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $650,000. The lot was recently appraised at $695,000. At the time of the purchase, the company spent $31,000 to grade the lot and another $3,500 to build a small buildi..
Which of the following is NOT a current asset? a. Inventory b. Accounts receivable c. Cash d. A rent deposit expected to be received back in 3 months when a lease expires. e. All of these are current assets.
The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0860. The variance of Willow is 0.1440, and the variance of Sky Diamond is 0.1020. What is the correlation coefficient between the returns of the two stocks?
ALTEC Inc. can issue bonds in either U.S. dollars or in Swiss francs. Dollar-denominated bonds would have a coupon rate of 15%; Swiss franc–denominated bonds would have a coupon rate of 12%. what is the annual cost of financing for the franc-denomina..
Caballos, Inc., has a debt to capital ratio of 27%, a beta of 1.26 and a pre-tax cost of debt of 6.8%. The firm had earnings before interest and taxes of $ 515 million for the last fiscal year, after depreciation charges of $ 292 million. Assume that..
Which of the following would offer the best return on investment? Assume that you buy $4,000 in stock in all three cases,
The Boeing Company has two different debt issues, both maturing four years from now. The domestic bond issue pays semiannual coupons and has a coupon rate of 4.80 percent. The current price on the bond is $951.30. The Eurobond issue is priced at $985..
A corporate bond, paying $65 interest at the end of each year for 6 years, has a face value of $1,000. If market rates on newly issued similarly rated corporate bonds are now 7.5%, what is the current market price of this bond?
How could the Federal Reserve use the interest rate it pays on bank reserves to restrain banks from lending large amounts of excess reserves and increasing the money supply excessively?
Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax..
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