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Abe Forrester and three of his friends from college have interested a croup fo venture capitalists in backing their business idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be located in Dallas, Houston, and San Antonia. To finance the new venture two plans have been proposed. Plan A is an all common equity structure in which $2.3 million dollars would be raised by selling 86,000 shares of common stock. Plan B would involve issuing $1.5 million dollars in long term bonds with an effective interest rate of 11.6% plus $0.8 million would be raised by selling 43,000 shares of common stock. The debt funds raised under Abe and his partners plan to use a 40% tax rate in their analysis, and they have hired you on a consulting basis to do the following. A. Find the EBIT indifference level associated with the two financing plans. B. Prepare a pro forma income statement for the EBIT level solved for in part A.
The objective of this business report is to focus upon evaluating the current portfolio of Baituna home loans product of Bank Muscat and its volumes. It focus upon the current standing of the product in Oman and its performance on the basis of its vo..
Your finance text book sold 47,500 copies in its first year. The publishing company expects the sales to grow at a rate of 23.0 percent for the next three years, and by 6.0 percent in the fourth year.
Discuss key reasons why a country should engage in global trade, and describe the control systems that can be put in place to protect domestic trade.
To do this, you will invest $830 a month in a stock account and $430 a month in a bond account. The return of the stock account is expected to be 10.3 percent, and the bond account will pay 6.3 percent.
Mother and daughter enterprises is a relatively new firm that appears to be on the road to great success. The company paid their first annual dividend yesterday in the amount of $.28 a share.
What is the cost of capital, what are WACC and MCC and how do taxes affect the cost of capital?
A firm also has 700 short term commerical paper notes outstanding that have a face value of $100000 and mature in 24 days .these notes are selling for 99979.31. What the wacc at 35 percent marginal tax
The exercise price on one of the First Link Investment corporation's call option us $15, its exercise value is $22 and its premium is $5. what are the option's market value and the stock's current price
Compute the duration for bond C, and rank the bonds on the basis of their price volatility. The current rate of interest is 8 percent, so the prices of bonds A and B are $1,000 and $1,268 respectively.
A firm with $49,000 in fixed costs breaks even on unit sales of 7,000, how many units must the firm sell to earn $30,000 in operating profit
How does a dividend policy affect the value of a company and what are the factors involved with setting a dividend policy?
Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.20 million.
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