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1. Which of the following represents a capital structure (or financing) decision?
A. A decision to issue $25 million of bonds.
B. A decision to invest $25 million in the stock of another company.
C. A decision to buy a new accounts payable software package for $2 million.
D. A decision to write-off $3 million of accounts receivable.
E. A decision to introduce a just-in-time inventory system, which will reduce inventories by an estimated $10 million
2. A firm is reviewing a project with labor cost of $8.90 per unit, raw materials cost of $21.63 per unit and fixed costs of $8,000 per month. Sales are projected at 10,000 units over the three-month life of the project.
What are the total variable costs of the project.
A. $329,300
B. $297,300
C. $313,300
D. $305,300
E. $216,300
Select a random sample of size 50 from the given 1000 cases. You will use this sample data to complete tasks 2 to 6. Explain how you obtained your sample in the appendix and provide a list of your customer data.
Describe how the firm can hedge the transaction risk associated with the payment using a money market hedge.
Compute the present value of a one-time payment of $1,000 paid in four years using the following discount rates: 2.0% in year 1, 2.25% in year 2, 4% in year 3, and 4.5% in year 4. Present Value: $
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Which of the following is the correct definition of Internal Rate of Return (IRR)?
Why does the value of a share of stock depend on dividends?
What after-tax amount must it receive for the plant for the divestiture to be profitable?
John J. Smith & Co. is developing a new product. In order to finance this venture, management has requested you to make recommendations. The current market value (market cap) of Smith & Co. is $14M. The mean cost of capital over the next decade is an..
What is the reason for holding cash and cash equivalents? And which hybrid security has special claims on a corporation's profits or incase of liquidation of corporate assets?
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