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As a member of the Finance Dept. of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources fro the firm, you have determined the market value of the firm's capital structure as follows: Source of Capital Market Values Bonds $4,500,000 Preferred stock $2,100,000 Common stock $5,600,000 To finance the purchase, Ranch Manufacturing will sell 10 year bonds paying 7.2% per year at the mart price of $1067. Preferred stock paying a $1.94 dividend can be sold for $24.17. Common stock for Ranch Manufacturing is currently selling for $54.12 and the firm paid $3.02 dividend last year. Divedends are expected to grow at a rate of 5.2% per year into the indefinite future. If the firm tax rate is 30% what discount rate should you use to evaluate the equipment purchase
Explain the term Capital Budgeting decisions and Salaries for the year are paid only once at the end of the year
Briefly explain two (2) ways interest rates influence the U.S. and global financial environment. Provide at least one (1) example of such influence for both the U.S. financial environment and one (1) example for the global financial environment.
Sally Sanford is purchasing an automaoblie that costs $12,000. She will pay $2,000 immediately and remaining $10,000 in four yearly end of year principal payments of $2,500 each
Discuss on to issue of new debt and break even analysis and what does it imply regarding whether or not the firm should go ahead with the new debt issue
Relating investment under various capital Budgeting Techniques and whichever project you choose
A senior executive in the company believes that 1 million candy bars will indeed be sold, but lowers the estimate of incremental revenue to $700,000. What would explain the change?
What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash blows Year 2 discounted back to Year 2.)
If the current price of Two-Stage's common stock is $28.98, what is the cost of common equity capital for the firm?
What amount is needed to be invested today at 6% Per annum, compounded semiannually, to equal $17,000 10 years from now? What amount is needed to be invested for the 2 1/2 years at 8% per annum, compounded quarterly to equal $5,000?
Discuss Hedging for exchange rates-fair value, cash flow, foreign currency
According to portfolio theory, people should hold more than one asset in their portfolios. The idea is that if some investments do poorly, other investments in the portfolio can compensate for the poor investments.
Computation of Breakeven sales and Contribution margin at breakeven and what would be the break even in this case
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