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A project currently generates sales of $11.5 million, variable costs equal to 40% of sales, and fixed costs of $3.5 million. The firm’s tax rate is 35%.
What are the effects on the after-tax profits and cash flow, if sales increase from $11.5 million to $12.5 million. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)
After-tax profit (decrease/increase) by:
Cash flow (decrease/increase) by:
What are the effects on the after-tax profits and cash flow, if variable costs increase to 60% of sales.(Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)
Southwestern Bank reports that just 20 percent of its customers were profitable. Assuming that this applies to individuals'account relationships, make three recommendations to increase the profitability of these accounts.
What are interest rate fundamentals? Explain term structure and risk premiums. How do these concepts come into play in the real world (mortgage rates, bond prices, etc.)?
A 15-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 12%. What is the bond’s yield to maturity if the bond is selling for $1,070?
Inflation has remained low for the past three years but you have come to the conclusion that trend is ending and inflation will increase significantly over the next 18 months. Assume you have reached this conclusion prior to other investors reaching ..
You own a security that provides an annual dividend of $135 forever. The security’s annual return is 5%. What is the present value of this security? Round your answer to the nearest cent.
Bill’s Bakery expects earnings per share of $2.18 next year. Current book value is $3.9 per share. The appropriate discount rate for Bill’s Bakery is 13 percent. Calculate the share price for Bill’s Bakery if earnings grow at 4 percent forever.
Your uncle has $300,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, beginning at the end of this year. He also wants to have $25,000 left to give you when he ceases to withdraw funds from the ac..
The risk free rate is 4%, and the expected return on the market is 12%. There is also an asset X with a Beta of 1.5.What is the return on portfolio 1 consisting of 40% of asset X and the rest in an asset with no risk? What is the return on portfolio ..
In mid-September, 2015 S&P 500 lowered the credit rating of We$ellDrugs, Inc (W$D) from AAA to AA in response to widespread outcry about the pricing of generic drugs that were recently purchased by the company. How would the yield to maturity of the ..
A bond has a coupon rate of 9.8 percent and 11 years until maturity. If the yield to maturity is 8.2 percent, what is the price of the bond?
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a consent rate of 4 percent per share indefinitely. If investors require a rate of return of 10.5 percent on The Jackson-T..
The price of a 10-year $100 par zero coupon inflation-indexed bond is $88.91. A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%. Compute the annual rate on the real bond.
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