Green Manufacturing, Inc., plans to announce that it will issue $1.92 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 6 percent. What is the expected return on Green’s equit..
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Describe in detail the differences and similarities in calculating the present value and future value of a lump sum, annuity, perpetuity and A series of unequal (multiple) cash flows.
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Consider the following binomial option pricing problem involving an American call. This call has two periods to go before expiring. Its stock price is 30, and its exercise price is 25. The risk free rate is .05, the value of u is 1.15, and the value ..
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In 2008, the government initiated an $8,000 tax credit for first-time homebuyers in an effort to stimulate the housing market. This means that all first-time homebuyers in 2008 were eligible to take an $8,000 deduction from their taxable income for t..
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Alex Smith purchased 30 shares of XYZ stock on April 30, 2010 for $210, and on September 1, 2010, he purchased 90 additional shares for $900. On November 8, 2010, he sold 48 shares, which could not be specifically identified, for $528, and on Decembe..
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Helen's income tax liability for 2011 was$24,000. Her self-employment tax was $4,000. Helen projects that her income tax for 2012 will be $34,000 and her self-employment tax will be $6,000. Helen will have $4,000 of income tax withholdings in 2012. C..
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The Green Goddess Salad Oil Company is considering the purchase of a new machine that would increase the speed of manufacturing tires and save money. The net cost of the new machine is $45,000. What is the internal rate of return? Should this project..
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Cold Goose Metal Works is analyzing a project that requires an initial investment of $2,750,000. The project's expected cash flows are: Year 1 ($350,000), Year 2 (-100,000), Year 3 (450,000), Year 4 (475,000). The company's WACC is 10%, and the proje..
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Callable bond. Corso Books has just sold a callable bond. It is a thirty year semi-annual bond with an annual coupon rate of 6% and $1,000 par value. Investors, however, can call the bond starting at the end of 10 years. If the yield to call on this ..
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Net operating income reported under absorption costing will exceed net operating income report under variable costing for a given period if: A. production equals sales for the period. B. production exceeds sales for the period. C. sales exceed produc..
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Need help with general journal entries in financial accounting? Accounting period July 1 to the 31, 2013. Paid $3,000 for six month rent. Purchased ne equipment that cost $40,000 by signing a 3 year, 6% note payable. The note and interest will be pai..
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The company also has a bank line of credit that allows the company to borrow any shortfall it might have in cash. Interest on the loan is 10%. Assume the loan remained constant throughout the year. Based on all of the above information, will this com..
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