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The management of Florida Phosphate Industries (FPI) is planning next year's capital budget. The company's earnings and dividends are growing at a constant rate of 5 percent. The last dividend, D0, was $0.90; and the current equilibrium stock price is $7.73. FPI can raise new debt at a 14 percent before-tax cost. FPI is at its optimal capital structure, which is 40 percent debt and 60 percent equity, and the firm's marginal tax rate is 40 percent. FPI has the following independent, indivisible, and equally risky investment opportunities:
Project Cost Rate of Return
A $15,000 17%
B 15,000 16
C 12,000 15
D 20,000 13
What is FPI's optimal capital budget?
Braxton Enterprises currently has debt outstanding of $55 million and an interest rate of 6%. Braxton plans to reduce its debt by repaying $11 million.
inflation is expected to be 3 percent over the next year. you desire an annual real rate of return of 2.5 percent on
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The company's projected average receivables level
On December 31,2015, Cathy Chen, a self-employed certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees, a bookkeeper and a clerical ..
The investment is expected to generate cash flows in the next 3 years of: $55,000, $75,000, and $90,000. Calculate the IRR of the project.
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