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1. Your company is considering the purchase of a fleet of cars for $200,000. It can borrow at 9%. The cars will be used for four years. At the end of four years they will be worthless. You call a leasing agent and find that the cars can be leased for $55,000 per year. The corporate tax rate is 40% and the cars belong in CCA class 10 (a 30% class), what is the net advantage to leasing?
a. $15,363
b. $5,399
c. $11,742
d. $7,771
e. $6,594
2. Al's Audio has a cost of debt of 5 percent, a cost of equity of 11 percent, and a cost of preferred stock of 8 percent. The weight for debt is 0.13, the weight for preferred shares is 0.34, and the weight for common stock is 0.53. The company's tax rate is 34 percent. What is the weighted average cost of capital for Al's Audio Shop?
a. 9.15 percent
b. 6.54 percent
c. 6.14 percent
d. 9.45 percent
e. 8.98 percent
Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $72, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate..
How much will be in your account after the last deposit if the rate of interest is 0.35-percent compounded monthly?
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $3.19 million.
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Divide ownership into more or fewer pieces and do not change the firm's investments or future earnings. Which of the following descriptions is NOT an example of a common type of dividend policy?
What is the yield to maturity of this bond?
Dividend growth rates are of primary importance to. Fair pricing of securities is associated with the.
Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Q1 Q2 Q3 Q4 Sales $ 120 $ 140 $ 160 $ 190 Sales for the first quarter of the year after this one are projected at $135 million. Accounts receivable at the beginni..
What is the payback period of the following project?
Compute the net present value. Based on the net present value should the project be undertaken?
What is the addition to retained earnings?
By using the fact that the income tax is 40% and minimum acceptable rate of return after 10% tax, calculate the current value of the machine.
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