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Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a standard diamond is $50. The fixed costs incurred each year for factory upkeep and administrative expenses are $180,000. The machinery costs $1.3 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of number of diamonds sold? b. What is the NPV break-even level of sales assuming a tax rate of 30%, a 10-year project life, and a discount rate of 12%?
How much cashflow is needed before tax and interest to satisfy debt holders and equity holders if tax rate is 40%, there is $10 million in Common stock requiring a 12% return and $6 million in bonds requiring an 8% return?
Explain how these estimates would be used to calculate an abnormal return.
The Shocking Demise of Mr. Thorndike, Prepare a PowerPoint presentation to be presented in class (blackboard) and an Excel worksheet backup that address the case study question(s) and provides:
Prepare an income statement for Virginia Slim Wear. (Input all amounts as positive values. Round EPS answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)
What is the likely impact of this policy on Asian foreign exchange reserves? On Asian inflation? On Asian export competitiveness? On Asian living standards?
A newly issued corporate bond has twenty years to maturity. The bond has a coupon rate of 8 percent and pays interest semiannually. Also the bond is callable in six years at a call price equal to 115% of par value.
What are the implied interest rates in Europe and the U.S.?
Determine social efficient level of provision for snowploughing services. Write down 3 possible methods in which they can share costs of snow ploughing at social efficient level and how much would each person pay under these 3 methods?
Neon Company's stock returns have a covariance with market portfolio of 0.031. The standard deviation of the returns on the market portfolio is 0.16, and expected market risk premium is 8.5%.
Your company's CEO has just learned that your firm's equity can be viewed as an option. Why might he want to increase the riskiness of the company, and why might other stakeholders be unhappy about this?
The new stock has an estimated flotation cost of $3 per share. What is the company's cost of equity capital?
Evaluate the term Capital budgeting and What is the yield to call of Hood Corporation's bonds
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