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1. At the beginning of the year, a firm had current assets of $1,050,000 and current liabilities of $950,000. At the end of the year, the current assets are $1,420,000 and the current liabilities are $1,210,000. What is the change in net working capital?
2. Gartner Systems has no debt and an equity cost of capital of 10.3%. Gartner's current market capitalization is $100 million, and its free cash flows are expected to grow at 3.2% per year. Gartner's corporate tax rate is 35%. Investors pay tax rates of 35% on interest income and 21% on equity income. a. Suppose Gartner adds $53 million in permanent debt and uses the proceeds to repurchase shares. What will Gartner's levered value be in this case? b. Suppose instead Gartner decides to maintain a 50% debt-to-value ratio going forward. If Gartner's debt cost of capital is 7.72%, what will Gartner's levered value be in this case? Hint:Make sure to round all intermediate calculations to at least four decimal places.
Bond-A: $ 1000 Face value, 5 year term, 5% coupon. Bond-B: $ 1000 Face value, 20 year term, 5% coupon. Price the bonds if your required rate of return is 5%. Price the bonds if your required rate of return is 7%. Compute the percentage change in the ..
An income statement may be represented as follows
If a security lies above the security market line (SML), then it must be overpriced .
Antiques ‘R’ Us is a mature manufacturing firm. If you require a return of 9 percent on this stock, what will you pay for a share today?
What are the main types of mortgages issued by financial institutions and what is the purpose the mortgage amortization schedule for investor? Who are the major stock market participants?
The spot rate between Japan and the U.S. is ¥104.02 = $1, while the 1-year forward rate is ¥105.13 = $1. A 1-year risk-free security in the U.S. is yielding 4.2%. What is the rate of return on a 1-year risk-free security in Japan assuming that intere..
Analysis of fundamentals: goals, strategy, market, competitive technology, and regulatory and operating characteristics and analysis of fundamentals: revenue outlook.
Fullerton Wine Company is a retailer which sells vintage wines. The company has established a policy of reordering inventory every 30 days.
Explain how a net present value (NPV) profile is used to compare projects. How does this profile compare to that of internal rate of return (IRR)? How does reinvestment affect both NPV and IRR? Provide support for your assertions.
BDU Company has set up a new product line in January 2015. The dividend is expected to grow at 8% per year for the next 15 years. Then at 3% thereafter. The required return is 12% and the dividend in the coming year is $3.00. What is the stock price?..
Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 7%, and its stock price is $40 per share with 2 million shares outstanding. What is BEA's unlevered be..
Which dispatching rule has the best score for work-in-process (jobs in the system)? Which dispatching rule has the best score for flow time?
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