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Crum Co’s balance sheet and income statement for 2001 are given below. The firm expects sales to grow by 50% in 2002. Operating costs, spontaneous liabilities and assets will increase in proportion to sales. The company plans to finance any additional funds needed using debt at an interest rate of 10%. What is the company’s projected funds needed for 2002? Assume interest expenses are 10% of the beginning year of debt balance. 2001 2002 – 1st pass 2002 – 2nd pass Sales $1,000 Operating costs 800 EBIT 200 Interest 16 EBT 184 Taxes (40%) 73.6 Net Income 110.40 Dividends (60%) 66.24 Addn. To RE 44.16 Cash 30 A/R 150 Inventories 200 Total CA 380 Gross FA 700 Accum. Depreciation 80 Net FA 620 Total assets 1000 A/P and accruals 150 Debt 200 Common stock 150 Retained Earnings 500 Total Liab. & Equity 1000
Security A has an expected return of 7%, a standard deviation of returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -1.5. Security B has an expected return of 12%, a standard deviation of returns of 10%, a co..
Company "A" has a beta of 1.5 and a cost of capital of 25%. Company "B" has a beta of 0.8 and a cost of capital of 15%. When evaluated at a rate of 15%, the project shows an NPV of +$5 million, and when evaluated at a rate of 25%, the project shows a..
At the beginning of each period for 10 years, Merl Agnes invests $500 semi annually at 6%. What is the cash value of this annuity due at the end of year 10?
Which of the following are reasons Google chose to use an online auction rather than an investment bank to issue its IPO.
Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $760,000. The lot was recently appraised at $792,000. At the time of the purchase, the company spent $56,000 to grade the lot and another $4,200 to build a small buildi..
You have a $48,000 portfolio consisting of Intel, GE, and Con Edison. You put $20,000 in Intel, $11,200 in GE, and the rest in Con Edison. Intel, GE, and Con Edison have betas of 1.3, 1, and .8, respectively. What is your portfolio beta?
King Farm Manufacturing Company's common stock has a beta of 2.3. If the risk-free return is 4.88 percent, and the market risk premium s 8.24 percent. Calculate the required return on King Farm Manufacturing's common stock. Round the answers to two d..
E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $29 in perpetuity, beginning 18 years from now. If the market requires a return of 4.3 percent on this investment, how much does a share of preferred stock cost..
Pinkon Communications is trying to estimate first-year operating cash flow (at t = 1) for a proposed project. The financial staff has collected the following information: The company faces a 40 percent tax rate. What is the project’s operating cash f..
What is the yield to call of a 30-year to maturity bond that pays a coupon rate of 11.98 percent per year, has a $1,000 par value, and is currently priced at $918? The bond can be called back in 7 years at a call price $1,089. Assume annual coupon pa..
At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $440,000. Sales, which in 2015 were $2.7 million, are expected to increase by 30% in 2016. Total assets and accounts payable are proportional to sale..
Senior managers of the subsidiary are employees of Qing Corporation who have been transferred to the subsidiary for a tour of international service. Is the functional currency of the subsidiary the peso or the U.S. dollar? Explain your reasoning
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