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Yonge Corporation must arrange financing for its working capital requirements for the coming year. Yonge can: (a) borrow from its bank on a simple interest basis (interest payable at the end of the loan) for 1 year at a 9% nominal rate; (b) borrow on a 3-month, but renewable, loan basis at an 11.6% nominal rate; (c) borrow on an installment loan basis at a 7% add-on rate with 12 end-of-month payments, assuming you borrowed $100; (d) obtain the needed funds by no longer taking discounts and thus increasing its accounts payable. Yonge buys on terms of 1/15, net 60. What is the effective annual cost (not the nominal cost) of each type of credit, assuming 360 days per year? Do not round intermediate calculations. Round your answers to two decimal places.
Assume that accounts payable reflects only accounts with inventory suppliers, and compute the cash payments made to suppliers during 2008.
Suppose a firm's price/earnings ratio is 10. It expects to pay a dividend of $1.20 per share to maintain a 60 percent payout ratio.
explain what is meant by a perfect hedge. does a perfect hedge always lead to a better outcome than an imperfect
Discuss the migration from money markets to government bond funds. Use the WSJ article "Why the Fed Had to Backstop Money-Market
You will review current and historical financial data. You will have the opportunity to discuss the organisation's behaviour and reactions to your analyses of this data. Your group will make a recommendation based on a what-if analysis.
Explain the direct and indirect method in quoting foreign currencies. Provide some examples.
Explain the basic schools of thought when it comes to equity premium estimation. - If you do not want to estimate the equity premium, what are your alternatives to finding a cost-of-capital estimate?
For both a bondholder and a (different) CDS buyer (with notional value $1,000), compute the cash flows two years from today in case the bond defaults
The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
If we require a 14 percent return, what is the NPV of the purchase? Assume a tax rate of 35 percent.
What is the cost of a preferred share with a $100 par value that pays a $9.60 dividend per year? The security has a flotation cost of $3.37 and will be retired at its par value in 20 years.
what factors need to be considered when determining the optimal form of organization for a business
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