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Question - Smith & Rock Entertainment Inc.'s CFO has determined the optimal capital structure is 30 percent debt and 70 percent equity. The company's WACC is 12% assuming the amount of earnings that can be retained and reinvested is adequate to fund the total equity portion (70%) of the current year's proposed capital budget. However if the capital budget requires the company raise new equity by issuing new common shares then the WACC will increase to 15%. The CFO estimates net income will be $400,000 this year and it pays dividends in accordance with the residual policy. It has two large independent capital projects being proposed: Project A is a $500,000 project (cost) with an IRR estimate 17.0% and Project B is a $450,000 project with an estimated IRR of 14%. The company follows a residual dividend policy. What is the expected dividend payout for this budget year?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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