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Plank’s Plants had net income of $16,000 on sales of $60,000 last year. The firm paid a dividend of $1,600. Total assets were $900,000, of which $450,000 was financed by debt
a. What is the firm’s sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal ce.
Sustainable growth rate %
b. If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.)
New debt $
c. What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Maximum growth rate %
Security Returns If State Occurs State of Economy Probability of State of Economy Roll Ross Bust .20 –18 % 21 % Boom .80 18 6 Calculate the standard deviations for Roll and Ross by filling in the following table (verify your answer using returns expr..
Suppose the European call and put options with strike price $20. Is there an arbitrage opportunity? how would you implement arbitrage opportunity?
Nachman Industries just paid a dividend of D0 = $1.75. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What..
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Calculate the number of inventory days outstanding for OVHS. The average number of inventory days in the industry is 73 days.
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An annuity pays 10,000 every year for 30 years. Find the accumulated value of this annuity 3 years after the last payment. Assume that the effective annual interest rate is 10%. An annuity pays 5,000 every year for 25 years. Find the present value of..
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 19 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its..
Would exchange rate changes always increase the risk of foreign investment?
Based on the DCF approach, what is the cost of equity from retained earnings?
Following is financial information relative to two companies in the same industry. Alpha Omega Sales $10,000,000 $10,000,000 Variable Cost 5,000,000 2,000,000 Contribution Margin 5,000,000 8,000,000 Fixed Costs 3,000,000 6,000,000 Operating Income $2..
For the year just ended, a firm had average accounts receivable of $90,000 and total credit sales of $700,000. Throughout the year, a factor purchased accounts receivable from the firm at a 1.5% discount. What was the firm’s effective interest rate p..
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