Recife Inc. has debt-to-assets ratio of 35%, tax rate of 40%, and total value of $200 million. William J. Recife, the CFO, would like to increase the leverage ratio to 39%, and he believes that there will be no change in the bankruptcy cost of the co..
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You would like to buy shares of Sirius Satellite Radio (SIRI). The current ask and bid quotes are $4.10 and $4.07, respectively. You place a market buy order for 570 shares that executes at these quoted prices. How much money did it cost to buy these..
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Goods available for sale total $25,000, beginning inventory is $8,000, endings inventory is $12,000, and cost of goods sold is $10,000. How many days is the days-sales-in-inventory?
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You recently completed your undergraduate degree in Business Administration, majoring in Finance, at University of Scranton. You are now working at PPL Corporation, at their corporate headquarters, in Allentown, PA. Your first assignment is to estima..
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An advertised monthly lending rate of 0.9% is about 11% per year. This difference between an advertised rate and the annualized rate is based on finer TVM details that may be overlooked by borrowers. Discuss how you may have used TVM in a recent inve..
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Metallica Bearings, Inc. is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend in 10 years and will ..
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You buy a share of stock, write a one-year call option with X = $18, and buy a one-year put option with X = $18. Your net outlay to establish the entire portfolio is $17.50. What must be the risk-free interest rate? The stock pays no dividends.
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A stock will pay dividends of $1.20 starting in year 4. The dividends for year 5, year 6, and year 7 will grow by 25%, 20%, and 12%. Finally, the dividends will grow at a constant rate of 6% forever. The required return on the stock is 11%. What shou..
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A stock had returns of 7 percent, –5 percent, 2 percent, and 10 percent over the past 4 years. What is the standard deviation of this stock for the past four years?
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Sombra Corp. is considering a project that will require $700,000 in assets. the project will be financed with 100% equity. The company faces a tax rate of 30%. What will be the ROE for this project if it produces and EBIT of $140,000?
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Red Roofs, Inc. has current liabilities of $24,300 and accounts receivable of $7,800. The firm has total assets of $43,100 and net fixed assets of $23,700. The owners' equity has a book value of $21,400. What is the amount of the net working capital?..
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You were hired as a consultant to Keys Company, and you were provided with the following data: Target capital structure: 30% debt, 15% preferred, and 55% common equity. The after-tax cost of debt is 4.50%, the cost of preferred is 8.00%, and the cost..
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