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Problem -
Fez Fabulous Fabrics wishes to acquire a $100,000 multifacet cutting machine. The machine is expected to be used for eight years, after which there is a $20,000 expected residual value. If Fez were to finance the cutting machine by signing an eight-year "true" lease contract, annual lease payments of $16,000 would be required, payable in advance. The company could also finance the purchase of the machine with a 12 percent term loan having a payment schedule of the same general configuration as the lease payment schedule. The asset falls in the five-year property class for cost recovery (depreciation) purposes, and the company has a 35 percent tax rate. What is the present value of cash outflows for each of these alternatives, using the after-tax cost of debt as the discount rate?
Beta Corp has an ROE of 15%; has just paid a dividend of $1.50; a pays 10% of its earnings out in dividends, and the appropriate discount rate is 20%; what is the current stock price?
If every new product goes through a product cycle, will the technological initiator (e.g., the United States or Japan) eventually develop chronic overall "trade deficits"?
Who is silenced or forgotten in your school curriculum as a result of these decisions or policies?
office plus sells its main product ergonomic mouse pads for 12 each. its variable cost is 5.20 per pad. fixed costs are
Assume that sales, operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure?
What percentage of the necessary 80 percent coverage they do have. The resulting answer will determine the percentage of the loss to the dwelling covered, and consequently the amount to be reimbursed by the insurance company.)
what are the differences between shareholder wealth maximization and profit maximization? if a firm chooses to pursue
What is the switch break-even point if the firm switched to a net 30 credit policy? Assume the selling price per unit and the variable costs per unit remain constant.
Calculate the WACC
a. What actions do you need to take to speculate in the forward market? What is the expected dollar profit from speculation? b. What would be your speculative profit in dollar terms if the spot exchange rate actually turns out to be $1.86/£?
If you can triple your money in 23 years, what is the implied rate of interest?
Using the Dividend Discount Model : -If the required return on this stock is 10 percent, what is the current share price?
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