Consider a project to supply 107 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,970,000 five years ago; if the land were sold today, it would net you $2,170,0..
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A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $723.9. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component cost of debt for purposes of calculati..
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What is the current share price? Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next seven years, because the firm needs to plow back its earnings to fuel growth.
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A 9-year project has an initial fixed asset investment of $39,060, an initial NWC investment of $3,720, and an annual OCF of -$59,520. The fixed asset is fully depreciated over the life of the project and has no salvage value. Required: If the requir..
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A project has a .7 chance of doubling your investment in a year and a .3 chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?
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The firm's marginal (and average) income tax rate is 40 percent. Determine the company's optimal capital structure.
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Consider two companies, each with a return on assets of 10%. Company X has a return on equity of 15%, and Company Y has a return on equity of 20%. Which company uses more financial leverage? Explain.
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Strudler Real Estate, Inc., a construction firm financed by both debt and equity, is undertaking a new project. If the project is successful, the value of the firm in one year will be $380 million, but if the project is a failure, the firm will be wo..
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Richard doesn't always make the smartest decisions when it comes to money. He has more taxes withheld from his paycheck so he will get a large check in April from the IRS. Well, this check came in the mail yesterday. $1200.00 and he deposited it into..
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STF Corporation issued 15 year, par $1000 bonds 10 years ago at a coupon rate of 5%. The bonds make semi annual payments. If these bonds currently sell for 90% of par value, what is the Yield To Maturity (YTM)? Please show your work.
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Medium Size Retailers, Inc. (MSR) has EBIT of $300,000, interest expense of $35,000, dividend income of $30,000, short term capital gains of $15,000, and long term capital losses of $20,000. What is MSR’s income tax liability?
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Delta Ray Brands Corp. just completed their latest fiscal year. The firm had sales of $16,306,200. Depreciation and amortization was $898,000, interest expense for the year was $804,700, and selling general and administrative expenses totaled $1,513,..
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