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Question: A. Equity Inc. is currently an all-equity financed firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 and pays no taxes. The firm contemplates a restructuring that would issue $50,000 in 8 percent debt, which will be used to repurchase stock. Show the value of the firm, EPS, and rate of return on the equity before and after the proposed restructuring. What changed?
B. Equity Inc. is currently an all-equity financed firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 and pays no taxes. The firm contemplates a restructuring that would issue $50,000 in 8 percent debt, which will be used to repurchase stock. Assuming that individuals have the same borrowing opportunities as corporations, explain how an investor can sythesize the leverage that is proposed by Equity Inc. Under these conditions, what is the value of restructuring to a firm?
What is the relationship between days delinquent and credit scores? Use simple regression. Determine and interpret the coefficient of determination.
What is the project"s net present value? While Kim expects the cash flows to be $3 million a year, it recognizes that the cash flows could, in fact, be much higher or lower, depending on whether the Korean government imposes a large hotel tax.
Demonstrate the invalidity of this argument by describing two ways that a decrease in pH caused by acid deposition can harm organisms living in an aquatic.
Corporate governance has become increasingly important over the years. The Sarbanes-Oxley (SOX) Act was enacted to improve transparency in financial accounting and to prevent fraud. Which of the following is correct?
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The 2014 balance sheet of Steelo, Inc., showed current assets of $4,515 and current liabilities of $3,005. The 2015 balance sheet showed current assets.
What would you receive in dollars if you sold PZ 5 million at the spot rate? What would it cost in dollars to purchase PZ 20 million forward three months. When would you make payment?
Note that per unit manufacturing overhead costs include $840,000 fixed costs. Note that per unit administrative expenses include $500,000 fixed costs.
Do you think the U.S. dollar is more likely to strengthen or weaken over the next few months? - Explain your reasoning.
In 2010 a mortgage loan of $8,500,000 was issued by Associated Bank on a downtown office building. The terms of the loan were 10 years, 6.15% interest rate.
initial machine cost = $1,000,000, discount rate = 14%, tax rate = 33%, project life = 7 years (use MACRS), sales for the first year = $250,000 and are expected to increase 20% through year 5, but sales in year 6 & 7 will be stable at year 5's number..
calculate the call option value at the end of one period for a european call option with the following terms the
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