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T Corporation is considering the acquisition of M Corporation. M Corporation generates earnings before interest and tax of $1.75 million a year, and asset replacement cost approximately equals depreciation. Alternative minimum tax is not an issue, there are no synergistic benefits, and cash flows are expected to continue forever and are not expected to grow in the future. Assuming a 20 percent tax rate and a 9 percent after-tax required return, what is net cash flow? Assuming year-end cash flows, what is the value of M Corporation's capital? If M Corporation has long-term debt of $2 million, what is the value of the equity of M Corporation?
Find out how much an investor would collect after 25 years if $100,000 is deposited and is compounded annually at 10%.
ABC Corporation sell for $20 per unit, and the variable cost to produce them is $15. Gateway estimates that the fixed expenses are $80,000.
Explain how risk affects corporate financial strategy. Include the following: Business risk-Credit risk-Interest rate risk
Project A has an internal rate of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent. Given this information, which one of the following statements is correct?
Mary Joe has a credit line of $1,000,000 (or equivalent in major currencies) for arbitrage. She had access to the following rates, and she managed to generate CIA profits.
What advice would you offer an entrepreneur interested in launching a global business effort? Specifically address the following:
Assume that the firm has a tax rate of 35 percent. Compute the cash flows to investors from operating activity.
Earnings per share of common stock will immediately increase as a result of, An increase in the market price of a company's common stock will immediately affect its:
For purposes of diversification, what type of correlation coefficient among assets returns is preferred by investors? Provide a brief explanation.
Conduct Internet research on success rate of corporate combinations over the past 20 years. Describe your findings.
Kim and Dan Bergholt are government workers. They are planniing buying a home in the Washington D.C. area for about $280,000.
If the real return for corporate bonds was 4% and the inflation rate was 2%, what is the nominal return for corporate bonds?
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