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Brakenridge Industries is considering the following two alternative working capital investment and financing policies:
Forecasted sales next year are $30 million. EBIT is projected at 25 percent of sales. Fixed assets are $30 million. The firm's income tax rate is 40 percent. Brakenridge desires to maintain its current capital structure, which consists of 50 percent debt and 50 percent equity. Interest rates on the company's short-term and long-term debt are 9 and 12 percent, respectively.
a. Determine the expected rate of return on equity capital under each of the working capital policies.
b. Which working capital policy is riskier?Explain.
a 10-year 1000 face value bond has an 8.5 annual coupon. the bond has a current yield of 8. what is the bondsyield to
present value. your favorite uncle has offered you the choice of the following options. he will give you either 2000 1
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The company's tax rate is 35% Working captial is expected to increase by $3,000 at the inception of the project but this amount will be recaptured at the end of year five. What is the incremental free cash flow for year one?
Garza Corporation had the following transactions during the current period. Garza issued 5,000 shares of $1 par value common stock to attorneys in payment of a bill for $30,000 for services provided in helping the company to incorporate.
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within the discussion board area write 400ndash600 words that respond to the following questions with your thoughts
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The Congress Company has identified two methods for producing playing cards. One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards.
The past five monthly returns for K and Company are 4.85 percent, 5.02 percent, -.35 percent, -.35 percent, and 9.60 percent. What is the average monthly return?
A bank issues a standard 30-year fixed rate mortgage at 7.8% for $150,000. Thirty-six months later, mortgage rates jump to 13%. If the bank sells the mortgage, how much of a loss is incurred?
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