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1.)Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return. a. Compute the market value of the bonds. b. What will the net price be if flotation costs are 10.5 percent of the market price? c. How many bonds will the firm have to issue to receive the needed funds? d. What is the firm’s after-tax cost of debt if its average tax rate is 25 percent and its marginal tax rate is 34 percent?2.)Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,950,000, and the project would generate incremental free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 9 percent. a. Calculate the NPV. b. Calculate the PI. c. Calculate the IRR. d. Should this project be accepted?3.)Spartan Stores is expanding operations with the introduction of a new distribution center. Not only will sales increase, but investment in inventory will decline due to increased efficiencies in getting inventory to showrooms. As a result of this new distribution center, Spartan expects a change in EBIT of $900,000. While inventory is expected to drop from $90,000 to $70,000, accounts receivables are expected to climb as a result of increased credit sales from $80,000 to $110,000. In addition, accounts payable are expected to increase from $65,000 to $80,000. This project will also produce $300,000 of depreciation per year and Spartan Stores is in the 34 percent marginal tax rate. What is the project’s free cash flow in year 1??
Discuss and explain the risk tolerance levels of investors and also describe your risk tolerance level?
Discuss and explain the economic and legal differences between holders of common stock, preferred stock and general creditors.
The following retirement problem is often used to illustrate Significant aspects of savings and compound interest - see what you can learn by working the problem.
Computation of Foreign Currency - Hedging with forward contracts and find the variance of the dollar price of this asset if the U.S. firm remains unhedged against this exposure?
describe a real or made up but realistic example of a product that went through a time of scarcity when demand was
A U.S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $.02 and the exercise price of the option is $.50. If the spot rate at the time of maturity is $.65, what is the total amount paid by the corporati..
The new bonds would be issued 1 month before the old bonds are called, with proceeds being invested in short term government securities returning 6% annually during the interim period. A. Perform a complete bond refund analysis. What is the bond r..
This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars.
Assume that the Euro is selling for US$1.10 per 1 Euro or "120 Yen per Euro", and the yen is 100 Yen per $US1. Demonstrate the particular trades which you would use to make money, and compute how much money you would make.
Brian responds that the sunken ship was abandoned and therefore he has good title to everything to which he took possession. What is the court likely to rule and why?
Discuss how monetary policy helps to sustain economic growth and smooths out the swings in the business cycle. Analyze the ways in which monetary policy can influence a nation's economic goals of achieving full employment, controlling inflation, su..
Mr. Beltram's payments increase by 10% each year. Find the balance on the loan immediately following his fiftieth payment.
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