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TKK has $1 billion of capital invested in several projects that are expected to generate a pretax operating profit of $170 million next year. TKK has an estimated tax cost of capital of 15%
1: What is the pretax economic value added expected to generate next year? Calculate economic value added based on pretax operating profit and based on expected retun on invested capital.
2: the following is actions are considered:a) a examination of the debt to equity ratio that could lower its pretax cost of capital to 14%.b) the acquisition of assets worth $100 million expected to generate a pretax operating profit of $20 million next year.c)10$ million reduction in operating expenses that should not affect revenues.d) the sale of assets at their book value of $100 million, with an expected pretax operating profit of $10 million next year.e) $60 million reduction in invested capital that should not affect operating profit.
How do these decisions improve the expected pretax economic value added.
Justify the term Bond valuation where would sell for a premium if interest rates were below 9 percent and would sell for a discount if interest rates were greater than 11 percent
A and B Beverages expects to earn $50,000 next year after taxes. Sales will be $375,000.
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14 percent with a volatility of 20 percent. Currently, the risk-free rate of interest is 3.8 percent.
Interest equivalent factor, Lori Stratton is considering investing in a bond that provides a yield of 8.35 percent or a preferred share with a yield of 7.09 percent. Lori lives in Ontario and at her level of taxable income, the federal tax rate is ..
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Susie can earn the nominal annual rate of return of= 12%, compounded semi-annually.
A bondholder owns 15-year government bonds with a $1 million face value and a 6% annual coupon rate that id paid semiannually. What is the duration of the bonds?
Hanebury Manufacturing Company has preferred stock outstanding with par value of $50. The stock pays a quarterly dividend of $1.25 and has a current price of $71.43. Find out the nominal rate of return on preferred stock?
Elite Trailer Parks has an operating profit of $200,000. Interest costs for the year was $10,000; preferred dividends paid were $18,750.00 and common dividends paid $30,000.
Objective type questions on leverage analysis and A plant may remain operating when sales are depressed
After analyzing a sample of remaining 480 items, you determine that sample is overpriced by 6%. By using this 6% decrement factor, what cost must you evaluate for those items?
Machine used has a 3 year tax life, depreciated by the straight line method over the 3 year life and would have zero salvage value, no new capital required.
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