Using the existing budget, create a new budget for the next fiscal year. Set out the details of all the assumptions you needed in order to build this budget. 2. Use the “Checklist for Building a Budget” (Exhibit 15–2) and critique your own effort. 3...

Research the value of your company's current stock price and the annual dividends per share, assuming that you own 250 shares, answer the following questions: 1. What is your expected return? 2. If you require an 8% return, given the current stock pr..

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 million in anticipation of using it as a warehouse and distribution site, but the comp..

If you borrow $2,500 from a bank now, at nominal interest rate of i (annual percentage rate, APR) compounded quarterly, and if you pay to the bank a year from now $2,700 what is the value of i? What is the effect interest rate (annual percentage yiel..

Assume both corporate taxes and financial distress costs apply to a firm. Given this, the tradeoff theory of capital structure illustrates that

Your firm is contemplating the purchase of a new $600,000 computerbased order entry system. The system will be depreciated straightline to zero over its fiveyear life. It will be worth $64,000 at the end of that time. You will save $230,000 before..

The current price of a stock is $16. In 6 months, the price will be either $20 or $12. The annual riskfree rate is 7%. Find the price of a call option on the stock that has a strike price of $15 and that expires in 6 months.

The return on the Rush Corporation in the state of recession is estimated to be 23% and the return on Rush in the state of boom is estimated to be 34%. Given this information, what is the covariance between Rush and Oberman if there is a 0.40probabi..

You have been asked by the president of your company to evaluate the proposed acquisition of a new specialpurpose truck for $60,000. The truck falls into the MACRS 3year class, and it will be sold after three years for $20,300. What will the cash f..

A company's $100 par perpetual preferred stock has a dividend rate of 7 percent and a required rate of return of 11 percent. The company's earnings are expected to grow at a constant rate of 3 percent per year. If the market price per share for the p..

Eccles Company has beta 1.7, debt/assets ratio 20%, and tax rate 34%. The cost of debt for Eccles is 9%, and of equity 15%. The riskless rate is 4%. Find the WACC of Eccles. If its debt/assets ratio is increased to 25% while its cost of debt remains ..

Use the binomial option pricing model to find the value of a call option on £10,000 with a strike price of €15,000. The current exchange rate is €1.50/£1.00 and in the next period the exchange rate can increase to €2.40/£ or decrease to €0.9375/£. Th..
