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Pierce Furnishings generated $2 million in sales during 2011, and its year-end total assets were $1.2 million. Also, at year-end 2011, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2012, the company estimates that its assets must increase by $0.60 for every $1.00 increase in sales. Pierce's profit margin is 7%, and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally? Round your answer to the nearest cent.
An six-year annual-pay coupon bond was issued with a face value of $1000 and a coupon rate of 12%. It is now 1.25 years later and the yield-to-maturity is 9%. (Keep in mind that the cash flows happen 0.75 years, 1.75 years, 2.75 years, etc. from n..
Computation of WACC for a firm and based on the information provided, calculate the weighted average cost of capital (WACC)
Is the beta of a stock static or dynamic? What could affect the beta of a stock? Are these better measures of risk than beta alone? Explain your answer.
Today, the firm is repurchasing $4,800 worth of stock. Ignore taxes. What will the earnings per share be after the stock repurchase?
A six-year bond with a continuosly compounded yield of 4% provides a 5% coupon at the end of each year. Use duration and convexity to estimate the effect of a 1% increase in the yield on the price of the bond. How accurate is the estimate?
The basket of goodies expenses $300, and is expected to cost $515 next year. The real rate of interest is 2%. Our company, Basic, Inc. has a bond risk premium of 2.5 percent and a preferred stock risk premium of 3 percent.
If the appropriate interest rate is 11 percent, what kind of deal did the running back scamper off with? Assume all payments other than the first $10.5 million are paid at the end of the year.
For the last 10 years you have been depositing a fixed amount into your savings account. You have been doing that once a year at the beginning of each year. You now have $35,000 in your account.
The firm now has the option of investing $20 million in developing a new seismic test which will increase the informativeness of the prospecting.
a. What is the initial investment? b. What is the Cash Flow at year 1? c. What is the Cash Flow at year 4? d. Is this a good investment? (hint: Compute NPV)
The initial proceeds per bond, the size of the issue, the initial maturity of bond, and the years remaining to maturity are shown in the following table for number of bonds.
Corporation planning two potential projects, X and Y. In assessing the projects' risks, the corporation estimated the beta of each project versus both the company's other assets and the stock market,
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