Ridiculousness, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
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Alto and Solo are all-equity firms. Alto has 2,400 shares outstanding at a market price of $24 a share. Solo has 4,000 shares outstanding at a price of $17 a share. Solo is acquiring Alto for $63,000 in cash. The incremental value of the acquisition ..
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Regis Clothiers can borrow from its bank at 13 percent to take a cash discount. The terms of the cash discount are 2/20, net 50. Compute the cost of not taking the cash discount. Should the firm borrow the funds?
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Monthly deposits are made into a fund at the beginning of each month for 5 years. The first 12 deposits are $500 each, and deposits increase by 5% every year. Find the accumulated value at the end of 5 years if i(12) = 0.06.
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How we measure risk is related to our perspective. The president of the company would look at the correlation between projects which is measured by the correlation coefficient. The shareholder would measure risk by looking at Beta. While the project ..
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Next year’s annual Dividend is expected to be $4, per share.The long-term growth in dividends is expected to be 3%, indefinitely.The firm’s Beta is 0.95, the Equity Risk Premium is 7.5%, and the risk free rate for the expected duration of the investm..
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Bernie’s Bike Shop receives the following trade discounts: 35/25/15. The vendor’s price list indicates that 35 percent off list price is for purchasing bikes in quantities of 100 or more, 25 percent off list price is for assembling the bikes for cust..
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In 2005, selected automobiles had an average cost of $18,000. The average cost of those same automobiles in now $21,960. What was the rate of increase for these automobiles between the two time periods?
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The city of Detroit is deciding whether or not to build an aquarium. Officials believe that a world-class stingray exhibit will attract families from across Michigan to visit the city. In turn, this will spur local businesses, lead to economic growth..
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If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7%, paid semiannually, and has a yield to maturity (YTM) of 4.2%, what should be its price in the bond market (ie, PV)?
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You are considering two investment options. In option A, you have to invest $4500 now and $800 three years from now. In option B, you have to invest $4000 now, $1200 a year from now, and $1000 three years from now. In both options, you will receive f..
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Firton Brothers purchased for $90,000 a tract of land that included an abandoned warehouse. The warehouse was razed, and the site was prepared for a new building at a cost of $10,000. Scrap materials from the warehouse were sold for $7,000. Compute t..
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