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T Corporation is considering a reduction in the corporations debt ratio. The following information is available:Debt $10,000,000 kd=7.5%, tax rate = 30%Common Stock $23,000,000 beta = 1.2, RF = 5%, E(rm) = 12%The issuance of $5,000,000 in common equity and repurchase of debt in that same amount is expected to result in the reduction in kd to 7%. The impact of the action on the cost of equity is to be established. Should the mangement pursue this reduction in debt? Why (not) ?
Illinois Tool Corporation fixed operating expenses are $1,260,000 and its variable cost ratio variable costs are as a fraction of sales is 0.70.
What annual interest rate was used to determine the present value of the $1 billion prize?
The annual operating costs (before depreciation) will consist of fixed operating costs of $25,000 plus variable operating costs equal to 75% of sales.
Osbourne Corporation has bonds on the market with 15.0 years to maturity, a YTM of 10.3 percent, and a current price of $954. The bonds make semiannual payments.
The firm has been extremely successful thus far and has decided to incorporate and offer shares of stock to the general public. What is this type of an equity offering called?
Do you think a government should consider human rights when granting preferential trading rights to countries? What are the arguments for and against taking that position.
The project's WACC is 10.5%. What is the project's net present value (NPV)? What is the IRR? Should the project be accepted? Why or why not?
You read in the Wall Street Journal that thirty day T-bills are currently yielding 5.55. your brother-in-law, a broker at Safe and Sound Securities, has given you following estimates of current interest rate premiums;
Describe the cause and effect relationship resulting from the use of air miles as the allocation base. In which of cost pools do you think the cause and effect relationship is the strongest?
The heart of discounted cash flows analysis is the assumptions behind the numbers. Once the mechanics of the tool are mastered, then one needs to focus on the assumptions behind the numbers.
If the expected returns for risk free asset and a risky asset are 4 percent and 17 percent respectively, what percentages of your money must be invested in risky asset and risk free asset, respectivel.
A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $106 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year.
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