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As a member of the finance department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packing equipment for the plant. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the firm's capital structure as follows:
Source of Capital Market Values
Bonds $4,500,000
Preferred stock $2,100,000
Common stock $6,300,000
To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying 6.6% per year at the market price of $1,029. Preferred stock paying a $1.97 dividend can be sold for $24.14. Common stock for Ranch Manufacturing is currently selling for $54.57 per share and the firm paid a $3.05 dividend last year. Dividends are expected to continue growing at a rate of 5.5% per year into the indefinite future. If the firm's tax rate is 30% what discount rate should you use to evaluate the equipment purchase?
Write a speech that you would give to a friend in an elevator summing up the contents of this course. You have 30 to 90 seconds to inform your friend of the most important elements.
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You deposit 5,000 into a retirement fund at the end of each year for the next 20 years at 5% effective annual interest rate. With that accumulated fund, you then purchase a 35-year annuity-immediate
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What is working capital management and how does a company manage and measure liquidity?
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $966.60. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,072.79
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THe index closed at 14,539.14, which was up from the previous day's close of 14,455.28. What was the return (in percent to four decimal places) of the stock market for March 14, 2013
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