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ABC Inc. has a debt ratio of 0.45 and it considers this to be its optimal capital structure. ABC has no preferred stock. ABC has analyzed four capital projects for the coming year as follows:
Project Net Investment IRR1 $3,000,000 13.5%2 $1,500,000 18.0%3 $2,000,000 12.6%4 $1,600,000 16.0%
ABC expects to earn $2.5 million after tax next year and pay out $700,000 in dividends. Dividends are expected to be $1.15 a share during the coming year and are expected to grow at a constant rate of 8 percent a year for the foreseeable future. The current market price of ABC stock is $23 and up to $2 million in new equity can be raised for a flotation cost of 10 percent. If more than $2 million is sold then the flotation cost will be 15 percent. Up to $2 million in debt can be sold at par with a coupon rate of 10 percent. Any debt over $2 million will carry a 12 percent coupon rate and be sold at par. If ABC has a marginal tax rate of 40 percent, in which projects should it invest and what is ABC's optimal capital budget?
Today the spot rate of the Australian dollar is $.81, and the one-year forward rate is $.77. What is the expected spot rate of the Australian dollar in one year?
Project A Project B Initial investment $80,000 $50,000 Year Cash Flows 1 $15,000 $15,000 2 $20,000 $15,000 3 $25,000 $15,000 4 $30,000 $15,000 5 $35,000 $15,000 Please help me. I need solutions please.
Without the new SUV, Ford expects to earn pre-tax income of $80 million from operations next year. Ford pays a 30% tax rate on its pre-tax income. What is the amount Ford owe in taxes next year with the launch of the new SUV?
Albatross Airline's fixed operating expense are $5.8 million, and its variable cost ratio is .20. The firm has $2 million in bonds outstanding with a coupon interest rate of 8%. Albatross has 30,000 shares of preferred stock outstanding,
What is Petsmart's ranking and market share in industry? What companies are its major competitors? Where does it rank in its industry and sector?
Describe the main factors in the RTC securitization flow of funds process AND explain how the securitization of receivables benefits the issuer. Does the existence of prepayments on mortgaged backed securities make them more or less risky to the i..
Describe and discuss each and every type of Marketable Securities and Explain the major elements of the Theory of Budget Execution.
On 6/5/2014, an investor buys 7 gold futures contracts, when the futures price is $1400 per ounce. The contract size is 100 ounces. The next day, the futures price becomes $1,396.27. Calculate the daily gain.
Which one of the following is a suggested method of reducing a U.S. importer's short-run exposure to exchange rate risk?
how much interest on interest will she have earned by the time her daughter starts college? Assume she makes no further deposits or withdrawals.
The last dividend paid by Marquette Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its ..
Explain Usage of the budgeting in business environment and Discuss how budgeting can be used at your place of employment
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