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1. As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.85; P0 = $28.50; and g = 6.00% (constant). Based on the DCF approach, what is the cost of common from reinvested earnings?
9.16%
9.85%
11.14%
13.04%
14.59%
2. Trahern Baking Co. common stock sells for $36.15 per share. It expects to earn $4.00 per share during the current year, its expected dividend payout ratio is 65%, and its expected constant dividend growth rate is 8.0%. New stock can be sold to the public at the current price, but a flotation cost of 4.5% would be incurred. What would be the cost of equity from new common stock?
19.57%
21.08%
21.70%
15.78%
14.05%
Can a company increase its earnings growth without affecting the value of its equity? Explain
Calculate a table of interest rates based on the information - Liquidity premium
ABC Company purchased a new machinery 4 years ago for $62,639. Today, it is selling this equipment for $24,229. What is the after-tax salvage value if the tax rate is 28 percent? The MACRS allowance percentages are as follows, commencing with year on..
Mutually exclusive project occur when
A factory costs $498,400. You forecast that it will produce cash inflows of $200,074 in year 1, $155,000 in year 2, and $340,000 in year 3. The discount rate is 10.50%. Calculate the PV of cash inflows. Should the company invest in the factor?
Indicate whether each of the following is a source of cash, use of cash, or has no cash impact. a. Firm issues new long term debt. b. Firm prepays operating costs. c. Because the firm buys another firm, it amortizes goodwill. d. Firm sells outdated c..
Wells Fargo offers to lend you $50,000 at a nominal rate of 6.0%, simple interest, with interest paid quarterly. An offer to lend you the $50,000 also comes from Citibank, but it will charge 6.0%, simple interest, with interest paid at the end of the..
Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,700 per unit; variable costs = $480 per unit; fixed costs = $4.1 million; quantity = 95,000 units. Suppose the company believes all of its estimates ..
You have $16,000 you want to invest for the next 32 years. You are offered an investment plan that will pay you 8 percent per year for the next 16 years and 12 percent per year for the last 16 years. How much will you have at the end of the 32 years?..
What is the operating ratio? Capacity ratio?
Bruto's sales for year 2014 were $74889 thousands of dollars. For that year the cost of sales without depreciation was 78% the value of sales and depreciation was 7.333% the value of sales.
If the taxes are set so that each resident shares the cost evenly, how many paths will get built?- What prices should it set?
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