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Reynolds Construction needs a piece of equipment that costs $200. Reynolds either can lease the equipment or borrow $200 from a local bank and buy the equipment. If the equipment is leased, the lease would not have to be capitalized. Reynolds's balance sheet prior to the acquisition of the equipment is as follows: Current assets $250 Debt $300 Net Fixed assets 450 Equity 400 Total assets $700 Total claims $700
What is Reynolds' current debt ratio? Round your answer to two decimal places. %
What would be the company's debt ratio if it purchased the equipment? Round your answer to one decimal place. %
What would be the debt ratio if the equipment were leased? Round your answer to two decimal places. %
Assume the same facts as in Problem 47, and assume that Suz-Anna prepares the capital account rollforward on the partners’ Schedules K–1 on a tax basis. What is Suzy’s capital account balance at the beginning of the tax year? What is Suzy’s capital a..
Suppose your company needs to raise $36 million and you want to issue 25-year bonds for this purpose. Assume the required return on your bond issue will be 7 percent, and you’re evaluating two issue alternatives: A 7 percent semi-annual coupon bond a..
You have $299 thousand to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.81 percent, and Stock L, with an expected return of 10.01 percent. If your goal is to create a portfolio with an expected return of 12.91 p..
Suppose firm XYZ has AR (Accounts Receivable) = 500, Sales = 3000, Inventory = 300, Cost of Goods Sold = 1200, and AP (Accounts Payable) = 100. How much cash does firm XYZ save if it reduces its Days Sales Outstanding by 10 days? What are specific ac..
Kendall borrows $100,000 on Jan 1, 1993 to be repaid in 12 annual installments at an effective annual rate of interest of 8%. The first payment is due on Jan 1, 1994. Instead of annual payments she decides to make monthly payments equal to one-twelft..
Which of the following is the main cost of the operation of commercial banks?
You are a researcher at Brave New World Interactive Communications Company. Sales to homeowners of the remote-controlled security system (using the new gesture-recognition microchip) have dropped 40% in the last quarter. Determine what type of inform..
Stock in CDB Industries has a beta of 0.93. The market risk premium is 7.3 percent, and T-bills are currently yielding 4.3 percent. CDB’s most recent dividend was $2.20 per share, and dividends are expected to grow at a 5.3 percent annual rate indefi..
The portfolio Alpha has an expected return of 18.50% and risk of 60%. The portfolio Gamma has an expected return of 11.75% and risk of 30%. The risk of market portfolio is 40%. Assume that the Capital Asset Pricing Model holds, what are the expected ..
If you invest $10,000 at 10% interest (compounded annually), how much will you have in 10 years? Round your answer to the nearest dollar.
X Corporation’s outstanding bonds have a $1,000 par value, a 6% semi annual coupon, 3 years to maturity and a 8% YTM. What is the bond’s price? If X Corporation needs to raise 2 million, how many bonds they need to issue?
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.4 million in anticipation of using it as a warehouse and distribution site, but the comp..
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