Alex plans to purchase a callable bond of Horizon Inc. The bond is 20-year to maturity, carry 10.5% annual coupon, paid semi-annually, and have a$1,000 par value. The bond is selling now for $1,187.40 each. The bond can be called back in 5 years at a..
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A farmer is considering replacing a labor-intensive machine system with a more capital-intensive one. Adopting the new system is estimated to increase machinery operating expenses by about dollar 21,000 per year and to replace one hired laborer, whos..
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The beach house has sales of $784, 000 and profit margin of 8 percent. The annual depreciation expense is $14, 000. What is the amount of the operating cash flow if the company has no long-term debt?
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Your wellness clinic wants to develop a product cost for the following activities using labor expense and supply expense to assign direct cost and visit minutes as a cost driver to assign indirect costs. Projected total costs for your wellness clinic..
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A proposed new investment has projected sales of $835,000. Variable costs are 55 percent of sales, and fixed costs are $187,450; depreciation is $96,000. Assume a tax rate of 30 percent. What is the projected net income?
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Suppose the stock price is $50 and the continuously compounded interest rate is 10%. The stock pays dividends every 3 months, with the first dividend coming 3 months from today. If the dividend payment is $2 each, what is the price of a 1-year prepai..
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Billy’s Exterminators, Inc., has sales of $658,000, costs of $310,000, depreciation expense of $62,000, interest expense of $41,000, a tax rate of 35 percent, and paid out $64,800 in cash dividends. The firm has 120,000 shares of common stock outstan..
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There was once a student who wanted a business degree. This student was overheard one day saying the following: Why do I have to take Accounting? I am not going to be an accountant! Can you make a case for accounting in the BBA program? What is the g..
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If US Congress decided to LOWER the personal income tax rates would you expect: dividend yields of US companies increase or decrease? Why do some companies utilize lower D/V ratio than that predicted by the optimal trade-off between tax benefits of d..
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Don’s Captain Morgan, Inc., needs to raise $13.50 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $21.40 per share and Don’s will receive $19.3..
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A college student spends $12,000 (end of the year) in year 1, 15,000 in year 2, 16,000 in year 3, and 18,000 in year 4 in order to acquire a college degree. The increase in potential salary (compared to a high school graduate) is expected to be 500 a..
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Most state lotteries in the U.S. give Lottery winners of particularly large prizes the option of taking the total prize as an annuity over several years, usually 10-20, or as a discounted lump sum now. What does this relationship suggest to potential..
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