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Edwards Enterprises follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restricted or maybe to a relaxed policy. The firm's annual sales are $400,000; its fixed assets are $100,000; its target capital structure calls for 50% debt and 50% equity; its EBIT is $35,000; the interest rate on its debt is 10%; and its tax rate is 40%. With a restricted policy, current assets will be 15% of sales, while under a relaxed policy they will be 25% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies?
Treasury bills are currently paying 8 percent and the inflation rate is 3.50 percent.
How can you explain the fact that as the discount rate increases, the present value of a cash flow decreases? Why do I value a cash flow less, when discount rate goes up? How is a present value associated with risk?
Crasler Corporation net income last year was $100,000. The Corporation paid preferred dividends of $20,000 and its average common stockholders' equity was $580,000.
Consider ABC's levered beta is 1.15, the risk free rate is 7% and the expected market return (Rm) is 12%. What is the new cost of equity under the capital structure financed with 20% debt?
Bart Simpson always wishes to purchase a digital camera. Homer and Marge go shopping at Sprawl-Mart for the newest digital camera.
Make research on financial services industries. Identify the prevalent employee benefit practices for that industry. Explain the discretionary benefits that are offered in your chosen industry.
You expect KT Industries will have earnings per share of dollar 3 this year and expect that they will pay out $1.50 of these earnings to shareholders in the form of a dividend.
A company generated free cash flow of 2348 million and paid net interest of 23 million after tax. it paid a dividend of 14$ million and issued shares for 54 million.
If a company has an average tax rate of 40%, the approximate yearly, after-tax cost of debt for a 10-year, 8%, $1,000 par value bond selling at $1,150 is
Peter land a loan of $328,337.1919 from George. The loan will be repaid over the next twenty-four years, beginning from the end of the next years. The Real interest expense for the first year is $15,785.44189.
Select the best answer for each of the following:
Computing of expected return on portfolio If you are to reinvest your money into a new portfolio with the same volatility as your current portfolio
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