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Reynolds Construction needs a piece of equipment that $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' balance sheet prior to the acquisition of the equipment is as flows: Current Assets $300 Debt $400 Net fixed assets $500 Equity 400 Total assets $800 Total Claims $800 a. 1 What is Reynolds current debt ratio? 2 What would be the company's debt ratio if it purchased the equipment? 3 What would be the debt ratio if the equipment were leased? b. Would the company's financial risk be different under the leasing and purchasing alternatives?
The relevant tax rate is 30 percent. What is the after tax cash flow from the sale of this asset?
1.What is the current stock price? 2.What will the stock price be in three years? (Round your answer to 2 decimal places. 3. What will the stock price be in 7 years?
A home purchased for 122 thousand dollars in 2002 is sold for 220 thousand dollars in 2006. What is the average annual percentage increase?
Three years ago, you entered into a five-year interest rate swap agreement by agreeing to pay a fixed rate of 7 percent in exchange for six-month LIBOR. If your counterparty were to default today when the fixed rate on a new two-year swap is 6.5 ..
PV of financial distress=800,000 x (D'V)^2. What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock?
Explain Finding the required rate of return and valuation of Preferred Stock where Preferred stock valuation Ezzell Corporation issued perpetual preferred stock with a 11% annual dividend
A stock just paid a dividend of $1.2. The required rate of return is 11.5%, and the constant growth rate is 3.6%. What is the current stock price.
The H.R. picket corp has 500,000 of debt outstanding, and it pays an annual interest rate of 10%. Its annual sales are 2 million, its average tax rate is 30% and its profit margin is 5%. what is the TIE ratio?
A member of your board has asked if you have considered competitive bids for the distribution of your securities compared to a negotiated contract with a particular firm. What factors are involved in this decision?
University Catering sells 50-pound bags of popcorn to university dormitories for $10 a bag. The fixed costs of this operation are $80,000, while variable costs of the popcorn are $.10 per pound.
An investor purchases 200 shares of XYX stock for $55.00 a share and immediately sells 2 covered call contracts at a strike price of $60.00 a share. The premium is $3.00 a share. What is the maximum profit and the maximum loss?
Project A has an internal rate of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent. Given this information, which one of the following statements is correct?
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