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Electro Wizard Company produces a popular video game called Destructo which sells for $32. Last year ElectroWizard sold 50,000 Destructo games, each of which costs $6 to produce. Electro Wizard incurred selling and administrative expenses of $80,000 and depreciation expense of $10,000. In addition, Electro Wizard has a $100,000 loan outstanding at 12%. Their tax rate is 40%. There are 100,000 common shares outstanding. Show and explain all work.
Chartreuse County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 17 percent per year for the next 10 years before leveling off at 4 percent into perpetuity. The required return on the company’s stock is 12 percen..
One of the ways investors benefit from federal security laws is through
ATL Constructions is trying to determine the optimal level of short term financing for its working capital requirement. You are asked to provide an analysis on the three key factors that the company should consider in selecting different sources of s..
The Lo Sun Corporation offers a 6.0 percent bond with a current market price of $788.50. The yield to maturity is 8.40 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?
The Farmer's Market recently announced that it will pay its first annual dividend two years from today. The first dividend will be $0.50 a share with that amount doubling each year for the following two years. After that, the dividend is expected to ..
Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The bonds had a 8.11 percent coupon rate and paid interest annually. It is now 19 years later. The current market rate of interest on the Bright Sun bonds is 9.08 percent..
The shareholders of the Pickwick Paper Company need to elect five directors. There are 120,000 shares outstanding. a. What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has majority ..
Your firm is contemplating the purchase of a new 540,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five year life. It will be worth 48,000 at the end of that time. Suppose your required return on..
The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $24,400,000 be paid to the president upon the completion of her first 9 years of service. The company wants to set aside an eq..
Suppose you invest $7,000 in Stock A and $3,000 in Stock B. The variance of Stock A is 50 percent, the variance of Stock B is also 50 percent, and the covariance between the two stocks is 0 percent. What is the variance of your portfolio in percent?
You are given the following information for Gandolfino Pizza Co.: sales = $42,000; costs = $22,100; addition to retained earnings = $4,900; dividends paid = $1,600; interest expense = $4,500; tax rate = 35 percent. Calculate the depreciation expense.
Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company's outstanding bonds is 7.75%, its tax rate is 40%, What is the firm's WACC, assuming it must issue new stock to finan..
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