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BEP, ROE, AND ROIC
Broward Manufacturing recently reported the following information: Net income $345,000 ROA 11% Interest expense $138,000 Accounts payable and accruals $1,050,000 Broward's tax rate is 30%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round your answers to two decimal places.
General Engine Corp. (GEC) has just finished minor renovations on their office building at a cost of $150,000. GEC originally allocated only $100,000 for this renovation. A memo from accounting suggests that the $50,000 cost overrun should be charged..
Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.50 coming 3 years from toda..
You plan to purchase a $130,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate is 5.25 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage 130..
A 10 year corporate bond with a face value of $1,000 pays $55 interest every year. What is the bond's fair market price if investor's required return is 8.0%? (FVIFR=8.0,N=10 = 2.1589 ; PVIFAR=8.0,N=10 = 14.4866)
Project A costs $67,775, its expected net cash inflows are $10,000 per year for 10 years, and its WACC is 8%. What is the project's Net Present Value?
Suppose you are a regular subscriber to the Financial Times and are considering whether to renew your subscription for a single year or two years. If your cost of capital is 10%, purchasing a two-year subscription for $775 rather than a one-year subs..
An investor wants to form a two asset portfolio consisting of treasury bills with a return of 2.5% and a risky portfolio with an expected return of 15.2% and a standard deviation of 16%. The investor wants the expected return of the two asset portfol..
The real risk-free rate is 2.5%. Inflation is expected to be 1.5% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? Round your answer to two decimal places. What ..
Given the following selected information on Cicalese’s Chocolate, Inc., calculate Cash Flow from Operating Activities for the year 20X1.
Review the Financial and Budget Policy and the Business Objectives and Key Performance Indicators and discuss whether the goals of these documents are being met.
Suppose you plan for your 6 year-old child to go to college starting at age 18. You think the college costs will be $20,000/year for 4 years when the time comes. You expect an average 4% annual after-tax return on your savings for your planning horiz..
What do you mean by horizontal and vertical analysis of financial statements? Discuss the categories of Ratios with the help of suitable example. Explain the concept of working capital. Discuss the working capital management strategies. Elaborate Rev..
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