Consider a four-year project with the following information: Initial fixed asset investment = $460,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $18; fixed costs = $150,000; quantit..
|
Chatterton Company has obtained a $75,000 short-term loan from the bank with the understanding that Chatterton will repay the loan in two equal monthly instalments of $38,250 each. The first instalment is due after 30 days, and the second after 60 da..
|
MicroSense, Inc., paid $2 dividends per share last year. It is estimated that the company’s ROEs will be 12% and 10%, respectively, next two years. The plowback rate in next two years will be 0.6. It is expected that the dividends will grow at a sust..
|
5 years ago you started making annual deposits of $362 into an account paying 7% annual return. You continue to make these deposits every year without fail. If you keep doing this every year for the next 5 years, how much money will you have in 5 yea..
|
You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $57,500, has a 5-year life, and has an annual OCF (after tax) of –$10,100 per year. The Keebler CookieMunster costs $90,500, has a 7-year life, and has an annual OCF (after..
|
Southland industries has 60,000 0f 14.1% (annual interest) bonds outstanding, 1,800 shares of preferred stock paying annual dividend of $5 per share, and 7,000 shares of common stock outstanding. Assuming that the firm has a 40% tax rate, compute ear..
|
Company X has net income of 1,000,000 and a plowback ratio of 40%. There are 50,000 shares of stock outstanding. The company plans to increase dividends by 22% each year for the next 2 years and apply a 2.25% growth rate to dividends each year indefi..
|
It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. What is the maximum monthly charge Cookie Cutte..
|
Puckett product is planning for $5 million in capital expenditures next year. Puckett’s target capital structure consists of 60% debt and 40% equity. If net income next year is $3 million and Puckett follows a residual distribution policy with all di..
|
What is the net asset value of an investment company with $5,000,000 in assets, $840,000 in current liabilities, and 1,100,000 shares outstanding? Round your answer to two decimal places.
|
A $150,000 loan is to be amortized over 6 years, with annual end-of-year payments. Which of these statements is CORRECT? The proportion of interest versus principal repayment would be the same for each of the 7 payments. The proportion of each paymen..
|
A firm has a capital structure with $100 million in equity and $100 million of debt. The cost of equity capital is 14% and the pretax cost of debt is 8%. If the marginal tax rate of the firm is 30%, compute the weighted average cost of capital of the..
|