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Question: Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face value of $38 million, a maturity of 15 years, and a yield to maturity of 10%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 10%. The face value of the issue is $43 million, and the issue sells for 93% of par value. The firm's tax rate is 20%.
a. What is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Before-tax cost of debt %
b. What is Olympic's after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) After-tax cost of debt %
Regardless of whether they buy the new machinary, Sales will be $500,000 for the next three years, COGS will fall from 70% of Sales to 60% of Sales if they buy the new machinary. The tax rate is 40%.
Suppose a firm's price/earnings ratio is 10. It expects to pay a dividend of $1.20 per share to maintain a 60 percent payout ratio. What is the firm's required return if its return on equity is 13.5 percent?
The Beasley Corporation has been experiencing declining earnings, but has just announced a 50 percent salary increase for its top executives.
What is the expected value of the annual net cash flows from each project? What is the coefficient of variation (CV)? (Hint: =B = $5,798 and CVB = 0.76.) What is the risk-adjusted NPV of each project?
In a regional high school swim meet, women's times (in seconds) in the 200-yard freestyle ranged from 105.4 to 139.0.
Assume you own stock in a corporation. The current price is $25. Another corporation has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock.
They have adopted a constant growth of 4.5% in their dividends, with the one just paid being 1.11$. What is the current price of the bond if the coupons.
Formulate a binary integer programming model that could be used to determine the optimal solution to the capacity increase question facing management.
The book value of Nott's Nursery's total assets is $400,000. Assume Golden Gardens Inc. acquires Nott's Nursery's assets for 1 million dollar and finances the purchase by selling $600,000 in new stock,
Assume he approaches WR after considering interest rates and charges from other banks, and decides to proceed with the loan application. John knows little about consumer credit law and seeks further information from you.
assume the project sponsor within a major corporation has championed a project for the past year and the concept was
East Midland Furniture' (EMF) manufacturer is aiming to expand their business in the UK by establishing a new production plant in London.
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