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Alor Fastener Bhd(AFB)makes a patented marine bulkhead latch that wholesales for RM6.00. Each latch has a variable cost of RM3.50. Fixed operating costs are RM50,000 per year. The firm pays RM13,000 interest and preferred dividend of RM7,000 per year. At this point the firm is selling 30,000 latches per year and is taxed at a rate of 40%.
a) Calculate AFB operating breakeven point.b) On the basis of the firm's current sales of 30,000 units per year and its interest and preferred dividend costs, calculate its EBIT and earnings available for common stock.c) Calculate the firm's degree of operating leverage (DOL).d) Calculate the firm's degree of financial leverage (DFL).e) Calculate the firm's degree of total leverage (DTL).f) AFB has entered into a contract to produce and sell an additional 15,000 latches in the coming year. Use the DOL, DFL and DTL to predict and calculate the changes in EBIT and earnings for common stock.
Sure Tea Co. has issued 7.6% annual coupon bonds that are now selling at a yield to maturity of 9.1% and current yield of 9.0246%. What is the remaining maturity of these bonds? (Do not round intermediate calculations. Round your answer to 2 decim..
The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 38 percent. What is the firm's weighted average cost of capital?
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A Japanese company has a bond outstanding that sells for 96 percent of its ¥100,000 par value. The bond has a coupon rate of 6.30 percent paid annually and matures in 19 years.
A equipment originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been ten years.
Johnson currently maintains an average demand deposit of $80k. Estimate the cost of the line of credit to Johnson. c. Which source of credit should Johnson select, Why?
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