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QUESTIONS
1. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean?
2. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity. Can the company's sales increase at this growth rate?
3. Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However, fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a "staircase" or "lumpy" fixed cost structure. Assume S&S Air is currently producing at 100 percent capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this assumption. What does this imply about capacity utilization for the company next year?
What is the difference of WACC based on market value weights and book weights - Please show formulas.A balance sheet shows a total of noncallable $45 million.
Assume that interest rate on one-year bond is 2%. You can observe that the interest rate on 2-year bond is 2.6%. Assume there is no liquidity premium and the interest rates are determined according to expectation hypothesis of the yield curve.
Stellar Plastics is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4 percent. The expected variable cost per unit is $6.00 and the expected fixed cost is $36,000. The fixed and variable cost estimates are conside..
Stock R has a beta of 1.4, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exc..
you own a 20-year 1000 par value bond paying 7 interest annually the market price of the bond is 875 and your required
1. on march 22 2013 tenkiller torque technology ttt was taken private in a leveraged buyout financed in part by a 5
What is the value of a bond that has a par value of $1,000, a coupon of $120 (annually), and matures in 10 years? Assume a required rate of return of 7.02%. Lakes industries preferred stock has par value of $100 and pays dividends of $6 er share. it ..
Find the net present value for the following series of future cash flows, assuming the company's cost of capital is 6.5%. The initial outlay is $450,200.
According to the put-call parity, the following condition must be met for the call price to be equal to the put price, when all the option factors are the same:
Ponzi Corporation has bonds on the market with 10.5 years to maturity, a YTM of 7.10 percent, and a current price of $1,051. The bonds make semi annual payments. What must the coupon rate be on these bonds?
Consider an asset that costs $465,000 and is depreciated straight-line to zero over its six-year tax life. The asset is to be used in a four-year project; at the end of the project, the asset can be sold for $120,000. If the relevant tax rate is 35 p..
International trade agreements eliminate trade barriers between countries, promote investments, infuse competitiveness, enhance productivity, create jobs, and provide consumers with a greater range of options at cheaper prices.
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