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Illinois Tool Corporation fixed operating expenses are $1,260,000 and its variable cost ratio (ie. variable costs are as a fraction of sales) is 0.70. The firm has $3,000,000 in bonds outstanding at an interest rate of 8 percent. ITC has 30,000 shares of $5 preferred stock and 150,000 shares of common stock outstanding. ITC is in the 50% corporate income tax bracket. Forecasted sales for next year are $9 million.
What is the ITC's degree of financial leverage (DFL) at an EBIT level of $1,440,000?
The answer to this problem is one of the following;a. 1.20b. 2.40c. 3.00d. 1.60
Sloane Company offered detachable five year warrants to buy one share of common stock par value five dollar at $20 at a time when the stock was selling for 32 dollar.
Objective type questions on preferred stock and If markets are in equilibrium then what will occur
Snail company wants to purchase Bug corporation. The financial manager of Snail company forecasted the following free cash flows for Bug corporation for year 1-6.
An investment is expected to generate $2,000,000 every year for four (4) years. If the firm's cost of funds is 5 percent,
Calculation of EBIT and Sensitivity analysis and What is the operating cash flow for a sensitivity analysis using total fixed costs
You have found three investment choices for a one year deposit: Compute the EAR for 10% APR compounded monthly, 10 percent APR compounded annually and 9% compounded daily.
Prepare the pro forma cash flow statements for Bloomington Clinics
After analyzing a sample of remaining 480 items, you determine that sample is overpriced by 6%. By using this 6% decrement factor, what cost must you evaluate for those items?
You are trying to compute the price of a preferred stock you are examining. This preferred stock has an yearly dividend of $5 per share and a par value of $30.
Lopez buy a patent for $60,000 that was used exclusively for a single research project created during 2011. Lopez uses straight-line amortization over maximum allowable periods.
Computation of current yield the bond pays interest annually matures in 12 years and has a yield to maturity of 7.842 percent
A company is planning to increase $43 million of external funding. Would there be financial leverage and what kind of financial leverage would be present if a corporation could issue bonds in the capital market,
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