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Champoux Hair Factory, Inc., has earnings before interest and taxes of $200,000. Annual interest amounts to $80,000, and annual depreciation is $80,000. Taxes are computed at a 40 percent rate. Existing bond obligations require the payment of $40,000 per year into a sinking fund. Champoux wishes to pay a $2 per-share dividend on the existing 20,000 shares. The firm's bond indenture prohibits the payment of dividends unless the cash flow (before dividends and sinking fund payments) is greater than the total of dividends, interest, and sinking fund obligations.
Can Champoux pay the proposed dividend?
What is the maximum dividend per share that may be paid?
Dunbar Hardware, a national hardware chain, is planning buying a smaller chain, Eastern Hardware. Dunbar's analysts project that the merger will result in incremental free flows and interest tax savings with a combined present value of $72.52 million..
In 2009, a $5 certificate from 1896 was sold for $10,500. What was the annual increase in the value of the certificate?
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One year treasury securities yield 6.9%, while two year Treasury securities yield 7.2%. If the expectations theory is correct (that is, the maturity risk premium = 0)
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Masters Golf Products, Corporation, spent 3 years and $1,000,000 to develop its new line of club heads to replace a line that is becoming obsolete. To start manufacturing them, the company will have to invest $1,800,000 in new equipment.
Included in AOL's assets was $1.5 billion in cash and risk-free securities. Assume that the risk-free rate of interest is 3% and the market risk premium is 4%.
The ratio analysis indicates that ACME has increased their profits and decreased their liabilities from 2003 to 2004. ACME has also increased their ability to cover interest payments and increased their return on assets.
You decide to borrow $200,000 to build a new home. The bank charges an interest rate of 6% compounded monthly. If you pay back the loan over 30 years, what will your monthly payments be (rounded to the nearest dollar)?
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Assume that the Treasury sold a $100,000, 30 year bond exactly twenty two years ago. That bond carried a coupon rate of 10.5%. Also assume that today Treasury security maturing in the five to ten year period yield 2.0%. How much would that 22 year..
Is the investment on global information systems justified and when you need to keep several aspects, such as cultural, political, social, and ethical concepts in mind when developing, implementing, and operating these systems.
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