Hicks Health Clubs, Inc., expects to generate an annual EBIT of $750,000 and needs to obtain financing for $1,200,000 of assets. Their tax bracket is 40%. If the firm goes with a short-term financing plan, their rate will be 7.5 percent, and with a long-term financing plan their rate will be 9 percent. By how much will their earnings after tax change if they choose the more conservative financing plan instead of the more aggressive plan? Select one: a. $10,000 b. ($10,800) c. ($6,000) d. $6,000

Find the present value of the ordinary annuities : Find the present value of the following ordinary annuities. Round your answers to the nearest cent. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable |

Future value of an annuity : Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1; that is, they are ordinary annuities. Round your answers to the nearest cent. |

What is the banks cost of preferred stock : Fifteenth Bank has an issue of 7% preferred stock with a $100.00 par value that just sold for $109 per share. What is the bank’s cost of preferred stock? (Show your work and round your answer to two decimal places). |

What is the current bond price-bonds make annual payments : Cee Co. issued 20-year, $1,000 bonds at a coupon rate of 7 percent. The bonds make annual payments. If the YTM on these bonds is 4 percent, what is the current bond price? |

Conservative financing plan instead of more aggressive plan : Hicks Health Clubs, Inc., expects to generate an annual EBIT of $750,000 and needs to obtain financing for $1,200,000 of assets. Their tax bracket is 40%. If the firm goes with a short-term financing plan, their rate will be 7.5 percent, and with a l.. |

Annuity Payment and EAR : Annuity Payment and EAR You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 6%, with interest paid monthly. What is the monthly loan payment.. |

What is brrs unlevered cost of capital : Assume the assumptions underlying the APV are relevant. Brakes and Rakes Co. (BRR) has required return on levered equity equal to 20%, required return on debt of 9%, and corporate tax rate of 25%. The required return on the market is 15%. BRR has deb.. |

Time for a lump sum to double : How long will it take $200 to double if it is deposited and earns the following rates? Round your answers to the closest year. [Notes: (1) This problem cannot be solved exactly with some financial calculators. |

Future values of single cash flows for interest rates : Use both the TVM equations and a financial calculator to find the following values. Round your answers to the nearest cent. (Hint: Using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown var.. |

## Measure the average performance of national marketStock market indexes allow us to measure the average performance of a national market. US Dow Jones Industrial Average Index is a good proxy of a foreign stock market performance. Investing in foreign firms thru ADRs is usually cheaper than a direct .. |

## What is one standard deviationA project’s coefficient of variation is .44. The project has a positive coefficient of correlation of 0.20. The expected value is 1200. What is one standard deviation? Choices are 400, 200, 600, or 1200 |

## Differences between corporate bonds and us treasury bondsWhat are the main differences between corporate bonds and US Treasury bonds? What is the absolute priority rule? Does it always hold in practice and why? What is a sinking fund provision in a bond issue? “A sinking fund provision in a bond issue bene.. |

## What is the expected annual contribution to retirement planELO manufacturing is looking to hire a new plant supervisor. They have 2 qualified candidates, Charlie, 43 and Kevin, 36. Both would have a starting salary of $62,000. Each could expect a 3% cost of living raise each year. |

## Contribution-contribution margin and net incomeBWP projects sales of 100,000 units next year at an average price of $50 per unit. Variable costs are estimated at 40% of revenue, and fixed costs will be $2.4 million. BWP has $1 million in bonds outstanding on which it pays 7%, and its marginal tax.. |

## Cemetery project will provide net cash inflowThe Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up". As a result, the cemetery project will provide net cash inflow of $104,000 for the firm during the first year, and the.. |

## Accident victim has received a structured settlementAn accident victim has received a structured settlement. According to the terms of the agreement, the victim will receive $10,000 per year at the end of each year for the next 10 years. Additionally, the victim will receive $20,000 in 10 years. |

## Find the market risk premiumMulherin's stock has a beta of 1.23, its required return is 11.75%, and the risk-free rate is 4.30%. What is the required rate of return on the market? |

## What is the return from the investmentA parent decides to buy a two bedroom condo for 65,000 by putting 10% down and financing the rest for 15 years at an annual rate of 3.5%. What is the monthly payment? One bedroom rented out to a roomTe for $400 a month. After 4 years, the parent Ella.. |

## What is the expected shortfall when the confidence levelSuppose that each of two investments has a 4% chance of loss of $ 10 million, a 2% chance that of loss of $1 million, and a 94% chance of profit of $1 million. What is the VaR for one of the investments when the confidence level is 95%? What is the e.. |

## Explain the variable growth modelCan you explain the variable growth model and try to solve this problem: Jia's Fashions recently paid a $2 annual dividend. The company is projecting that its dividends will grow by 20 percent next year, 12 percent annually for the two years after th.. |

## Money in other investments with equal riskYou have a chance to buy an annuity that pays $10,000 at the beginning of each year for 10 years. You could earn 5.75% on your money in other investments with equal risk. What is the most you should pay for the annuity? |

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