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1. Last year a company had $355,000 of assets, $26,275 of net income, and a debt-to-total-assets ratio of 44%. Now suppose the newly hired CFO convinces the president to increase the debt ratio to 58%. Sales and total assets will not be affected, but interest expenses would increase. However, the CFO believes that better cost controls would be sufficient to offset the higher interest expense and therefore keep net income unchanged. What was the original return on equity (ROE) for this company? Assuming the president of the firm allows the CFO to increase the debt ratio to 58%, what will be the new ROE’?2.Consider the following information for three stocks: Stock X, Stock Y, and Stock Z. The returns on each of the three stocks are positively correlated, but they are not perfectly correlated. (That is, all of the correlation coefficients are between 0 and 1, or 0 < ρ < 1). Expected StandardStock Return Deviation BetaStock X 10% 20% 1.0Stock Y 10 20 1.0Stock Z 12 20 1.4Portfolio A has half of its funds invested in Stock X and half invested in Stock Y. Portfolio B has one third of its funds invested in each of the three stocks. The risk-free rate (rrf) is 5 percent, and the market is in equilibrium. (That is, the required return equals the expected return on all assets.) What is the expected return on the market, rMKT?
If the stock sells for $31.2 per share, your best estimate of Country Road's cost of equity is FIND percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))
The stocks of Spaulding (S) and Johnson (J) Corporations have the following risk and return statistics: E(rJ) = 14%, ?J = 22%; E(rS) = 16%, ?S = 25%. [Round any calculation to two decimal points]
A manufacture has been selling 1700 television sets a week at 420dollars each. A market survey indicates that for each 21 -dollarrebate offered to a buyer, the number of sets sold will increase by210 per week.
What is the best estimate for Morningside's cost of equity? What is the firm's corporate cost of capital?
The income tax rate of the company is 30%. Find the value of the stock per share after this buyback. Is the company making the right move?
What is the function of the foreign exchange market? Who are the market participants? What is the difference between the spot and forward markets?
Filkins Farm Equipment needs to raise $4.5 million for expansion. and it Expects that five year zero coupon bonds can be sold at a price of $567.44 for each $1.000 bond.
Her loan requires 36 equal monthly payments of $450 each with the first payment due 30 days from today. Which one of the following statements is correct concerning this purchase?
Suppose that you have a growing perpetuity that starts next year with a $166.91 payment, grows at 7.6% and has a discount rate of 14.3%. What is the present value of this perpetuity?
Computation of share price that affected by acquisition and expect to happen to the Financial architecture of corporations in these countries over the decade
Discuss the positives and negatives of CAPITALIZING leases and the related leased assets.
Explain how much additional short-term funding can it borrow before its current ratio standard is reached?
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