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Montejo Corporation expects sales to be $ 12 million, operating costs other than depreciation are expected to be 75 percent of sales, and depreciation to be $ 1.5 million during the next year. All sales revenues will be collected in cash, and costs other than depreciation must be paid during the year. Montejo's interest expense is expected to be $ 1 million, and it is taxed at a 40 percent rate.a) Set up an income statement and a cash flow statement for Montejo. What is the expected cash flow from operations?b) Suppose congress changed the tax laws so that Montejo's depreciation expenses doubled, but no other changes occurred. What would happen to the net income and cash flow from operations expected during the year?c) Suppose that congress, rather than increasing Montejo's depreciation, reduced it by 50 percent. How would the income and cash flows be affected?d) If this company belonged to you, would you prefer that congress increase or decrease the depreciation expense allowed your company? Explain why.
Assume GESS has no internal sources of financing and does not pay dividends. Under these conditions, would the pecking order hypothesis influence the decision to use Plan A or Plan B?
As a financial manager be interested in doing business in this country-Growth Rate of GDP, both current and historical
Computation of the present value of each project using annual compounding rate - Evaluate the present value of each project using annual compounding, and report on the relative values and the difference between the two.
Use the five forces framework and your knowledge of the soft drink industry to describe how Coca-Cola and Pepsi are able to retain most of the profits in this industry.
Calculation of stock price and stock to be allotted with given data - c. How many shares of common stock must be issued at the value computed in part b to eliminate the deficit computed in part a?
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Evaluate the future value using the savings and graduation gift - what will his financial be when he leaves for Australia 5 years from now?
Bay, Corporation buys a new machine for $50,000 on March 28, 2004. The useful life was expected to be 8-years & then they would sell it to junk yard for $2,000.
Calculate the Weighted Average Cost of Capital for three years to study and discuss the trend.
The tsetsekos Corporation was considering to finance an expansion. The principal executives of the c orporation all agreed that an industrial company such as theirs should finance growth by means of common stock rather than by debt.
Computation of Economic Order quantity of Books for college and What is their expected total inventory cost (excluding the unit cost of the shirts)?
Show the four retirement risks listed in the textbook in relationship to each of these plans. Provide examples with your explanation
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