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FARO Technologies, whose products include protable 3D measurement equipment, recently had 17 million shares outstanding trading at $42 a share. Suppose the company announces its intention to raise $200 million by selling new shares.
a. How large a gain or loss in aggregate dollar terms do market signaling studies suggest existing FARO shareholders will experience on the announcement date?
b. What percentage of the value of FARO's existing equity prior to the announcement is this expected to gain or loss?
c. At what price should FARO expect its existing shares to sell immediately after the announcement?
The Morris Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris’s annual sales are $3 million, its average tax rate is 40%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ..
Prepare 15 slides or power point presentation on "What is the nature of Financial Management".
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The bonds have an 9.3% coupon rate, payable semi annually, and a par value of $1,000. They mature exactly 10-years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt?
Roxanne invested $560,000 in a new business 7 years ago. The business was expected to bring in $8,000 each month for the next 26 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 7% with month..
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Consider a firm with a contract to sell an asset for $150,000 five years from now. The asset costs $86,000 to produce today. Given a relevant discount rate on this asset of 12 percent per year, calculate the profit the firm will make on this asset.
Dobson Dairies has a capital structure, which consists of 60 percent long-term debt and 40 percent common stock. Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget. What is the company’s weighted av..
What is the present value of an annuity due that pays 250 dollars per year for 4 years, if the appropriate discount rate is 5.0 percent per year, compounded annually?
In many cases, banks do not permit depositors to spend the proceeds of a deposit until several days have elapsed. What risks do banks face in the check clearing process? Does this justify holds on checks?
Assume Calvin invests in a mutual fund that earns about 10% annually from dividend income and capital gains. Given that Calvin wants to receive $1,000 to $1,500 a month from his mutual fund, what would be the size of his investment account 5 years fr..
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