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George foreman has been selling grills for over 50 years now. The current target debt to value ratio is 35%. It borrows at 8% interest and the tax rate is 40%. At this capital structure, shareholders require a 15% return. They plan to expand production capacity. Equipment that will be purchased costs $40 million today and will last 4 years. Depreciation = straight line with no salvage value. Forecast for the next 4 years (in millions)
Foreman expects to recover all investment in working capital in year 4. Foreman has arranged $20 million loan for partial expansion funding. The terms are 8% annual on outstanding balance of the beginning of the year. Firm will also make year end principal payments of $5 million per year and completely retire debt at year 4.Ignoring financial distress and issuing costs, how much value is to be created or destroyed by this project and should they proceed with the project?
Explain in detail how the four kinds of float (billing, collections, transit and disbursement) can be used to maximize the efficiency of incoming revenues and outgoing expenditures? What kinds of policies can be initiated to facilitate maximum eff..
calculate the accounting break-even point for the following firm revenues of 700000 100000 fixed costs 75000
Now assume that besides the change in part (b), investor's risk aversion increases so that the market risk premium is 7%. Write and sketch the resulting SML, calculate Picante's required return, and show it on the last line.
nugent communication corp. is investing 10800655 in new technologies. the company expects significant benefits in the
metallica bearings inc. is a young start-up company. no dividends will be paid on the stock over the next nine years
q. abc manufacturing is major producer of farm equipment. presently firm has two divisions machinery division also
Global Technology's capital structure is given below, The after tax cost of debt is 6.5%; the cost of preferred stock is 10%; and the cost of common equity is 13.5%.
what is the present value of 38000 to be received in 8 years if interest rates are 10.1 and interest is compounded 3
Time value Jim Nance has been offered an investment that will pay him $500 three years from today.
a. Calculate the expected rate of return on investments X and Y using the most recent year’s data. b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?
calvin jacobs seeks the good lifecalcin jacobs is a widower who recently retired after a long career with a major
an individual has 30000 invested in a stock with a beta of 0.7 and another 45000 invested in a stock with a beta of
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