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1. How can leasing allow a firm to effectively "depreciate" land?
2. What effect does leasing have on the stability of a firm's reported earnings?
3. It has been argued that leasing is almost always more expensive than borrowing and owning. Do you think this is true? Why or why not? Under what circum- stances is leasing likely to be more desirable than direct ownership?
4. Why do you think it is easier for firms with weak credit positions to obtain leasefinancing than bank loan financing?
5. Under what circumstances might a firm prefer intermediate-term borrowing to either long- or short-term borrowing?
6. Discuss the advantages and disadvantages of the following types of term loans:
a. Those that require equal periodic payments
b. Those that require equal periodic reductions in outstanding principal
c. Balloon loans
d. Bullet loans.
On January 1, 2012, your brother's business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 4.35%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest dedu..
Discuss the importance of a bank's credit culture in managing credit risk.
A non-dividend-paying stock is currently priced at $46.57. The risk-free rate is 5.6 percent, and a futures contract on the stock matures in five months. What price should the futures be?
Weston Corporation had earnings per share of $1.41, depreciation expense of $592,800, and 240,000 shares outstanding. What was the operating cash flow per share? If the share price was $51, what was the price-cash flow ratio?
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: A new common stock issue that paid a $1.85 dividend last year. The firm's dividends are expected to continue to grow at 7.7 percent per year, forev..
Time Watch Co. has $46 million in earnings and is considering paying $6.45 million in interest to bond hloders and $4.35 million to preferred stockholders in dividends. What are the bondholders' contractual claims to payment?
The current exchange rate between French franc and US dollar is FF 5.529 per dollar. Last month this rate was FF 5.491 per dollar. a) FF has appreciated b) US $ has depreciation c) FF has depreciated d) US $ has appreciated
You purchased an investment which will pay you $10,000, in real dollars, a year for the next five years. Each payment will be received at the end of the period with the first payment occurring one year from today. The nominal discount rate is 10 perc..
A student plans to win first prize in a competition that began Jan 2 and ends March 2. He will invest his $10,000 winnings in a friend’s 5-year-old startup company and expects to gain 10% interest per year, compounded annually, based on contracts the..
Bill’s Bakery expects earnings per share of $2.18 next year. Current book value is $3.9 per share. The appropriate discount rate for Bill’s Bakery is 13 percent. Calculate the share price for Bill’s Bakery if earnings grow at 4 percent forever.
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 11 percent. Interest payments are $55.00 and are paid semi..
the book is financial management for public health and not-for-profit organization third edition by steven a.
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