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High Adventure is considering a new project that is similar in risk to the firm's current operations. The firm maintains a debt-equity ratio of .55 and retains all profits to fund the firm's rapid growth. How should the firm determine its cost of equity?
A. By adding the market risk premium to the after tax cost of debt
B. By mulitplying the market risk premium by 1.55
C. By using the dividend growth model
D. By using the capital asset pricing model
E. By averaging the costs based on the dividend growth model and the capital asset pricing model
Caballos, Inc., has a debt to capital ratio of 48%, a beta of 1.13 and a pre-tax cost of debt of 6.9%. The firm had earnings before interest and taxes of $ 636 million for the last fiscal year, after depreciation charges of $ 216 million. Assume that..
You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 2.8 days. On an average day, your firm receives 2,419 checks with an average value of $1,287 each. The daily interest rat..
Calculate the 2014 curent and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position in 2013
An injection molding machine can be purchased and installed for $90,000. It is expected to be kept in service for eight years. It is believed that $10,000 can be obtained when the machine is disposed of the at the end of year eight. What are the depr..
One reason that the credit default swap market grew so rapidly from 2000 to 2007 is that:
A check---cashing store is in the business of making personal loan to walk---up customers. The store makes only one---week loans at 7.5 percent interest per week. What APR must the store report to its customer? What EAR are customers actually paying?
How would you respond to the criticism that a proposed IT architecture is not feasible based on today's technology?
Mitsi Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $39. At the close of business the day before the ex-rights day, the co..
Which of these may lawfully be used as part of a loan application evaluation process?
Project K costs $50,000, its expected cash inflows are $15,000 per year for 10 years, and its WACC is 9%. What is the project's payback?
You have $38,063.80 in a brokerage account, and you plan to deposit an additional $3,000 at the end of every future year until your account totals $230,000. You expect to earn 14% annually on the account. How many years will it take to reach your goa..
Barry and his wife Mary have accumulated over $4.10 million during their 45 years of marriage. They have five children and five grandchildren. How much money can they gift to their children and grandchildren in 2012 without any gift tax liability?
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