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1. AMCE, Inc. is considering adding a loyalty program in which its customers can earn points for discounts in lieu of running storewide promotions. Additionally, ACME would collect information on its customers' shopping transactions, which allow ACME to craft individualized promotions. Currently ACME has $225 million in annual sales generating a profit margin of 3.0 percent on sales and an asset turnover of 4.5. ACME's marketing group believes the loyalty program would increase sales by $20 million with an additional investment in working capital of $2.5 million to support the increased sales. Costs to run the loyalty program would reduce profit margin to 2.8 percent. Based solely on the above financial consideration, explain whether you would recommend management consider adding this new program. 2. Calculate the cost of capital for operations (WACC). Use the capital asset pricing model to estimate the cost of equity capital. U.S. Government long-term bond rate 2.7% Market risk premium 4.0% Equity beta 0.80 Per-share market price $55.00 Shares outstanding 20 million Net financial obligations on balance sheet $1,000 million Weighted-average borrowing cost 6.0% Statutory tax rate 35.0% 3. Given your analysis in 2 above, explain why the cost of equity capital, ρE, is actually based on the cost of capital for the firm, ρF. 4. What is the principle assumption that allows an analyst to modify a residual earnings (RE) model to a residual operating earnings (ReOI) model? Explain.
how many dependency exemptions are the taxpayers entitled to assuming the people involved are u.s. citizens? which
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Telsa Corporation received $400,000,000 from the state of Nevada to built a plant in that state. What are the Tax consequenses from receiving these funds?
textbook solutions is missing the answer to excercises e21 through e23 and also all the solutions for the problems can
Please describe how to prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts.
What is the adjusting entry to remove an item that was incorrectly capitalized and depreciated for three years? I believe I would reverse the asset entry and remove the accumulated depreciation. But what is the entry?
problem 1 during 2012 barden building company constructed various assets at a total cost of 10500000. the weighted
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On July 1, 2013, $6 million face amount of 7%, 10 year bonds were issued.
goldcoast corporation has budgeted a total of 356800 in costs and expenses for the upcoming quarter. of this amount
The Lovely Gum Company has the following information regarding its costs of operations: Selling price $.40 per pack, variable costs 40% of sales, fixed costs $30,000 and target profit $15,000. Use this information to calculate the Break-even volum..
1.what types of derivative transactions does xerox engage in cash flow hedges fair value hedges or speculative
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