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Martin and Sons (M and S) currently is an all equity firm with 64,000 shares of stock outstanding at a market price of $25 a share. The company's earnings before interest and taxes are $86,000. M and S has decided to add leverage to their financial operations by issuing $610,000 of debt with a 8% percent interest rate. This $610,000 will be used to repurchase shares of stock. You own 1,600 shares of M and S stock. You also loan out funds at a 8% percent rate of interest. How many of your shares of stock in M and S must you sell to offset the leverage that the firm is assuming? Assume that you loan out all of the funds you receive from the sale of your stock.
659 shares 610 shares 406 shares 561 shares 634 shares
Broussard Skateboard's sales are expected to increase by 20% from $8.6 million in 2013 to $10.32 million in 2014. Its assets totalled $5 million at the end of 2013. Baxter is already at full capacity, so its assets must grow at the same rate as proje..
C Corp borrowed money from XYZ Bank at 11.53% interest for nine years. The loan calls for annual payments of $9,846.38 beginning today. What is the amount of the loan?
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What was the premium on the Dec. BABA 118 put? Was this option in or out of the money? What was the intrinsic value of this put? What is the time value?
Assume a project has normal cash flows (i.e., the initial cash flow is negative, and all other cash flows are positive). Which of the following statements is most correct?
Dahlia Enterprises needs someone to supply it with 120,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $870,000 to install the equipment n..
1 calculate the audjpy cross rate when the following fx spot rates are quoted bullaudusd0.6066bullusdjpy115.90 give
Assume that your organization's chief financial officer (CFO) has just completed a presentation to the board of trustees concerning the analysis of a proposed ambulatory surgery center costing $2 million. During the presentation, the CFO indicated th..
You are evaluating a project for a small manufacturing firm. The firm has provided the following information: the initial cost of the project is $2,500 for equipment purchase; the CCA rate is 10 percent; tax rate is 25 percent; and the pre-tax cash f..
Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $7.75 million, and its tax rate was 35%. What was its interest expense? Round your answer to the nearest dollar. Enter your answer in dollars. For example, an answer of $..
Assume that in 2007 the U.S. Government issued a debt security with a purpose of consolidating all of the federal national debt. At the time of the issue, each security was priced at $15,000 and promised to pay 10% coupon rate indefinitely, just as i..
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