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Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)? a. A sharp increase in its forecasted sales. b. A switch to a just-in-time inventory system and outsourcing production. c. The company reduces its dividend payout ratio. d. The company switches its materials purchases to a supplier that sells on terms of 1/5, net 90, from a supplier whose terms are 3/15, net 35. e. The company discovers that it has excess capacity in its fixed assets.
Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 7 percent. Safeco’s recent dividend was $1.10. What is the value of Safeco stock when the required return is 9 percent?
A bank developed a model for predicting the average checking and savings account balance as balance = -17,732 + 367 x age + 1,300 x years education + 0.116 x household wealth. Explain how to interpret the numbers in this model.
Your company is considering an investment in a new product. The new product has been developed with a total cumulative investment of 2.5 million. To initiate the product from this point in time, a 1.5 million investment will be required. Construct a ..
If a stock has a beta of 1.3 would its required rate of return be higher or lower than the required return for the average stock on the market? Why? Would it be more or less risky than holding a fund that replicated the S&P 500 Index ? Why?
Fashion Wear has bonds outstanding that mature in 12 years, pay interest annually, and have a coupon rate of 7.5 percent. These bonds have a face value of $1,000 and a current market price of $1,060. What is the company's aftertax cost of debt if its..
Dick Tracy builds a two way wrist radio for $8,000. It costs Dick $1800 a year to operate the radio. Dick uses the wrist radio for 5 years before upgrading the electronics for $3000. What is the total cost of the watch radio for the 5 years? Dick has..
The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate of return on the equity is 20% and that on its debt is 8%, calculate the company's cost of capital. (Assume no tax..
A company has a zero-coupon bond outstanding, with face value 1000 and a 2 year maturity. The bond is risky but bears no systematic risk. There are two equally likely scenarios at maturity: What is the monetary value of the bankruptcy costs at year 2..
Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. Suggest when should Bel..
Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock currently is valued at $42.00 per share. The company needs to raise new capital to invest in production. The company is looking to..
Assuming zero taxes, calculate the future value of a $1,000 lump-sum contribution to a savings plan, compounded annually, at the end of: (a) five years, using a 4% rate of return; (b) thirty years, using a 8% rate of return. Show your work.
If there is a revenue = to 500,000 Cogs = 400,000 GM = ? OPS exp = 10,000 Interest expence = 50.000 What is the Net Profit. What is Gross Margin? What is the dividend payout ratio?
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