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A firm has current assets that could be sold for their book value of $38 million. The book value of its fixed assets is $76 million, but they could be sold for $106 million today. The firm has total debt with a book value of $56 million, but interest rate declines have caused the market value of the debt to increase to $66 million. What is the ratio of the market value of equity to its book value? (Round your answer to 2 decimal places.)
If we input a positive PV in our calculator, we get a negative FV if that is what we are solving for. The reverse it true as well. Put in a positive, and the answer is negative. This is true of all financial calculators and is referred to as the ____..
The "No Credit Refused" used car dealer offers the following automobile finance opportunity. Monthly payments on the loan are 4% of the original loan amount for 36 months. That is, a loan of $10,000 would have a monthly payment of 4% of $10,000 or $4..
Suppose rRF = 4%, rM = 9%, and rA = 16%. Calculate Stock A's beta. Round your answer to two decimal places. If Stock A's beta were 1.3, then what would be A's new required rate of return? Round your answer to two decimal places.
Your firm needs a computerized machine tool lathe which costs $60,000 and requires $13,000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category...
The coupon rate on an issue of debt is 8%. The yield of maturity on this issue is 10%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?
Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. What is BEA's unlevered be..
Using the supply and demand graphs for both the bond market and the loanable funds market, show the effects of an increase in the expected return on stocks.
Ross Ice Gardens stock commands a market rate of return of 12.5% per year, pays dividends that are expected to increase by 3% per year, and currently sells for $32 a share. Based on this information, what is the expected amount per share of the next ..
The Oceanic Corporation, a Chesapeake, VA based company, was established in 1994. Glenn Rodgers III founded the corporation, which was privately owned at the time, after his retirement from Norentech Corporation. Comment on Stephanie’s assumptions as..
Percy Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 11%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 14.30%...
Company sells 2,391 chairs a year at an average price per chair of $170. The carrying cost per unit is $30.15. The company orders 499 chairs at a time and has a fixed order cost of $92 per order. The chairs are sold out before they are restocked. How..
What are the dividend payment process and the open-market repurchase process? In your answer, be sure to explain the effects they have in a perfect world.
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