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ABC Inc. has a debt ratio of 0.45 and it considers this to be its optimal capital structure. ABC has no preferred stock. ABC has analyzed four capital projects for the coming year as follows:
Project Net Investment IRR1 $3,000,000 13.5%2 $1,500,000 18.0%3 $2,000,000 12.6%4 $1,600,000 16.0%
ABC expects to earn $2.5 million after tax next year and pay out $700,000 in dividends. Dividends are expected to be $1.15 a share during the coming year and are expected to grow at a constant rate of 8 percent a year for the foreseeable future. The current market price of ABC stock is $23 and up to $2 million in new equity can be raised for a flotation cost of 10 percent. If more than $2 million is sold then the flotation cost will be 15 percent. Up to $2 million in debt can be sold at par with a coupon rate of 10 percent. Any debt over $2 million will carry a 12 percent coupon rate and be sold at par. If ABC has a marginal tax rate of 40 percent, in which projects should it invest and what is ABC's optimal capital budget?
Compute accumulated interest due to seller from buyer at settlement. Compute dirty price of this transaction.
Sunny Incorporated amended its pension plan which caused an rise of $4,800,000 in its projected benefit obligation. The corporation has 400 employees who are expected to receive benefits under the corporation's defined benefit pension plan.
What is the yield on this 5-year corporate bond? Round your answer to two decimal places.e your question here.
If Quadrangle stock currently sells for $30 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.
The investor's income tax bracket is 30%. The long-term capital gains tax rate is 15 percent. What is the investor's secondyear's tax obligation?
As an shareholder in Eastern Semiconductor company, what do you think of the following statements and justify your opinion.
On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Seller Co. ends June 30. Using the 360-day year in your calculations, what is the amount of interest revenue recognized by Seller in the ..
If the required rate of return on the stock is 15 percent, what is its expected price four years from today?
Which are the 3 most significant variables which determine the level of country risk? When is country risk analysis a critical factor for a business going global?
Securities requiring four payments of $50 at end of next three years plus payment of $1050 at end of yr 4. Each security costs $900 each. Your money is invested in bank at 8 percent with quarterly compounding.
Organizations merge and grow bigger and differentiate, which can cause problems in functional structure.
callaghan Motors' bonds have 10 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 8%, and the yield to maturityis 9%. What is the bond's current market price?
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