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A Swiss sporting goods company borrows in yen in the Euro credit market at a rate of 4.91 percent from Bank of America using a three-month rollover loan. Bank of America assigns a default risk premium of 2.14 percent on the loan, and the country risk is an additional 0.80 percent. The bank can borrow funds in the Euro market at the three-month LIBOR rate of 0.32 percent. What is Bank of America’s gross profit margin on this loan? (Round answer to 1 decimal places, e.g. 15.2.) Gross profit margin= ___________ %
Gamma Electronics is considering the purchase of testing equipment that will cost $500,000 to replace old equipment. Assume the new machine will generate after-tax savings of $250,000 per year over the next four years. If Gamma Electronics has a 15% ..
Management install the network system
Andrews Corporation buys on terms of 1/8, net 45 days, it does not take discounts, and it actually pays after 58 days. What is the effective cost of its trade credit? (Use a 365-day year.)
Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. What the RATFCF’s associated with the purchase of this machine? What is the TCF associa..
BDJ Co. wants to issue new 25-year bonds for some much-needed expansion projects. The company currently has 7.8 percent coupon bonds on the market that sell for $1,125, make semi-annual payments, and mature in 25 years. Required: What coupon rate sho..
Lane, Inc., has an issue of preferred stock outstanding that pays a $3.35 dividend every year in perpetuity. If this issue currently sells for $90 per share, what is the required return?
Suppose that sales for the entire yr were 200,000 and the cost of goods sold 60% of sales. The Inventory Balance is 10,000, the accounts payable Balance is 5,000 and the cash conversion cycle is 50 days. What is the inventory conversion period?
A company currently pays a dividend of $3.5 per share (D0 = $3.5). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 0.8, ..
Yonan Corporation's stock had a required return of 11.5% last year, when the risk-free rate was 5.5% and the market risk premium was 4.75%. Now suppose there is a shift in investor risk aversion, and the market risk premium increases by 2%. The risk-..
You own a one-year call option to buy one acre of Los Angeles real estate. The exercise price is $2.12 million, and the current, appraised market value of the land is $1.82 million. You have a European call option. What is it worth of the European ca..
Consider a firm with an EBIT of $10,500,000. The firm finances its assets with $50,000,000 debt (costing 6.5 percent) and 10,000,000 shares of stock selling at $10.00 per share. Calculate the change in the firm’s EPS from this change in capital struc..
Mary has EAT, depreciation expense, capital expenses, debt and debt principal payments of $2m, $2.8m, $1.3m, $40m and $1.5m respectively. Moreover, Mary had operating profit of $2.5 million and its assets went from a total of $35 to $38 million. Addi..
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