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Hadlock Fabrics has $10 million in preferred stock, $6 million in common equity, and $4 million in unsecured bonds. The company's after tax cost of capital is 10 percent. The company has the following income statement:
Sales: $10.0 millionOperating costs $ 6.0 millionOperating income $ 4.0 millionInterest expense $ 2.0 millionEarnings before taxes $ 2.0 millionTaxes (40%) $ 0.8 millionNet income $ 1.2 million
What is Hadlock's EVA?
What is the stock price today assuming a required return of 12 percent on this stock?
If a random variable is drawn from a normal distribution, what is the probability that the random variable is larger than 1.96 standard deviations larger than the mean?
Once the patent expires, other pharmaeutical companies will be able to produce the same drug and competiton will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year?
ABC wants to issue 12-year, zero coupon bonds that yield 8.73 percent. What price should they charge for these bonds if they have a par value of $1000? That is solve for PV. Assume compounding.
Peter land a loan of $328,337.1919 from George. The loan will be repaid over the next twenty-four years, beginning from the end of the next years. The Real interest expense for the first year is $15,785.44189.
Suppose you are considering to buy a building for $40,000, and you have $10,000 to apply as a down payment. You may borrow the remainder under the following terms:
a. What was the firm's net income for the year?b. What was the firm's net cash flow?c. What was the company's operating cash flow?
What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.)
Some individuals take a position that selected standards should not apply to nonpublic companies. Others take a position that "little" companies should be exempt from selected standards.
What amount should be used as the initial cash flow for this project?
St. Vincent's Hospital has a target capital structure of 35 percent debt and 65 percent equity. Its cost of equity (fund capital) estimate is 13.5 percent and its cost of tax exempt debt estimate is 7 percent. What is the hospital's corporate cost..
If the firm's tax rate is 30%, what discount rate should you use to evaluate the equipment purchase?
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