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Mustard Patch Doll Company needs to purchase new plastic moulding machines to meet the demand for its product. The cost of the equipment is $100,000. It is estimated that the firm will generate, after tax, operating cash flow (OCF) of $22,000 per year for the next seven years. The firm is financed with 40% debt and 60% equity, both based on market values. The firm's cost of equity is 16% and its pre-tax cost of debt is 8%. The flotation costs of debt and equity are 2% and 8%, respectively. Assume the firm's tax rate is 34% and ignore the effects of CCA depreciation. a. What is the firm's tax adjusted WACC?b. Ignoring flotation costs, what is the NPV of the proposed project?c. What is the weighted average flotation cost, fA, for the firm?d. What is the dollar flotation cost of the proposed financing?e. After considering flotation costs, what is the NPV of the proposed project?
Computation of new price of bonds and the market interest rate on these bonds has dropped to 6%
Compute the internal rate of return of each investment?
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If the assets are tangible and the market can supply meaningful valuations then you could say that the value of the company is the assets-in a perfect world.
You wants to sell short 100 shares of XYZ Company stock. If the last two transactions were at 34.10 followed by 34.15, you only can sell short on the next transaction at a value of;
How is an investor's choice of which security to purchase related to his degree of risk aversion and calculate the standard deviation of the return on the security.
In international cash management, managers have choice between managing only foreign exchange risk or managing foreign exchange and interest rate risk together.
Last year Steve bought hundred shares of Dallas Company common stock for $53 per share. During the year he received dividends of $1.45 per share.
Explain what is the rate of return on his investment, assuming yield to maturity does not change?
Analyse whether the proposed changes in credit policy should be accepted. Identify and discuss die key areas of accounts receivable management.
ABC corporation can sell preferred stock for $70 with an estimated flotation cost of $2.50. It is anticipated that the preferred stock will pay dollar six each share in dividends.
Computation of Tax liability for a specific period Assume that the company has taken full advantage of the Tax Code's carry-back, carry-forward provisions
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