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Tapley Inc.'s current (target) capital structure has a target debt ratio (D/TA) of 60 percent. The firm can raise up to $5 million in new debt at a before-tax cost of 8 percent. If more debt is required, the initial cost will be 8.5 percent, and if more than $10 million of debt is required, the cost will be 9 percent. Net income for the previous year was $10 million, and it is expected to increase by 10 percent this year. The firm expects to maintain its dividend payout ratio of 40 percent on the 1 million shares of common stock outstanding. If it must sell new common stock, it would encounter a 10 percent flotation cost on the first $2 million, a 15 percent cost if more than $2 million but less than $4 million is needed, and a 20 percent cost if more than $4 million of new outside equity is required. Tapley's tax rate is 30 percent, and its current stock price is $88 per share. If the firm has an unlimited number of projects which will earn a 10.25 percent return, what is the maximum capital budget that can be adopted without adversely affecting stockholder wealth?
Financial analysts have determined that the firm's after-tax cost of debt is 4.8 percent, its cost of internal equity is 9 percent, and its cost of external equity is 11.5 percent.
What is the expected return on the firm's equity before the announcement of the stock repurchase plan and what is the value of equity after the announcement of the stock repurchase plan?
In 2013, Sheryl is claimed as a dependent on her parents' tax return. Her parents' ordinary income marginal tax rate is 35 percent. Sheryl did not provide more than half her own support.
The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth
The current price of the $1,000 bind if $978. On February 1, you purchase $10,000 face amount, and your broker charges a $25 commission. How mcuh must you remit for the purchase
The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2010, 90% of the merchandise had been sold and 10% remained in inventory. The company uses a periodic system.
Your parents will retire in 30 years. They currently have $330,000, and they think they will need $1,050,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds
frank Zanca is considering three different investments that his broker has offered to him. the different cash flows are as follows: end of the year A B C
Crown Cinema recently increased the price of a movie ticket by 5%. As a result, attendance dropped by 8%. Based on this information, what is the price elasticity of demand for movie tickets at Crown
Assume the company's tax rate is 35 percent. Debt: 5,000 6% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 105% of par; the bonds make semiannual payments.
If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project
The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $108,000, and it would cost another $12,500 to modify it for special use by your firm.
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