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Dunbar Hardware, a national hardware chain, is considering purchasing a smaller chain, Eastern Hardware. Dunbar's analysts project that the merger will result in incremental free flows and interest tax savings with a combined present value of $72.52 million, and they have determined that the appropriate discount rate for valuing Eastern is 16%. Eastern has 4 million shares outstanding and no debt. Eastern's current price is $16.25. What is the maximum price per share that Dunbar should offer?
1. $16.25
2. $19.00
3. $18.13
4. $16.97
5. $17.42
Exxon Mobil has a 34 percent tax rate and has decided to issue $100 million of seven-year debt. It has three alternatives. A U.S. public offering would need an 8 percent coupon with interest payable semiannually and $900,000 of flotation expense.
For the year ended March 31, 2011, the company had revenues of $953,757, general and administrative expenses of $313,753, depreciation expenses of $131,455, leasing expenses of $108,195, and interest expenses equal to $78,122. If the company's tax..
The expected rate of return on the market portfolio is 8.50% and the risk-free rate of return is 2.50%. The standard deviation of the market portfolio is 24%. What is the representative investor's average degree of risk aversion?
Barry packs books for a bookstore. A new edition of a dictionary is ready to be boxed for shipment. Each dictionary measures 11inches x 8.5in. x 4in.
Yoder Dairy has a capital structure of 40% debt and 60% equity with a tax rate of 35%. Yoder's beta (leveraged) is 1.25. What would the firm's beta be if it switched to a capital structure that used no debt, i.e., what is its unlevered beta based ..
Define and discuss the concepts of risk and return. Also discuss the importance of portfolio diversification and the relationship to risk and return.
Depreciation is computed using MACRS over a 5-year life, and the cost of capitial is 9 percent. Assume a 40 percent tax rate. What will the year 1 operating cash flow for this project be?
Discuss an advantage or disadvantage of the probate process, OR, Discuss the properties of a valid will, OR, describe the consequences of dying intestate in your State.
Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 28%. The T-bill rate is 7%. Your client chooses to invest 60% of a portfolio in your fund and 40% in a T-bill money market fund.
What tools or techniques would you use in examine business strategies, financial reporting & disclosure policies, financial performance, forecasts & fundamental values?
Assuming net fixed assets increased by $20,550 during the year, what was the addition to NWC? (Do not include the dollar sign ($).) Addition to net working capital
The rate expected in the marketplace for investments similar to Tortoise is 4.50%. Tortoise just paid a dividend of $2.80 per share. What is the current value of one share of Tortoise Company?
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