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Kohers Inc is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years. The firm will depreciate the cost of the tools on a straight-line basis over their 3 year life. It can borrow $4,800,000, the purchase price, at 10% and buy the tools, or it can make 3 equal end-of-year lease payments of $2,100,000 each and lease them. The loan obtained from the bank is a 3-year simple interest loan, with interest paid at the end of the year. The firm's tax rate is 40%. Annual maintenance costs associated with ownership are estimated at $240,000 but this cost would be borne by the lessor if it leases. What is the net advantage to leasing(NAL), in thousands?
The Green House has a profit margin of 5.6 percent on sales of $311,200. The firm currently has 15,000 shares of stock outstanding at a market price of $11.60 per share. What is the price-earnings ratio?
The expected return for an investment is 30 percent. If we know the following data about the return distribution of investment, determine the return the investment produce if the economic climate is average?
Describe the characteristics of each investment.
What is the maximum initial cost of company would be willing to pay for the project?
The initial offering price was $35.10 per share, and the stock rose to $42.40 per share in the first few minutes of trading. Bostitch paid $912,000 in legal and other direct costs and $264,000 in indirect costs.
Kish's beta coefficient can be discovered as a weighted average of its stocks betas. The risk free rate is 6 percent, and you believe the following probability distribution future market returns is realistic:
Determine the market return for an investment with a required rate of return of 15%, a Beta of 1.10 and the risk free rate is 4 percent?
Community Hospital has yearly net patient revenues of 150 million dollar. At present time, payments received by the hospital are not deposited for six days on average.
Lewis Morris Crew spends $350,000 in bureaucratic expenses in their IPO. The underwriter sells three million shares at an offer price of $9.63, charging Lewis Morris Crew fifty cents per share in spread.
The Preston Toy Co has warrants outstanding that permit the holder to purchase a share of stock for $22. The common stock is currently selling for $28,
Considering investors, the company, and the investment banker, who is happy about the money left on the table and who is not happy. Explain.
How a zero coupon bond provide profit?
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