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Question - In 2011, Beta Corporation earned gross profits of 760,000.
Suppose it is financed by a combination of common stock and 1 million of debt. The interest rate on the debt is 10%, corporate tax rate is 35%. What is the profit available for common stockholders?
Now, suppose if the firm decides to not issue debt, rather finance itself by a combination of common stock and 1 million of preferred stock. The dividend on the preferred stock being 8% and the tax rate at 35%, what is the profit available for common stock holders? Assume the firm pays off dividend to preferred stock holders immediately.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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