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1. Counts Accounting has a beta of 1.45. The tax rate is 35%, and Counts is financed with 60% debt. What is Court's unlevered beta? Round your answer to two decimal places.
2. Shapland Inc. has fixed operating costs of $750,000 and variable costs of $50 per unit. If it sells the product for $75 per unit, what is the break-even quantity?
3. According to the Miller Modigliani Prop I, the value of the levered firm:
(A) is greater than the value of the unlevered firm by the amount of the debt tax shield.
(B) is lower than the value of the unlevered firm by the amount of the debt tax shield.
(c) is equal to the amount of the debt tax shield.
(D) is equal to the value of the unlevered firm in the world with taxes.
(E) A and D are true.
Barnes Enterprises has bonds on the market making annual payments, with 17 years to maturity, a par value of $1,000, and a price of $969. At this price, the bonds yield 8.1 percent. What must the coupon rate be on the bonds?
Compute the effective cost of not taking the cash discount under the following trade credit terms:
Cee Co. issued 20-year, $1,000 bonds at a coupon rate of 7 percent. The bonds make annual payments. If the YTM on these bonds is 4 percent, what is the current bond price?
Porter bonds were issued five years ago with a 20 year maturity. The bond has a call provision that allows them to pay off the debt anytime after ten years by compensating bond holders with an extra year’s interest at the coupon rate. The bond’s coup..
One year ago, in October of 2015, you bought shares of stock in Apple . The stock price at the time was $53.98 per share. Earlier today, one year after buying the shares, you sold them at a price of $59.66/share. Right before the sale, you received a..
From information given in the attached financial statements, explain the primary reason for the change in GMCR’s Debt-Asset Ratio.
Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.72 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. What is the maximum initial cost the co..
You open a brokerage account and purchase 200 shares of Google at $443.05 per share. You borrow 40% from your broker to help pay for the purchase. The interest rate on the loan is 8%. What is the initial margin balance?
Lisa Simpson wants to have $1,500,000 in 30 years by making equal annual end of the year deposits into a tax - deferred account paying 11.75 percent annually. What must Lisa's annual deposit be?
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,080,000 and will be sold for $1,280,000 at the end of the project. If the tax rate is 35 percent, what is the aftertax s..
Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $14 million, of which 80% has been depreciated. The used equipment can be sold today for $4.9 million, and its tax rate is 40%. What is the equipment'..
We know the following about Carl & Co. Total assets are $200m, D is $60m, E is $130m, cash is $50m and the # of shares is 1m. We estimate that the market value of equity is 3 times the book value of it. Finally, a fire sale of the firm would bring 40..
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