Currently a firm is earning $3.80 per share (EPS=$3.80)and has a dividend payout ratio of 70% today and in the foreseeable future. Starting next year EPS is expected to grow by 30% for three years and 20% for the next…
A company is considering a new venture. This venture will require the purchase of $321,000 of equipment which belongs to a CCA rate of 20%. It will also require $45,000 in inventory, and will increase accounts payable by $73,000. Expected…
Harper Corp.’s sales last year were $395,000, and its year-end receivables were $42,500. Harper sells on terms that call for customers to pay 30 days after the purchase, but many delay payment beyond Day 30. On average, how many days…
A homeowner borrows $1,000,000 on a mortgage loan, and the loan is to be repaid in 30 equal payments at the end of each of the next 30 years. The lender charges 9.75% on the balance at the beginning of…
This is the second part of the question just previously asked regarding calculating the pre-tax weighted average cost of capital for my company. Your company’s marginal income tax rate is 40%. Please calculate the post tax WACC from the information…
Last year, a barber shop generated $100,000 in profit. Assume that the shop’s profits grow at 5% per year and that cash flows are discounted at 10% per year. If profits are received at the end of each year, what…
Discuss and provide two supporting examples to demonstrate how calculating the Present Value and the Future Value would be helpful for decision making.
Hernandez Engineering received a promissory note of $15,500 at 11% simple interest for 15 months from one of its customers. After 3 months, Union Bank discounted the note at a discount rate of 13%. Calculate the proceeds that Hernandez Engineering…
The MedTech Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million per year. a.Compute the firm’s earnings per share (EPS). b.Assuming that the…
Financial Leverage effects. Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has $20 million in assests, has $4 million of EBIT, and is in the 40% federal-plus-state-tax bracket.…
