Dealer Corp. is contemplating a project that will generate perpetual sales of $800,000. Cash costs are expected to be 75% of sales. The company pays taxes at a 40% rate. The company is currently unlevered and has a cost of…
Strickler technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler’s sales last year were $3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 9.0 times during the…
Your company is considering investing in a project that will cost $19,500,000 and will pay back to you $6,500,000 for the next 4 years. (These are after-tax cash flows.) If your company’s cost of capital is 11%, please calculate 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.…
1-At the beginning of last year, you invested $4,000 in 80 shares of the Chang Corporation. During the year, Change paid dividends of $5 per share. At the end of the year, you sold the 80 shares for $59 per…
Kate Greenway Corporation, having recently issued a $20,113,000, 15-year bond issue, is committed to make annual sinking fund deposits of $610,000. The deposits are made on the last day of each year and yield a return of 10%. Will the…
You ran a little short on your spring vacation, so you put a $1,500 on your credit card. You can only afford to make the minimum payment of $30 per month. The interest rate on the card is 1.5% per…
JR Industries has a $20 million loan due at the end of the year and under its current business strategy its assets will have a market value of only $15 million when the loan comes due. JR is considering a…
What is the value of a bond that matures in 18 years, makes an annual coupon payment of $110, and has a par value of $1000? Assume a required rate of return of 7%, and round your answer to the…
The State of California is known for their wineries, beaches, and notorious/violent gangs that integrate themselves into communities in order to recruit and maintain “turf” for personal gain. In saying this, local and state governments have created programs and units…
