QUESTION Sopranos Spaghetti Factory issued 30-year bonds two years ago at a coupon rate of 7.5 percent. If these bonds currently sell for 84 percent of par value, what is the YTM? Number of years to Maturity of the bond = 30 years Annual Coupon rate of the bond = 7.5% Par Value of the […]
Date: September 2nd, 2020
QUESTION Le Bleu Co. has a ratio of long-term debt to total assets of .40 and a current ratio of 1.30. Current liabilities are $900, sales are $5,320, profit margin is 9.4 percent, and ROE is 18.2 percent. What is the amount of the firms net assets? Long-term debt to total assets = .40 Current […]
Date: September 2nd, 2020
QUESTION You are negotiating to make a 7 year loan of $25,000 to breck inc. To repay you, Breck will pay $2,500 at the end of year 1, $5,000 at the end of year 2 and $7,500 at the end of year 3, plus a fixed but currently unspecified cash flow,X, at the end of […]
Date: September 2nd, 2020
QUESTION OBrien Ltds outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $975. What is the bonds nominal coupon interest rate? Par Value (Or) Face Value of the bond = $1,000Number of years […]
Date: September 2nd, 2020
QUESTION XYZ pays an annual dividend 0f $6.00. What is the required return if the market value of the preferred stock:a-$60b-$70c-$80 a) If the market value of the preferred stock is $60 thenRequired return on Preferred stock = Annual dividend per share / Market value of Preferred stock = $6 / $60 = 0.1 or […]
Date: September 2nd, 2020
QUESTION What is a “replacement chain?” When and how should replacement chain be used in capital budgeting ? In Capital Budgeting, a financial analyst analyzes alternative and often mutually exclusive projects to make a selection. As it may happen, the alternative projects may differ in life span as one may be shorter in life as […]
Date: September 2nd, 2020
QUESTION The Sharpe Corporation: Detailed cash flow budget for the first seven months of 2004The Sharpe Corporations projected sales for the first eight months of 2004 are as follows:January $90,000February & November December January February March April May June July Sales $2,20,000 $1,75,000 $90,000 $1,20,000 $1,35,000 $2,40,000 $3,00,000 $2,70,000 $2,25,000 Collections: Cash 10% $9,000 $12,000 […]
Date: September 2nd, 2020
QUESTION Barrett Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Barretts stock. The pen […]
Date: September 2nd, 2020
QUESTION Piedmont Enterprises currently pays a dividend of $1 per share. This dividend is expected to grow at a 20 percent per year rate for the next two years, after which it is expected to grow at 6 percent per year for the foreseeable future. If you require a 15 percent rate of return on […]
Date: September 2nd, 2020
QUESTION Lancer Audio produces a high end DVD player that sells for $1,250. Total operating expenses for July were as follows:Month Units produced and sold CostAugust 125 $112,670September 145 121,990October 150 129,500November 160 131,500December 165 139,700January 140 117,400February 145 125,600March 135 1 a.Use the high-low method to estimate fixed and variable costs. Units Cost High […]
Date: September 2nd, 2020
