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
QUESTION Calculating WACCShadow corp. has no debt but can borrow at 6.5%. The firms WACC is currently 10.4% and the tax rate is 35%a) What is Shadows cost of equity?b) If the firm converts to 25% debt, what will its cost of equity be?c) If the firm converts to 50% debt, what will its cost […]
Date: September 2nd, 2020
QUESTION After years of negative free cash flow, General Electric reported a positive free cash flow of $7,386 million in 2003. Look back at GEs cash flows displayed in Exhibit 4.2. Would you interpret the 2003 free cash flow as good news? After a string of negative free cash flow in the Fiscal Year of […]
Date: September 2nd, 2020
QUESTION 2. Richmond Wins, Inc., had the following alphabetical list of accounts taken from its adjusted trial balance at December 31, 20B:Accounts Payable$10,000Accounts Receivable 14,000Accumulated Depreciation-Building 13,400Advertising Expense 6,400Buildin 2 Richmond Wines Income statement For the year of December 31, 20B. Sales Revenue: Sales 100000 Less: Cost of Goods Sold 52000 Gross Profit: 48000 Operating […]
Date: September 2nd, 2020
