QUESTION Kings of Leon, Inc., has a book value of equity of $64,500. Long-term debt is $57,500. Net working capital, other than cash, is $22,300. Fixed assets are $92,100 and current liabilities are $7,300. How much cash does the company have and what is the amount of current assets? Solution: Kings of Leon Inc. Net […]
QUESTION scale differencesA company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.23 million per year for 20 years. Plan B requires a $13 million expenditure to build a somewhat Answer : Plan A :expected cash flows […]
QUESTION 5. (TCO I) Below is a table showing the income of individuals A and B together with their food and clothing purchases in an untaxed environment (NOTE: K = 1000). Individual Income Food ClothingA $20,000 $5,000 $2,000B $50,000 $8,000 $8,000Before even considering any particular numbers, define precisely what is meant when we say that […]
QUESTION Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolios beta is 0.65. Now, suppose you sell one of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another stock whose beta is 1.35. Calculate your portf Solution: […]
QUESTION Assignment 3.3: Case Study, Casa de Diseo In January 2012, Teresa Leal was named treasurer of Casa de Diseo. She decided that she could best orient herself by systematically examining each area of the companys financial operations. She began by studying the firms short-term financial activities. Casa de Diseo is located in Southern California […]
QUESTION Robinson expects its 2012 sales and cost of goods sold to grow by20 percent over their 2011 levels.a. What will be the affect on its levels of receivables, inventories,and payments if the components of its cash conversioncycle remain at their 2011 levels? What will be its net investmentin working ca ANS : a. What […]
QUESTION 6. The Garcia Companys bonds have a face value of $1000 will mature in ten years and carry a coupon rate of 16%. Assume interest payments are made semi-annually.a. Determine the present value of the bonds cash flows if the required rate of return is 16.64 percent.b. how would your answer change Period Cash […]
QUESTION Linda invested $15,000 today, in an investment that pays 6.50 percent interest, compounded semi-annually. Which one of the following statements is correct concerning this investment? Linda will receive equal interest payments every six months over the life of the investment.Linda would have earned m Linda would have earned more interest if she had invested […]
QUESTION After deciding to buy a new car, you can either lease the car or purchase it with a three-year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $1 today and $450 per month for the next three years. If you purchase the car, […]
QUESTION ROIC for firm LL is _____________%ROIC for firm HL is _____________%Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has $28 million in invested capital, has $5.6 million of EBIT, and is in the 40% federal-plus-state tax bracket. Firm HL, Alright, since this […]
