QUESTION Multi-Part 15-2:Volunteer Fabricators, Inc. (VF) currently has zero debt. It is a zero growth company, and it has the data shown below. Now the company is considering using some debt, moving to the market value capital structure indicated below. The money raised would be used to repurchase stock. I answer: $53.33 details The price […]
QUESTION Text Book: Financial Management Theory and Practice 13e, Brigham EhrhardtProblem: (26-8)Schwarzentraub Industries expected free cash flow for the year is $500,000; in the future, free cash flow is expected to grow at t a rate of 9%. The company currently has no debt, and its cost of equity is 13%. I a) Vu = […]
QUESTION Firms often use financial performance targets to determine bonus (incentive) compensation for managers. If a firm used a targeted percentage increase in sales (for example, the goal might be to increase sales by 5%) or a targeted profit margin on sales (the goal might be to achieve a 10% profit marg For the best […]
QUESTION Margetis Inc. carries an average inventory of $750,000. Its annualsales are $10 million, its cost of goods sold is 75% of annual sales,and its average collection period is twice as long as its inventoryconversion period. The firm buys on terms of net 30 days, and it payson time. Its new CFO wants to According […]
QUESTION Given an annual lease payment of $438,020, find the rate of return earned by a lessor on a 3 year, $1 million (present value) capital lease. We need to calculate the internal rate of return. In a financial calculator, it can be done as follows; CF0 = -1,000,000 CF1 = 438,020 N1 = 3 […]
QUESTION 34. Senate Inc. is considering two alternative methods for producing playing cards. Method 1 involves using a machine with a fixed cost (mainly depreciation) of $12,000 and variable costs of $1.00 per deck of cards. Method 2 would use a less expensive machine with a fixed cost of only $5,000, but it EBIT is […]
QUESTION Why can option price never exceed stock price? You mean a call option, right? Because a put option price could exceed the stock price. A call option wont because it just gives you the right to buy the stock at some other price. If the stock is selling at 50, even if the call […]
QUESTION FDE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed costs and expenses are $112,500 ($3 per unit at normal plant capacity) and variable costs and expens Differential analysis report: […]
QUESTION The Altoona Co. issued a 25-year bond 5 years agowith a face value of $1,000. The bond pays interest semiannually at a 10% annual rate.a. What is the bonds price today if the interest rate on comparable new issues is 12%?b. What is the price today if the interest rate is 8%?c. What is […]
QUESTION You have been given the following projections for Cali Corporation for the coming year. Sales = 10,000 units. Sales price per unit = $10. Variable cost per unit = $5. Fixed costs = $10,000. Bonds outstanding = $15,000. rd on outstanding bonds = 8%. Ta Sales = 10,000 units Sales price per unit = […]
