Jones Crusher Company is evaluating the proposed acquisition of a new machine. The machine will cost $190,000, and it will cost another $33,000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class, and it will be sold after 3 years of use for $110,000. The machine will […]
Date: September 19th, 2020
Sweetums Inc, a confectioner best known for its chocolate ogre balls, uses the residual dividend model to set its dividends. Selected financial information for Sweetums Inc is provided in the table below. Sweetums Inc has many new project opportunities and so has decided to cancel its dividend this year. What is the most that it […]
Date: September 19th, 2020
Which of the following statements best describes mutual funds? A) They are illegal in the United States, but popular in Europe. B) They enable investors to buy many shares of stock in a single firm at a lower cost than using a stockbroker. C) They provide good investment returns, but insufficient diversification. D) They enable […]
Date: September 19th, 2020
The primary role of a financial system is to A) make savvy investors rich. B) regulate the banking system. C) enable financial managers to evaluate investment projects with a system that always selects the correct opportunity for their firm. D) channel funds from savers to borrowers who need funds for investment projects. E) provide employees […]
Date: September 19th, 2020
Sweetums Inc, a confectioner best known for its mint ogre balls, uses the residual dividend model to set its dividends. Selected financial information for Sweetums Inc is provided in the table below. Given the investment plan summarized in the table, how much new debt will it have to take on in order to maintain its […]
Date: September 19th, 2020
The Boeing Corp is considering building a new aircraft, the 787—larger than the 747 and larger than the Airbus A380. The company’s Renton WA Facility, where 747s are currently manufactured, would have to be expanded. Expansion costs are forecast to be $2.5B, incurred at t = 0. Also at time t = 0, before production […]
Date: September 19th, 2020
EnviroStyro Inc is all equity financed and generates perpetual annual EBIT of $750. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. EnviroStyro has 1,500 shares outstanding which trade for $3.611. The stockholders of EnviroStyro require a return of 9%. […]
Date: September 19th, 2020
John Kay Inc is considering the installation of a new production line to make automated flying shuttles for weaving machines. The capital cost of the equipment is $2.2 million. The machines on the new line are classified as 15-year property. Kay plans to operate the line for 2 years, at which time the project will […]
Date: September 19th, 2020
Which of the following is a role of the secondary market? A) Keep prices level B) Give information for securities on sale in the primary market C) Trade long term securities only D) Offer securities for sale for the first time E) Establishing security prices ANSWER E
Date: September 19th, 2020
Topsy Breweries Inc, a UK brewer headquartered in Turvey, is all equity financed and generates perpetual annual EBIT of $800. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Topsy has 2,000 shares outstanding which trade for $4.00. The stockholders […]
Date: September 19th, 2020
