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 […]
Save-a-lot is a grocery store chain. Save-a-lot is forecasting its financial statements for Year 3. Selected financial information for Years 2 and 3 is provided in the table. In Year 3 Save-a-lot is planning to invest $600 million in CAPEX and forecasted depreciation is $903 million. What is Net PP&E (Property, Plant and Equipment) at […]
On Thursday, February 7, Baretta Pistols Inc declared a $0.75 per share dividend to be paid on Monday, April 15; the date of record will be Thursday, March 18. Baretta’s stock closed $17.25 on the last cum-dividend date. What will the opening price be on the ex-dividend date? (Assume perfect markets.) A) $15.75 B) $16.50 […]
Omnicorp is all equity financed and generates perpetual annual EBIT of $500. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Omnicorp has 1,000 shares outstanding which trade for $3.125. The stockholders of Omnicorp require a return of 8%. Omnicorp […]
The Film Shoppe is a video rental and retail chain. The Shoppe is forecasting its financial statements for Year 2. Selected financial information for Years 1 and 2 is provided in the table. In Year 2 The Shoppe is planning to invest $600 million in CAPEX and forecasted depreciation is $903 million. What is Net […]
Tom Morrison Inc, a leading manufacturer of golf equipment, is currently evaluating a new golf ball called the ‘Feathery’. The secret to the Feathery is that its core is made from goose down. The advantage of down is that the ball flies higher and longer. You have been asked to analyze The Feathery project and […]
Wayne Enterprises Inc has a target debt/equity ratio of 0.1765. Its capital budget (for new projects) for next year is estimated at $110 million. Estimated net income is $100 million. Wayne Enterprises has 100 million shares outstanding. Find Wayne Enterprises dividends using the residual dividend approach. A) $0.035 B) $0.045 C) $0.055 D) $0.065 E) […]
Which of the following is not a major participant in the money market? A) Money market mutual funds B) Commercial banks C) Wall Street dealers D) Federal Reserve E) U.S. Treasury ANSWER C
Blockbuster is a video rental and retail chain. Blockbuster is forecasting its financial statements for Year 3. Selected financial information for Years 1 and 2 is provided in the table. What is the interest expense for Blockbuster in Year 3? (Assume that Blockbuster’s average cost of debt is 7.50%.) Selected Financial Information Blockbuster Inc ($ […]
Orange Inc., the Cupertino-based computer manufacturer, has developed a new all-in-one device: phone, music-player, camera, GPS, and computer. The device is called the iPip. The following data have been collected regarding the iPip project. The company has identified a prime piece of real estate and must purchase it immediately for $100,000. In addition, R&D expenditures […]
