Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1.The common stock for Grapevine Plumbing Company currently sells for $40 per share. If a new issue is sold, the flotation cost is estimated to be $7 per share. The company had earnings of $2.00 per share four years ago. Next year, the company expects to have earnings of $3.22 per share. The company maintains a constant dividend payout ratio of 40%. Earnings per share are anticipated to grow at the same rate in the future. The firm's marginal tax rate is 30%. find out the cost of internal equity capital and external equity capital.

2.Hauber, Ltd., is negotiating a line of credit with bank A, B, and C, each of which has the following terms:

A.prime with interest on a discounted interest basis and a 20% compensating
balance requirement on the face amount of the loan.
B.prime plus 2% with interest due at maturity and a 15% compensating balance
requirement on the face amount of the loan.
C.prime plus 1% with interest discounted and a 15% compensating balance requirement on the face amount of the loan.

The prime rate of interest is currently at 8.5%. What is the effective rate of interest for each bank? Recommend which bank's line of credit Hauber, Ltd. should accept? Why?

3.Patterson, Inc. is considering a new production line for its rapidly expanding equipment division. The new line will cost $480,000, and will be depreciated on a straight-line basis over the next three years leaving no residual value. Other important factors are:

new sales for each of the next 3 years will be $465,000, $560,000, and $610,000
cost of goods sold exclusive of depreciation is 40% of sales
increased General & Administrative and selling expenses are estimated to be $40,000 per year.
the company's cost of capital is 14% with a tax rate of 40%

a.) What are the project's annual cash flows?

b.) What is the projectâ??s NPV?

4.The firm of Beck has two investment proposals that have been submitted to you for consideration. Given the following data, for each project find out the required information and make a recommendation.
Proposal Jackson
P Return (%)
.25 10
.45 14
.30 10
Proposal Harley
P Return (%)
.25 5
.55 10
.20 20

a. Expected Return J____ H______
b. Standard deviation J______ H______
c. Coefficient of variation J_____ H_____

5. Omar Corp issued just issued a 10 percent, 20 year bond with a $1000 par value that pays interest semi-annually.

a.How much can the investor expect in annual interest (in dollars)?

b.How much can the investor expect in interest every six months?

c. How much can the investor expect in par value at the end of the 20 years?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M927922

Have any Question? 


Related Questions in Basic Finance

Consider whether each of the following research reports

Consider whether each of the following research reports seems to describe an applied or a basic research project, and explain why: An experimental analysis of the impact of contingent reinforcement on salespersons' perfo ...

Altmans bankruptcy prediction model places a coefficient of

Altman's bankruptcy prediction model places a coefficient of 3.3 on the earnings before interest and taxes divided by total assets variable but a coefficient of only 1.0 on the sales to total assets variable. Does this m ...

1 how can leasing allow a firm to effectively depreciate

1. How can leasing allow a firm to effectively "depreciate" land? 2. What effect does leasing have on the stability of a firm's reported earnings? 3. It has been argued that leasing is almost always more expensive than b ...

What is the sum of the cash flows from operating activities

What is the sum of the cash flows from operating activities, financing activities, and investing activities? What does it mean that the financial statements are prepared based on historical cost? Where can an investor fi ...

Fresh fruit inc has a 1000 par value bond that is currently

Fresh Fruit, Inc. has a $1,000 par value bond that is currently selling for $1,277. it has an annual coupon rate of 12.86 percent, paid semiannually, and has 28-years remaining until maturity. What would the annual yield ...

Go to wwwgpoaccessgoveop the web site for the economic

Go to www.gpoaccess.gov/eop/, the Web site for the Economic Report of the President. On the left of the screen, go to "Downloadable Reports/Tables" and in the "Statistical Tables" click on 2010. In the tables, use Table ...

1 affordable payments what should you consider when

1. Affordable Payments. What should you consider when determining an affordable down payment and monthly mortgage payments? 2. Selection Criteria . List the criteria you should use when selecting a home. 3. Selection Cri ...

Discussion 1 170 wordsidentify a futures commodity exchange

Discussion 1: (170 words) Identify a futures commodity, exchange, stock, or interest rate. Use the internet to find a short history of the performance of this futures contract. Then research the possible reasons for this ...

A student remarks 135000000 shares of general electric were

A student remarks: "135,000,000 shares of General Electric were sold yesterday on the New York Stock Exchange, at an average price of $15 per share. That means General Electric just received a little over $2 billion from ...

Choose an global industry and consider the following topics

Choose an global industry and consider the following topics: diversification, investment, management, exchange rates or currency forecasts. Which of these would be most significant to your selected industry and how would ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro