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

Question 1 outline the differences between common stock and

Question 1: Outline the differences between common stock and preferred stock? Question 2: What are the differences between capital projects that are independent, mutually exclusive, and contingent? Question 3: Cortez Art ...

What precautions must one take when using ratio analysis to

What precautions must one take when using ratio analysis to make financial decisions? Which ratios would be most useful for a financial manager's internal financial analysis? For an analyst trying to decide which stocks ...

Question 1 outline the differences between common stock and

Question 1: Outline the differences between common stock and preferred stock? Question 2: What are the differences between capital projects that are independent, mutually exclusive, and contingent? Question 3: Cortez Art ...

Anticipate and respond to questions about textbook

Anticipate and respond to questions about textbook content. Prepare a three-minute presentation, using an outline, on any section. Before making the presentation, write a list of the questions you anticipate being asked ...

1 explain the differences between a cmo and a mortgage

1. Explain the differences between a CMO and a mortgage pass-through type of security. 2. Define a mortgage purchase "for portfolio." 3. Discuss the purpose and operation of Ginnie Mae. 4. What would be the price of a $1 ...

The stock of company a has a beta of 15 the return of

The stock of company A has a beta of 1.5. The return of market portfolio is 9% and the risk-free rate is1%. 1) According to the Capital Asset Pricing Model (CAPM), what is the expected return of this stock? 2) Assuming t ...

1 in analyzing the data from an experiment why is it not

1. In analyzing the data from an experiment, why is it not sufficient simply to examine the condition means to see whether they differ? 2. Assuming that all confounds were eliminated, the means of the conditions in an ex ...

Final project - fire 650refer to the template spreadsheet

Final Project - FIRE 650 Refer to the template spreadsheet provided.  Stock A has an annualized volatility equal to 18% for which you have just written an out-of-the-money 26 week call option.  The risk free rate is 2% p ...

1 explain how replication can be conceptualized as a

1. Explain how replication can be conceptualized as a factorial experimental design. 2. Why are research programs more important to the advancement of science than are single experiments? 3. Define a meta-analysis, and e ...

Define the endurance limit of a bolt which is greater the

Define the endurance limit of a bolt ? Which is greater, the static yield strength or the endurance limit of the bolt? When will an increase in preload increase fatigue life? When will an increase in preload decrease fat ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen