Q: What is Reg D?
A: Regulation D (Reg D): It may be a Securities and Exchange Commission (SEC) law confining exceptions…
Q: es FRA’s primarily and why?
A: Step 1 Forward rate agreements (FRAs) are agreements that are obtained over the counter between two…
Q: What is Gordon model?
A: Intrinsic value of a stock is based on the internal information of an organization. That is, market…
Q: What is Glass-Steagall Act?
A: Glass-Steagall Act splits up the investment and commercial banking segments of an investment bank.
Q: What is the answer question (A ) only??
A: Lets understand the basics. Management calculates the cash collection and cash payment for the…
Q: What is LIFO?
A: Definition: Inventory cost flow methods: These are the methods used by the companies to compute the…
Q: What does PFMA stand for?
A: Solution- PFMS [Public Financial Management System] PFMS stands for Public financial Management…
Q: What is meant by Remainderman?
A: The remainderman is a beneficiary that receives the principal left in an estate or trust after a…
Q: What is FIFO?
A: FIFO is a type of inventory management system where stock purchased earlier will be sold first and…
Q: What is factoring?
A: It is a money related service in which the business entity sells its bill receivables to an outsider…
Q: IS a Soie ng
A: As it is not mentioned specifically about the accounting basis adopted by…
Q: what does p&l stand for?
A: A deferred tax adjustment is prevalent where there is a temporary difference in the book value and…
Q: Describe the PW method?
A: There are different types of methods for comparing the worthiness of the projects. Some of the tem…
Q: What is Miller model?
A: It represents the impact of individual taxes or personal taxes into the valuation of a levered firm,…
Q: What is a limit order?
A: Limit order It is such an order to buy or trade a security at or superior to a predefined cost. The…
Q: What are the equivalent units?
A: Equivalent units: Completed units 150 Ending Inventory 20 Total…
Q: What is the meaning of Frieght Inward and Frieght outward?
A: Freight-inward: Freight-inward is a transportation cost related with the acquisition of goods. In is…
Q: What is LIBOR?
A: London Interbank bank offering rate (LIBOR): it's a financial interest rate between two bank or…
Q: What is R, the expected
A: The time value of money is a method to calculate the present value and future value of an…
Q: Define Volcker rule
A: Volcker Rule is a regulation that implies restrictions on the banks to involve in the stock market…
Q: What is MM Proposition I?
A: Modigliani and Miller’s approach is an element of economic theory and it forms the basis for modern…
Q: What is the decision rule for NPV?
A: Capital budgeting: Capital budgeting is a process by which the management can plan and evaluate the…
Q: What ‘LIBOR’ stands for?
A: LIBOR : LIBOR, which stands for London Interbank Offered Rate, is a globally accepted key…
Q: Why is C the correct one?
A: DPO stands for Days payable outstanding refers to the financial ratio which states the average time…
Q: What is GAAP?
A: Generally Accepted Accounting Principles (GAAP): These are the guidelines necessary to create…
Q: nterest?
A: D,E and F are Partner in a partnership firm and sharing profit in the ratio of 1:3:6.
Q: What is alpha transfer?
A: The term ‘Alpha’ refers to the active return on investment. In other words, the excess return from…
Q: stimat- r this
A: Under % the age completion method the revenue is recognized on the basis of the cost…
Q: What is the full form of ERP? Explain ERP with examples?
A: ERP means Enterprise Resource Planning, it is a process management software used by organizations to…
Q: What is EBITDA?
A: EBITDA is a metric which is used to measure the company's profitability. Though there is no legal…
Q: What is composite of e?
A: Composite unit is defined as the hypothetical measure which combines the products in the sales mix…
Q: What is the Baumol model, and how is it used?
A: The Baumol model, also known as the Baumol-Allais-Tobin (BAT) model, is a cash management model. In…
Q: What is an LBO?
A: Leveraged buyout (LBO): It is another firm's takeover, employing a huge sum of borrowed capital to…
Q: What is cpj
A: Financial accounting involves the work of recording and posting of financial transactions into the…
Q: Define Will.
A: A will is a legal document in which a person specifies how his property is going to be distributed…
Q: What is a cfar?
A: Cash Flow at Risk (CFAR):Cash Flow at Risk is a term which focuses on the risk of receivables and…
Q: What is the difference between the CML and the SML?
A: The term CML refers to capital market line. Whereas the term SML refers to security market line.
Q: What is APR?
A: In US, calculation as well as disclosure of Annual Percentage Rate is basically government by an act…
Q: What is a double-entry? Give an example?
A: Double entry: Double-entry refers to the double effect of each financial transaction that occurs.…
Q: Which of the attribute fou
A: Virtual currency is treated as property and general tax principles applicable to property…
Q: What is inverse floater?
A: Introduction: This question is related to the concept of financial derivatives. Derivative…
Q: What does ROE measure?
A: Profitability ratio is referred as the financial metrics which is used by analysts as well as…
Q: What is Jensen’s alpha?
A: Jensens alpha is the abnormal or unexpected return of an investment over the theoretical expected…
Q: What is CAPM? What is ‘Alpha’ and ‘Beta’ in CAPM?
A: CAPM - CAPM model means the Capital asset pricing model. It describes the relational ship between…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- You work for the CEO of a new company that plans to manufacture and sell a new type of laptop computer. The issue now is how to finance the company, with only equity or with a mix of debt and equity. Expected operating income is $690,000. Other data for the firm are shown below. How much higher or lower will the firm's expected EPS be if it uses some debt rather than only equity, i.e., what is EPSL - EPSU? 0% Debt, U 60% Debt, L Oper. income (EBIT) $690,000 $690,000 Required investment $2,500,000 $2,500,000 % Debt 0.0% 60.0% $ of Debt $0.00 $1,500,000 $ of Common equity $2,500,000 $1,000,000 Shares issued, $10/share 250,000 100,000 Interest rate NA 10.00% Tax rate 35% 35% Select one: a. $1.29 b. $1.97 c. $2.23 d. $1.63 e. $1.72You work for the CEO of a new company that plans to manufacture and sell a new type of laptop computer. The issue now is how to finance the company, with only equity or with a mix of debt and equity. Expected operating income is $810,000. Other data for the firm are shown below. How much higher or lower will the firm's expected EPS be if it uses some debt rather than only equity, i. e., what is EPSL - EPSU? 0% Debt, U 60% Debt, L Oper. income (EBIT) $810,000 $810,000 Required investment $ 2,500,000 $2,500,000 % Debt 0.0% 60.0% $ of Debt $0.00 $1,500,000 $ of Common equity $2,500,000 $ 1,000,000 Shares issued, $10/share 250,000 100, 000 Interest rate NA 10.00% Tax rate 25% 25% a. $0.75 b. $ 2.52 c. $3.36 d. $4.10 e. $2.907. You work for the CEO of a new company that plans to manufacture and sell a new product, a watch that has an embedded TV set and a magnifying glass erystal. The issue now is how to finance the company, with only equity or with a mix of debt and equity. Expected operating income is S540,000. Other data for the firm are shown below. How much higher or lower will the firm's expected ROE be ifit uses some debt rather than all equity, i.e., what is ROEL. - ROEU? Do not round your intermediate calculations. 0% Deht, U Oper. income (EBIT) Required investment S540,000 $2,500,000 0.0% 60% Debt, L S540,000 $2,500,000 % Debt S of Debt S of Common equity 60.0% S0.00 $1,500,000 S1,000,000 $2,500,000 NA 35% Interest rate 10.00% Tax rate 35% a. 10.74% b. 13.57% c. 14.14% d. 11.88% e. 11.31%
- 7. You work for the CEO of a new company that plans to manufacture and sell a new product, a watch that has an embedded TV set and a magnifying glass crystal. The issue now is how to finance the company, with only equity or with a mix of debt and equity. Expected operating income is $540,000. Other data for the firm are shown below. How much higher or lower will the firm's expected ROE be if it uses some debt rather than all equity, i.e., what is ROEL - ROEU? Do not round your intermediate calculations. 0% Debt, U 60% Debt, L Oper. income (EBIT) Required investment $540,000 $2,500,000 $540,000 $2,500,000 % Debt $ of Debt $ of Common equity 0.0% 60.0% $1,500,000 $1,000,000 $0.00 $2,500,000 Interest rate NA 10.00% Tax rate 35% 35% а. 10.74% b. 13.57% с. 14.14% d. 11.88% е. 11.31%1) An investor is considering starting a new business. The company would require $475,000 of assets, and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have a ROE of 13.5%. How much net income must be expected to warrant starting the business? Netincome = 2) Pace Corp.'s assets are $625,000, and its total debt outstanding is $185,000. The new CFO wants to employ a debt ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio? 29,6 Debt Ratio total debt total Asset 3) Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio? TIF = earning before tax or Int 29 I = 362500 12500 4) Nikko Corp.'s total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What…An investor is considering starting a new business. The company would require $475,000 of assets, and itwould be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business? Please show work in excel
- An investor is considering starting a new business. The company would require $500,000 of assets, and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 15.0% return on the invested capital, which means that the firm must have an ROE of 15.0%. How much net income must be expected to warrant starting the business?David Lyons, CEO of Lyons Solar Technologies, is concerned about his firms level of debt financing. The company uses short-term debt to finance its temporary working capital needs, but it does not use any permanent (long-term) debt. Other solar technology companies have debt, and Mr. Lyons wonders why they use debt and what its effects are on stock prices. To gain some insights into the matter, he poses the following questions to you, his recently hired assistant: e. Suppose the expected free cash flow for Year 1 is 250,000 but it is expected to grow faster than 7% during the next 3 years: FCF2 = 290,000 and FCF3 = 320,000, after which it will grow at a constant rate of 7%. The expected interest expense at Year 1 is 128,000, but it is expected to grow over the next couple of years before the capital structure becomes constant: Interest expense at Year 2 will be 152,000, at Year 3 it will be 192,000 and it will grow at 7% thereafter. What is the estimated horizon unlevered value of operations (i.e., the value at Year 3 immediately after the FCF at Year 3)? What is the current unlevered value of operations? What is the horizon value of the tax shield at Year 3? What is the current value of the tax shield? What is the current total value? The tax rate and unlevered cost of equity remain at 25% and 14%, respectively.Your sister is thinking about starting a new business. The company would require $300,000 of assets, and it would be financed entirely with common stock. She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business? a. $44,145 b. $38,475 c. $33,210 d. $40,500 e. $41,310
- You were hired as the CFO of a new company that was founded by three professors at your university. The company plans to manufacture and sell a new product, a cell phone that can be worn like a wrist watch. The issue now is how to finance the company, with equity only or with a mix of debt and equity. The price per phone will be $250.00 regardless of how the firm is financed. The expected fixed and variable operating costs, along with other data, are shown below. How much higher or lower will the firm's expected ROE be if it uses 60% debt rather than only equity, i.e., what is ROEL - ROEU? 0% Debt, U 60% Debt, L Expected unit sales (Q) 33,500 33,500 Price per phone (P) $250.00 $250.00 Fixed costs (F) $1,000,000 $1,000,000 Variable cost/unit (V) $200.00 $200.00 Required investment $2,500,000 $2,500,000 % Debt 0.00% 60.00% Debt, $ $0 ?? Equity, $ $2,500,000 ?? Interest rate NA 10.00% Tax rate 25.00% 25.00% Group of answer choices…You have been asked by your employers to demonstrate your knowledge in business valuation process, by analyzing the value of Best Group Savings and Loans Company (BGSLC). The company paid a dividend of GH¢ 250,000 this year. The current return to shareholders of companies in the same industry as BGSLC is 12%, although it is expected that an additional risk premium of 2% will be applicable to BGSLC, being a smaller and unquoted company. Compute the expected valuation of BGSLC, if: The current level of dividend is expected to continue into the foreseeable future The dividend is expected to grow at a rate 4% par into foreseeable future The dividend is expected to grow at a 3% rate for three years and 2% afterwards1. You want to invest in a company that guarantees your money's interest payments and returns at the maturity date as an investor. Which is the best option for this investment? 2. The ABC Incorporated paid a dividend of Php142.60 per share last year. Yesterday's last price is Php2,300 with the current yield of 6.2%. This problem is an example of _____. Suppose that you have a stable job and you are thinking about your family's future once you retire from your job. What is an appropriate investment for retirees? a. bonds b. stocks c. stocks and bonds d. neither stocks nor bonds