raxton Corp. has no debt but can borrow at 6.2 percent

Question: 2) Braxton Corp. has no debt but can borrow at 6.2…

2) Braxton Corp. has no debt but can borrow at 6.2 percent. The firm’s WACC is currently 8 percent, and the tax rate is 35 percent.

a. What is the company’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. If the firm converts to 20 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

c. If the firm converts to 50 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

d-1 If the firm converts to 20 percent debt, what is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

d-2 If the firm converts to 50 percent debt, what is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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Choose and describe a recent experience that you

Question: 3- Choose and describe a recent experience that yo…

3- Choose and describe a recent experience that you have had with a provider in the health services industry (medical practices, hospitals, clinics, nursing homes, home healthcare agencies, hospices). Using your chosen experience, highlight the major differences between tangible products and services. Analyze your experience in terms of your expectations and perceptions about each of the five components of service quality: (1) reliability (ability to perform the required service dependably and accurately); (2) responsiveness (willingness to help customers and provide prompt service); (3) assurance (employees knowledge, courtesy and ability to inspire trust); (4) empathy (degree of caring and compassion shown in service provision); and, (5) tangibles (appearance of physical facilities and other tangibles associated with the service).

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You have been asked to assess the expected financial impact

Question: You have been asked to assess the expected financial…

You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made by your company. Each proposal is independent of the other.

Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks.   Sales are projected to increase by $120,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 6% are projected to be uncollectible. Additional collection costs are projected to be 2% of incremental sales (whether they actually end up collected or not), and production and selling costs are projected to be 74% of sales. Your firm expects to pay a total of 40% of its income after expenses in taxes.

Compute the incremental income after taxes that would result from these projections:

Compute the incremental Return on Sales if these new credit customers are accepted:

If the receivable turnover ratio is expected to be 3 to 1 and no other asset buildup is needed to serve the new customers…

Compute the additional investment in Accounts Receivable:

Compute the incremental Return on New Investment:

If your company requires a 15% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers? Explain.

Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 3 days.

If the company currently averages $25,000 in collections per day, how many dollars will this suggested cash management system free up?

If all freed up dollars would be used to pay down debt that has an interest rate of 8%, how much money could be saved each year in interest expense?

Do the numbers suggest that this new system should be implemented if its total annual cost is $7,200? Explain.

 

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You have accumulated $1872270 for your retirement

Question: You have accumulated $1,872,270 for your retirement…

You have accumulated $1,872,270 for your retirement. How much money can you withdraw for the next 16 years in equal annual end-of the next 16 years in equal annual end-of-the-year cash flow if you invest the money at a rate of 17.85 percent per year, compound annually? Round the answer to two decimal places.

 

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Potts an employee for Jemoli and had a personal account

Question: In chapter 30 question 14. Potts an employee for J…

In chapter 30 question 14. Potts an employee for Jemoli and had a personal account with Raymond James and after the market crash in 2000 due to the dotcom bubble. Potts write checks for 4 months after totaling $1.5 million dollars to cover the margin calls. Once the principals at Jemoli discovered the embezzlement, Jemoli brought suit to recover the funds from Raymond James. Raymond James says it was a holder in due course (HDC) of the checks and not subject to Jemoli’s claims for breach of fiduciary duty by its agent, Potts. Who is correct about the HDC status of Raymond James and why? Is Raymond James correct that they are the holder in due course? Or, is the company that Potts worked for, Jemloi the holder in due course?

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Cooling tools inc is currently producing 685 of small refrigerators

Question: Cooling tools inc is currently producing 685 of sm…

Cooling tools inc is currently producing 685 of small refrigerators per month but the company’s ceo plans to increase production rate at 9.12percent per month until the firm is producing 6268 of refrigerators per month. how many months will this take? Round the answer to two decimal places.

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A proposed new investment has projected sales of $840000

Question: A proposed new investment has projected sales…

1)A proposed new investment has projected sales of $840,000. Variable costs are 55 percent of sales, and fixed costs are $173,000; depreciation is $74,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?

Sales $

Variable costs

Fixed costs

Depreciation

EBT $

Taxes Net income $

2)

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.73 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,090,000 in annual sales, with costs of $785,000. The project requires an initial investment in net working capital of $310,000, and the fixed asset will have a market value of $215,000 at the end of the project. If the tax rate is 30 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.)
  Years Cash Flow
  Year 0 $
  Year 1 $
  Year 2 $
  Year 3 $
If the required return is 13 percent, what is the project’s NPV?

3)

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs. System B costs $342,000, has a six-year life, and requires $70,000 in pretax annual operating costs. Suppose LISC always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 35 percent and the discount rate is 10 percent.
Calculate the EAC for both conveyor belt systems. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
EAC
  System A $
  System B $

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Preferred stock has two main characteristics that distinguish

Question: Preferred stock is said to be a hybrid of common…

Preferred stock is said to be a hybrid of common stock and bonds. Explain fully. Describe the cash flows associated with preferred and their valuation.

Answer)

Preferred stock has two main characteristics that distinguish it from common stock. First, if a company liquidates, any money that’s left over for shareholders goes first to holders of preferred stock up to a set amount, and only if there’s any remaining after that do common shareholders get anything. Second, preferred shareholders have preferential treatment with dividends, and if the issuing company doesn’t pay the full amount of dividends set forth in the prospectus, then it can’t pay common shareholders any dividend. Preferred stock is referred to a hybrid security because it has similarities to both common stock and bonds, they have no “fixed maturity date, if dividends aren’t paid by the firm, “it does not bring on bankruptcy, and dividends are not tax deductible. There is a similarity with bonds, in that their dividends have a fixed amount. Preferred stock shares elements of bonds and common stocks, and as such, many consider it to be a hybrid security. The par value is equivalent to the face value of a bond, and the dividend rate specified in the prospectus matches up to the coupon rate of the bond.

Lasher, W. R. (2013). Practical Financial Management, 7th Ed, Cengage Publishing

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What is the duration of a four-year Treasury bond with a 6

Question: What is the duration of a four-year Treasury bond

 

What is the duration of a four-year Treasury bond with a 6 percent semiannual coupon selling at par? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

 

  Duration of the bond years

 

b. What is the duration of a three-year Treasury bond with a 6 percent semiannual coupon selling at par? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

 

  Duration of the bond years

 

c. What is the duration of a two-year Treasury bond with a 6 percent semiannual coupon selling at par? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

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MLK Bank has an asset portfolio that consists of $210 million

Question: MLK Bank has an asset portfolio that consists of $…

 

MLK Bank has an asset portfolio that consists of $210 million of 15-year, 6-percent-coupon, $1,000 bonds with annual coupon payments that sell at par.

 

a-1. What will be the bonds’ new prices if market yields change immediately by ± 0.10 percent? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

 

              Bonds’ New Price
  At + 0.10% $
  At − 0.10%  

 

a-2. What will be the new prices if market yields change immediately by ± 2.00 percent? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

 

              Bonds’ New Price
  At + 2.0% $
  At − 2.0%  

 

b-1. The duration of these bonds is 10.2950 years. What are the predicted bond prices in each of the four cases using the duration rule? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

 

              Bonds’ New Price
  At + 0.10% $
  At − 0.10%  
  At + 2.0%  
  At − 2.0%  

 

b-2. What is the amount of error between the duration prediction and the actual market values? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

 

              Amount of Error
  At + 0.10% $
  At − 0.10%  
  At + 2.0%  
  At − 2.0%  

 

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