Cfin4 Plus Coursemate Printed Access Card 2014 1st Student Edition Scott Besley, Eugene F. Brigham - Solutions

Peter Piper’s Pies (P3) is evaluating four independent investments. The cost of each project is $214,000. The internal rates of return (IRRs)for the projects are IRR1 5 19%, IRR2 5 15%, IRR3 5 18%, and IRR4 5 14%. P3’s investment banker has provided the following WACC table:Which project(s)
Using the information provided in Tables 12.1 and 12.2, compute OptiCap’s EPS when sales are $200,000 and the debt-to-total-assets ratio(D/TA) is 20 percent.
Loving Gardens (LG) has $6 million in assets,$700,000 EBIT, 80,000 shares of stock outstanding, and a marginal tax rate equal to 40 percent.If LG’s debt-to-total-assets ratio (D/TA) is 70 percent, it pays 12 percent interest on debt, whereas if the D/TA ratio is 40 percent, interest is 9 percent.
Following is the latest income statement for Surfside Airlines:Compute Surfside’s degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL). Sales $150,000 Variable operating costs (105,000) Gross profit 45,000 Fixed operating costs ( 20,000) Net
Expert Analysts Resources (EAR) has provided you with the following information about three companies you are currently evaluating:Which firm would be considered riskiest? Explain your answe Company Degree of Operating Leverage (DOL) Degree of Financial Leverage (DFL) Acme 1.5x 6.0 Apex 3.0X 4.0

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