- David Lyons, CEO of Lyons Solar Technologies, is concerned about his firm’s level of debt financing. The company uses short-term debt to finance its temporary working capital needs z but it does
- Start with the partial model in the file Ch26 P11 Build a Model.xls on the textbook’s Web site. Rework Problem 26-10 using a spreadsheet model. After completing the problem as it appears, answer
- An unlevered firm has a value of $800 million. An otherwise identical but levered firm has $60 million in debt. Assuming the corporate tax rate is 35%, use the MM model with corporate taxes to
- An unlevered firm has a value of $500 million. An otherwise identical but levered firm has $50 million in debt. Under the MM zero-tax model, what is the value of the levered firm?
- Start with the partial model in the file Ch25 P09 Build a Model.xls on the textbook’s Web site. Bradford Services Inc. (BSI) is considering a project with a cost of $10 million and an expected life
- Answer the following questions.a. Suppose Asset A has an expected return of 10% and a standard deviation of 20%. Asset B has an expected return of 16% and a standard deviation of 40%. If the
- Start with the partial model in the file Ch24 P09 Build a Model.xls from the textbook’s Web site. Following is information for the required returns and standard deviations of returns for A, B, and
- You are given the following set of data:a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X’s beta coefficient.b. Determine the arithmetic average rates of
- The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A’s
- Start with the partial model in the file Ch23 P06 Build a Model.xls on the textbook’s Web site. Use the information and data from Problem 23-5.a. Create a hedge with the futures contract for Zinn
- Explain how the futures markets can be used to reduce interest rate risk and input price risk.
- Start with the partial model in the file Ch22 P05 Build a Model.xls on the textbook’s Web site. Duchon Industries had the following balance sheet at the time it defaulted on its interest payments
- The Verbrugge Publishing Company’s 2010 balance sheet and income statement are as follows (in millions of dollars):Verbrugge and its creditors have agreed upon a voluntary reorganization plan. In
- Hager’s Home Repair Company, a regional hardware chain that specializes in “do it yourself” materials and equipment rentals, is cash rich because of several consecutive good years. One of the
- Start with the partial model in the file Ch21 P07 Build a Model.xls on the textbook’s Web site. Wansley Portal Inc., a large Internet service provider, is evaluating the possible acquisition of
- On the basis of your answers to Problems 21-1 and 21-2, indicate the range of possible prices that Hastings could bid for each share of Vandell common stock in an acquisition.Data From Problem
- Define each of the following terms:a. Synergy; mergerb. Horizontal merger; vertical merger; congeneric merger; conglomerate mergerc. Friendly merger; hostile merger; defensive merger; tender offer;
- Start with the partial model in the file Ch20 P06 Build a Model.xls on the textbook’s Web site. Schumann Shoe Manufacturer is considering whether or not to refund a $70 million, 10% coupon, 30-year
- Before entering a formal agreement, investment banks carefully investigate the companies whose securities they underwrite; this is especially true of the issues of firms going public for the first
- How do you think each of the following items would affect a company’s ability to attract new capital and the flotation costs involved in doing so?a. A decision of a privately held company to go
- Is it true that the “flatter” (more nearly horizontal) the demand curve for a particular firm’s stock and the less important investors regard the signaling effect of the offering, the more
- Start with the partial model in the file Ch19 P08 Build a Model.xls on the textbook’s Web site. Maggie’s Magazines (MM) has straight nonconvertible bond that currently yield 9%. MM’s stock
- Suppose a company simultaneously issues $50 million of convertible bonds with a coupon rate of 10% and $50 million of straight bonds with a coupon rate of 14%. Both bonds have the same maturity. Does
- Start with the partial model in the file Ch18 P06 Build a Model.xls on the textbook’s Web site. As part of its overall plant modernization and cost reduction program, Western Fabrics’s management
- One advantage of leasing voiced in the past is that it kept liabilities off the balance sheet, thus making it possible for a firm to obtain more leverage than it otherwise could have. This raised the
- Citrus Products Inc. is a medium-sized producer of citrus juice drinks with groves in Indian River County, Florida. Until now, the company has confined its operations and sales to the United States,
- Start with the partial model in the file Ch17 P15 Build a Model.xls on the textbook’s Web site. Yohe Telecommunications is a multinational corporation that produces and distributes
- Suppose the exchange rate between U.S. dollars and the Swiss franc is SFr1.6 = $1 and the exchange rate between the dollar and the British pound is £1 = $1.50. What then is the cross rate between
- Start with the partial model in the file Ch16 P18 Build a Model.xls on the textbook's Web site.Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank.
- Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl’s Doll Shop. Business has been good, but Koehl has frequently run out of cash. This has necessitated late
- The Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Christie’s sales last year (all on credit) were
- Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date.a. 1/15, net 20b. 2/10, net
- McDowell Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500. Forty percent of customers pay on the 10th day and take discounts; the other 60% pay, on average, 40 days
- A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to
- The following discussion questions demonstrate how we can evaluate the capital structures for three global automobile companies: Ford (F), BMW (BMW), and Toyota (J:TYMO). As you gather information on
- The Rivoli Company has no debt outstanding, and its financial position is given by the following data:The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it
- The Rivoli Company has no debt outstanding, and its financial position is given by the following data:The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it
- Let’s find out what has happened to Microsoft’s (MSFT) dividend policy since its 2003 announcement to initiate dividends. We can address this issue by relying on the data that are provided to you
- Start with the partial model in the file Ch14 P13 Build a Model.xls on the textbook’s Web site. J. Clark Inc. (JCI), a manufacturer and distributor of sports equipment, has grown until it has
- Start with the partial model in the file Ch14 P13 Build a Model.xls on the textbook’s Web site. J. Clark Inc. (JCI), a manufacturer and distributor of sports equipment, has grown until it has
- Define each of the following terms:a. Optimal distribution policyb. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theoryc. Information content, or signaling, hypothesis; clientele
- Define each of the following terms:a. Optimal distribution policyb. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theoryc. Information content, or signaling, hypothesis; clientele
- You have been hired as a consultant to Kulpa Fishing Supplies (KFS), a company that is seeking to increase its value. The company’s CEO and founder, Mia Kulpa, has asked you to estimate the value
- Start with the partial model in the file Ch13 P11 Build a Model.xls on the textbook’s Web site. The Henley Corporation is a privately held company specializing in lawn care products and services.
- Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012, and the weighted average cost of capital is 11%. What is the horizon
- Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012, and the weighted average cost of capital is 11%. What is the horizon
- Hatfield Medical Supplies’s stock price had been lagging its industry averages, so its board of directors brought in a new CEO, Adam Lee. Lee asked for the company’s long-run strategic plan; when
- Hatfield Medical Supplies’s stock price had been lagging its industry averages, so its board of directors brought in a new CEO, Adam Lee. Lee asked for the company’s long-run strategic plan; when
- Clothing retailer Abercrombie & Fitch enjoyed phenomenal success in the late 1990s. Between 1996 and 2000, its sales grew almost fourfold, from $335 million to more than $1.2 billion, and its stock
- Clothing retailer Abercrombie & Fitch enjoyed phenomenal success in the late 1990s. Between 1996 and 2000, its sales grew almost fourfold, from $335 million to more than $1.2 billion, and its stock
- Start with the partial model in the file Ch12 P11 Build a Model.xls on the textbook’s Web site, which shows Matthews Industries’s most recent balance sheet, income statement, and other data.
- Start with the partial model in the file Ch12 P10 Build a Model.xls on the textbook’s Web site, which contains the 2010 financial statements of Zieber Corporation. Forecast Zeiber’s 2011 income
- Start with the partial model in the file Ch12 P10 Build a Model.xls on the textbook’s Web site, which contains the 2010 financial statements of Zieber Corporation. Forecast Zeiber’s 2011 income
- Refer to Problem 12-1. What would be the additional funds needed if the company’s year-end 2010 assets had been $4 million? Assume that all other numbers, including sales, are the same as in
- Refer to Problem 12-1. What would be the additional funds needed if the company’s year-end 2010 assets had been $4 million? Assume that all other numbers, including sales, are the same as in
- Start with the partial model in the file Ch11 P18 Build a Model.xls on the textbook’s Web site. Webmasters.com has developed a powerful new server that would be used for corporations’ Internet
- Start with the partial model in the file Ch10 P23 Build a Model.xls on the textbook’s Web site. Gardial Fisheries is considering two mutually exclusive investments. The projects’ expected net
- Refer to Problem 10-1. What is the project’s IRR?Data From Problem 10-1:A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of
- Define each of the following terms:a. Capital budgeting; regular payback period; discounted payback periodb. Independent projects; mutually exclusive projectsc. DCF techniques; net present value
- In this chapter we described how to estimate a company's WACC, which is the weighted average of its costs of debt, preferred stock, and common equity. Most of the data we need to do this can be found
- Start with the partial model in the file Ch09 P18 Build a Model.xls on the textbook's Web site. The stock of Gao Computing sells for $50, and last year's dividend was $2.10. A flotation cost of 10%
- Start with the partial model in the file Ch09 P18 Build a Model.xls on the textbook's Web site. The stock of Gao Computing sells for $50, and last year's dividend was $2.10. A flotation cost of 10%
- Start with the partial model in the file Ch09 P18 Build a Model.xls on the textbook's Web site. The stock of Gao Computing sells for $50, and last year's dividend was $2.10. A flotation cost of 10%
- A company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at a price of $515.16. The company's federal-plus-state tax rateis 40%. What is the firm's
- Start with the partial model in the file Ch08 P08 Build a Model.xls on the textbook's Web site. You have been given the following information for a call option on the stock of Puckett Industries: P =
- Start with the partial model in the file Ch08 P08 Build a Model.xls on the textbook's Web site. You have been given the following information for a call option on the stock of Puckett Industries: P =
- Start with the partial model in the file Ch08 P08 Build a Model.xls on the textbook's Web site. You have been given the following information for a call option on the stock of Puckett Industries: P =
- Use the Black-Scholes Model to find the price for a call option with thefollowing inputs: (1) current stock price is $30, (2) strike price is $35, (3) time toexpiration is 4 months, (4) annualized
- Sam Strother and Shawna Tibbs are senior vice presidents of Mutual of Seattle. They are co- directors of the company's pension fund management division, with Strother having responsibility for fixed
- In this chapter we described the various factors that influence stock prices and the approaches analysts use to estimate a stock's intrinsic value. By comparing these intrinsic value estimates to the
- Start with the partial model in the file Ch07 P20 Build a Model.xls on the textbook's Web site. Rework parts a, b, and c of Problem 7-19 using a spreadsheet model. For part b, calculate the price,
- Define each of the following terms:a. Proxy; proxy fight; takeover; preemptive right; classified stock; founders' sharesb. Closely held stock; publicly owned stockc. Intrinsic value (Po); market
- Assume that you recently graduated with a major in finance and that you just landed a job as a financial planner with Barney Smith Inc., a large financial services corporation. Your first assignment
- In the Capital Asset Pricing Model (CAPM) discussion, beta is identified as the correct measure of risk for diversified shareholders. Recall that beta measures the extent to which the returns of a
- Start with the partial model in the file Ch06 P14 Build a Model.xls on the textbook's Web site. The file contains hypothetical data for working this problem. Bartman Industries's and Reynolds
- The probability distribution of a less risky return is more peaked than that of a riskier return. What shape would the probability distribution have for (a) completelycertain returns and (b)
- Start with the partial model in the file Ch05 P24 Build a Model.xls on the textbook'sWeb site. A 20-year, 8% semiannual coupon bond with a par value of $1,000 may becalled in 5 years at a call price
- Define each of the following terms:a. Bond; Treasury bond; corporate bond; municipal bond; foreign bondb. Par value; maturity date; coupon payment; coupon interest ratec. Floating-rate bond; zero
- Find the present value of the following ordinary annuities.a. $400 per year for 10 years at 10%b. $200 per year for 5 years at 5%c. $400 per year for 5 years at 0%d. Now rework parts a, b, and c
- Define each of the following terms:a. PV; I; INT; FVN; PVAN; FVAN; PMT; M; INOMb. Opportunity cost ratec. Annuity; lump-sum payment; cash flow; uneven cash flow streamd. Ordinary (or deferred)
- The first part of the case, presented in Chapter 2, discussed the situation of Computron Industries after an expansion program. A large loss occurred in 2010, rather than the expected profit. As a
- Use Thomson ONE to analyze Ford Motor Company. Enter Ford's ticker symbol (F) and select GO. By selecting the tab at the top labeled Financials, you can find Ford's key financial statements for the
- Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbook's Web site. Joshua & White (J&W) Technologies's financial statements are also shown below. Answer the
- Start with the partial model in the file Ch03 P15 Build a Model.xls from the textbook'sWeb site. Joshua & White (J&W) Technologies's financial statements are also shownbelow. Answer the following
- Assume you are given the following relationships for the Clayton Corporation:Calculate Clayton's profit margin and debt ratio.
- Define each of the following terms:a. Liquidity ratios: current ratio; quick, or acid test, ratiob. Asset management ratios: inventory turnover ratio; days sales outstanding(DSO); fixed assets
- Donna Jamison, a graduate of the University of Tennessee with four years of banking experience, was recently brought in as assistant to the chairman of the board of Computron Industries, a
- Donna Jamison, a graduate of the University of Tennessee with four years of banking experience, was recently brought in as assistant to the chairman of the board of Computron Industries, a
- Over the past decade, Starbucks coffee shops have become an increasingly familiar part of the urban landscape. The Thomson ONE-Business School Edition online database can provide a wealth of
- Begin with the partial model in the file Ch02 P15 Build a Model.xls on the textbook's Web site.a. Using the financial statements shown below for Lan & Chen Technologies, calculate net operating
- Begin with the partial model in the file Ch02 P14 Build a Model.xls on the text- book's Web site.a. Cumberland Industries's 2010 sales were $455,000,000; operating costs (excluding depreciation) were
- The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of
- The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of
- The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of
- Explain the following statement: "Whereas the balance sheet can be thought of as asnapshot of the firm's financial position at a point in time, the income statement reports on operations over a
- Define each of the following terms:a. Annual report; balance sheet; income statementb. Common stockholders' equity, or net worth; retained earningsc. Statement of stockholders' equity; statement of
- Define each of the following terms:a. Proprietorship; partnership; corporationb. Limited partnership; limited liability partnership; professional corporationc. Stockholder wealth maximizationd. Money
- Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $80,000. HPB will need it for only 3 years even though the compressor’s economic life is long enough so that the lease