Question: Someone plz solve all, help needed! Ch II R1: Gamma Corp. owns several municipal bonds and AAA corporate bonds that pay rates of return of
Someone plz solve all, help needed!
Ch II R1: Gamma Corp. owns several municipal bonds and AAA corporate bonds that pay rates of return of 4.65 per cent and 5.9 per cent, respectively. Additionally, it has also purchased preferred stock on a publicly traded company with a dividend yield of five per cent. Gamma Corp. only retains 12 per cent of the total market capitalization of this publicly traded company. If Gamma Corp. were in the 21 per cent tax bracket, which investment would be the most advantageous?
Ch IV R2: UnDone Inc. has Sales of $39,400, Cost of Goods Sold and Other Administrative Expenses of $20,937.5, Interest Expense amounts to $1,010, and a yearly Depreciation allowance of $10,000. Fixed Assets amount to $36,560, Accounts Payable of $5,880, Current Assets of $6,030, Long-term Debt of $15,200, and Total Equity of $21,520. The company maintains a constant 50 per cent Dividend Pay-out Ratio. The relevant tax rate is 20 per cent. Next year's Sales are projected to increase by 20 per cent. What is the amount of External Financing Needed if the firm is currently operating at full capacity?
Ch VII R3: LU Enterprises' callable semi-annual bonds have a10-year maturity, and a 6.25 per cent coupon. The going interest rate is 4.75 per cent. The bonds can be called in five years with a 3.5 per cent premium. What is the bonds YTC?
Ch VIII R4: New Gods Corp. is growing at a very fast pace. The last annual dividend the firm paid was $0.25 a share, the firm is going to suspend dividends payments temporarily; hence, investors require at least a 10 per cent return on NG Corp.s stock. The company pledges to pay annual dividends of $0.5, $0.5, $1, and $1 per share, respectively, starting in three years. After that, the dividend is projected to increase by five per cent annually. What is the current value of this stock?
Ch IX R5: Drinkable Water Systems is analysing two mutually exclusive projects using its WACC of 10 per cent. Project A with projected cash inflows of $17,500 for years 1 to 3, respectively and a cancelation expense of 10,000 at year 4. This project requires a $30,000 initial investment. Alternatively, Project B has projected yearly cash flows of $30,000, -$20,000, and $40,000 starting in three years, after a current initial cost of 50,000. a. Compute their Discounted Payback; consider a 1.5-year benchmark threshold. b. Should any project be accepted based on the combination approach to the MIRR if both the discount rate and the reinvestment rate are 10 per cent?
Ch X R6: A firm is contemplating the purchase of a new $675,000 computer-based order entry system to be used for five-years. The equipment falls in the five-year MACRS class with annual depreciation allowances of 20 per cent, 32 per cent, 19.2 per cent, 11.52 per cent, 11.52 per cent, and 5.76 per cent, for years one to six, respectively. In the secondary market, it will be worth $156,000 at the end of the project. The system will generate savings of $176,000 before taxes per year in order processing costs and it requires an initial investment in net working capital of $51,000. The tax rate is 20 per cent and the required rate of return is eight per cent. Should the firm make the investment?
Ch X R7: Backbone PLC. wants to maintain a growth rate of five per cent without incurring any additional debt or equity financing. The firm maintains a constant debt-equity ratio of 0.4, a total asset turnover ratio of 2x, and a profit margin of eight per cent. What must the dividend pay-out ratio be?
Ch XI R8: Romanesque SA is considering a new limited product launch. The project will have an initial cost of $1,150,000, a three-year life, and no salvage value; depreciation is straight-line to zero. Sales are projected at 1,000 units per year, price per unit will be $750, variable cost per unit will be $400, and fixed costs will be $200,000 per year. The firms WACC is 12 per cent and the relevant tax rate is 20 per cent. External firm consultants believe forecasted unit sales and price are accurate within a 5 per cent range while costs may vary by 10 per cent. a. What is the best-case scenario NPV? b. What is the sensitivity of NPV to changes in the sales volume?
Ch XII R9: Over three of the past four years Cassina SpA. experienced annual stock returns of 15 per cent, -7 per cent, and 12 per cent, respectively. The annual dividend yields ranging from 0.5 per cent to four per cent were included in the overall annual stock returns. a. What is the missing Cassina SpA.s annual return that results on a four-year Geometric Average Return of 7.139 per cent for the Italian firm? b. Using the missing annual return determined above, please calculate the firms AAR and SD.
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