Entries by Hannah Wangui

Which of the following is NOT a. The extent to which operating costs are fixed.

November 27, 2020 in /by

Which of the following is NOT a. The extent to which operating costs are fixed. associated with (or does not contribute to) business risk? Recall that business risk is affected by a firm’s operations. b. Input price variability. c. Demand variability. d. The extent to which interest rates on the firm’s debt fluctuate. e. Sales price variability. […]

 

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Anson Jackson Court Company (AJC)

November 27, 2020 in /by

Anson Jackson Court Company (AJC) The Anson Jackson Court Company (AJC) currently has $200,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6%. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. AJC’s current cost of equity is 8.8%, and its tax […]

 

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Wilson Dover Inc.12​Refer to the data for Wilson Dover Inc. What is the yield on Wilson Dover’s debt?

November 27, 2020 in /by

Wilson Dover Inc.12​Refer to the data for Wilson Dover Inc. What is the yield on Wilson Dover’s debt? The total value (debt plus equity) of Wilson Dover Inc. is $500 million and the face value of its 1-year coupon debt is $200 million. The volatility (σ) of Wilson Dover’s total value is 0.60, and the […]

 

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Which of the following would be most likely to lead to a decrease in a firm’s dividend payout ratio?

November 27, 2020 in /by

Which of the following would be most likely to lead to a decrease in a firm’s dividend payout ratio? a. Its accounts receivable decrease due to a change in its credit policy. b. Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages. […]

 

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