Entries by Hannah Wangui

River Cruises is all-equity-financed

September 24, 2019 in /by

Question River Cruises is all-equity-financed. /> Current DataNumber of shares:                       100,000Price per share:                      $            10Market value of shares:          $ 1,000,000 State of the Economy Slump      Normal           BoomProfits before interest:            $82,750       140,500        202,000 Suppose it now issues $250,000 of debt at an interest rate of 10% and uses the proceeds to repurchase 25,000 shares. Assume that the firm pays no […]

 

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Plank’s Plants had net income of $4,000 on sales of $90,000 last year

September 24, 2019 in /by

Question 1.  Plank’s Plants had net income of $4,000 on sales of $90,000 last year. The firm paid a dividend of $400. Total assets were $300,000, of which $180,000 was financed by debt. a. What is the firm’s sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. If […]

 

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The 2017 financial statements for Growth Industries

September 24, 2019 in /by

Question 1.      The 2017 financial statements for Growth Industries are presented below.                                  INCOME STATEMENT, 2017 Sales                                                                          $250,000    Costs                                                                           175,000    EBIT                                                                            $75,000     Interest expense                                                       15,000     Taxable income                                                          $60,000   Taxes (at 35%)                                                            21,000    Net income                                                                  $39,000  Dividends                                               $23,400                                                 Addition to retained earnings                15,600                            BALANCE SHEET, YEAR-END, 2017        Assets                                                                                                                         Liabilities                                           Current assets                                                                 Current liabilities                                          Cash                                    $8,000                                […]

 

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Suppose that you own 2,600 shares of Nocash Corp.

September 24, 2019 in /by

Question Q 1. Suppose that you own 2,600 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $120 per share. a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round intermediate calculations.) b. What will be the […]

 

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