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What is the company's new required rate of return 1. Which of the following statements best describes what you should expect if you randomly select stocks and add them to your portfolio? a. Adding more such stocks will reduce the portfolio's unsystematic, or diversifiable, risk. b. Adding more such stocks will increase the portfolio's expected rate of return. c. Adding more such stocks will reduce the portfolio's beta coefficient and ...

Other / Other 27 Apr 2016

Which of the following projects should Conglomerate accept 1. You must estimate the intrinsic value of Gallovits Technologies’ stock. Gallovits’s end-of-year free cash flow (FCF) is expected to be $25 million, and it is expected to grow at a constant rate of 8.5% a year thereafter. The company’s WACC is 11%. Gallovits has $200 million of long-term debt plus preferred stock, and there are 30 million shares of com ...

Other / Other 27 Apr 2016

What was British Pub's return on owners' equity in 200X USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS THE BRITISH PUB CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/200X (DOLLARS IN THOUSANDS) -------------------------------------------------------------- Net sales $1025 Cost of goods sold 682 ----- EBITDA 343 Depreciation 31 Operating expense 103 Administrative expense ...

Other / Other 27 Apr 2016

Crockett Corporation's 5-year bonds yield 1. Assume that interest rates on 20-year Treasury and corporate bonds are as follows: T-bond = 7.72% AAA = 8.72% A = 9.64% BBB = 10.18% The differences in these rates were probably caused primarily by: a. Tax effects. b. Default risk differences. c. Maturity risk differences. d. Inflation differences. e. Real risk-free rate differences 2. A bond trader observes the following inform ...

Other / Other 27 Apr 2016

Hoagland Corp's stock price at the end of last year 1. Ajax Corp's sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times-interest-earned (TIE) ratio? a. 4.72 b. 4.97 c. 5.51 d. 5.80 2. Hoagland Corp's stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio? a. 1.34 b. 1.41 c. 1.48 ...

Other / Other 27 Apr 2016

What is Quigley's WACC 1. Which of the following statements is CORRECT? a. When calculating the cost of debt, a company needs to adjust for taxes, because interest payments are deductible by the paying corporation. b. When calculating the cost of preferred stock, companies must adjust for taxes, because dividends paid on preferred stock are deductible by the paying corporation. c. Because of tax effects, an increase in the risk-free rat ...

Other / Other 27 Apr 2016

Which of the following are likely to occur if this proposal is adopted 1. Stennett Corp.’s CFO has proposed that the company issue new debt and use the proceeds to buy back common stock. Which of the following are likely to occur if this proposal is adopted? (Assume that the proposal would have no effect on the company’s operating income.) a. Return on assets (ROA) will decline. b. The Depreciation will increase. c. T ...

Other / Other 27 Apr 2016

What is Wilson’s net profit margin and debt ratio 1. Culver Inc. has earnings before interest and taxes (EBIT )of $300. The company’s times interest earned ratio is 7.00. Calculate the company’s interest charges. a. $42.86 b. $50.00 c. $40.00 d. $60.00 2. The Wilson Corporation has the following relationships: Sales/Total assets 2.0 Return on assets (ROA) 4.0% Return on equity (ROE) 6.0% ...

Other / Other 27 Apr 2016

Calculate DSO (days sales outstanding) ratio USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS You are provided with the following information for a company. Sales 35000 Receivables 750 COGS 20000 Inventory 3000 Payables 1500 1. Calculate DSO (days sales outstanding) ratio a) 7.83 b) 8.4 c) 55.1 d) 36.7 2. Calculate the inventory turnover ratio a) 27.23 b) 13.3 c) 55.43 ...

Other / Other 27 Apr 2016

Which of the following actions are likely to reduce agency conflicts 1. Which of the following statements is most correct? a. One advantage of forming a corporation is that you have limited liability. b. Corporations face fewer regulations than sole proprietorships. c. One disadvantage of being a sole proprietor is that you have to pay corporate taxes, even though you don’t realize the benefits of being a corporation. d. State ...

Other / Other 27 Apr 2016