Which of the following are true about debt and equity interest payments are generally tax deductible but dividends are not debt returns are limited to repayment of principal and interest potential equity returns are infinite liabilities and debt are the same thing all public companies pay dividends
Q: Medco Corporation can sell preferred stock for $84 w $5 per share in dividends. a. Compute the cost…
A: Cost of preferred stock =Dividend per share(Price per share - Flotation cost) First, we need to…
Q: Intro BP has a bond outstanding with 15 years to maturity, a $1,000 par value, a coupon rate of…
A: Bonds are debt instruments issued by companies. Cost of debt, in case of bonds, is determined by…
Q: Which of the following describes a single premium variable annuity? A]Karen retires from her job…
A: Step 1 SPVAs are designed to provide flexibility and control over investments, as well as…
Q: it say 0.0617 is incorrect and answer must be rounded to 2 decimal places, (0.06 is incorrect also)
A: As per the given information: Current price of a preferred stock = $84Flotation cost = $3Annual…
Q: Stock A has a beta of 1.5 and Stock B has a beta of 0.8. Which of the following statements is most…
A: Beta is an important measure of risk used to evaluate stocks. It is a measure of a stock's…
Q: The duty of performance requires agents to live up to which of the following standards? Good…
A: Agents are obligated under the duty of performance to carry out their tasks with reasonable care and…
Q: A loan is amortized over 9 years, with monthly payments at a nominal rate of 9% compounded monthly.…
A: Given the following: First payment, P = $1,000 Nominal rate= 9% Term = 9 years Growth rate, g =…
Q: Compared to the 1960 and 1973 period, average real earnings of workers ______ from 1973 to 1995 and…
A: Real earnings refer to the income consumption by an individual after considering the effect of…
Q: A donor pledges money to the organization but has not paid it yet. The donor does not indicate how…
A: This will be regarded as an increase in net assets without any restrictions from the donor as the…
Q: A collection of financial assets and securities is referred to as a portfolio. Most individuals and…
A: Risk and return in investing are closely linked. Increased risk typically comes along with increased…
Q: A company is developing a special vehicle for Arctic exploration. The development requires an…
A: The analysis and evaluation of any investment's feasibility and profitability is recognized as…
Q: A 15 year $1000 face value coupon bond pays a coupon rate of 3.8% and has a YTM of 4.4%. Coupon…
A:
Q: Q 3 and Q 4 combined: You are a trader (arbitrageur) at Platypus Capital (a hedge fund). You are…
A: Annual worth is helpful for the interpretation of the data for one year which shows the recovery…
Q: A donor gives the organization a cash contribution to be used for expanding the organizations food…
A: The change in net assets resulting from a cash contribution given to an organization by a donor for…
Q: Orca Industries' 5.75% bonds currently sell for $1,370.54. They mature in 24 years and have a par…
A: Bonds are typically more accessible to individual investors than other types of debt securities such…
Q: Assume you purchase a share of stock for $50 at time t=0, and another share at $65 at time t= 1, and…
A: Step 1 The returns for each holding period or sub-period are multiplied by the time-weighted return…
Q: Ella Funt has been saving $5000 annually for the last 20 years and her account now totals $286,375.…
A: Interest rate Ella's account been earning is calculated in excel using Rate function with number of…
Q: Malkiel and Saha (2005) estimate that the survivorship bias for hedge funds equals 4.4%, which is…
A: Hedge funds are investment instruments that are typically structured as private partnerships and…
Q: A company’s 8 percent coupon rate, paid semiannually, $1,000 par value bond which mature in 30 years…
A: Annual Yield to maturity refers to the pre-tax cost of debt. The after-tax cost of debt depicts the…
Q: While buying a new car, William made a down payment of $900 and agreed to make month-end payments of…
A: First we need to calculate monthly interest rate by using effective annual rate formula EAR =1+imm…
Q: What is the modified duration of a semiannual-pay 10.3 percent coupon bond with 11 years to maturity…
A: The modified duration of a bond is used to find out the change in the price of the bond for every…
Q: Budgeted cash receipts in the month - budgeted cash payments in the month - budgeted cash at the…
A: Explanation = Cash account balance at the end of month is that account balance which means the cash…
Q: Jill has a liability of 6000 due in four years. This liability will be met with payments of A in two…
A: To use full immunization strategy, we need to make sure that the present value of the assets will be…
Q: If inflation is higher than the Federal Reserve wants, the FOMC is likely to do what at its next…
A: The rate at which prices are generally increasing and, as a result, the purchasing power of money is…
Q: Alexander can purchase a new car for $25,000. Alternatively, in addition to a down payment of…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: We project unit sales for a new household-use laser-guided cockroach search and destroy system as…
A: Time Value of Money: The time value of money is the widely accepted idea that obtaining a sum of…
Q: Kaja Kallas produces luxury collection of dolls. She is preparing her budget for the coming year.…
A: The gross profit is calculated by deducting the cost of goods sold from the sales. The cost of…
Q: Plato Pharmaceuticals Ltd has invested £300,000 to date in developing a new type of insect…
A: NPV is a financial measure used to estimate the profitability of an investment or a project. It is…
Q: A certificate of deposit usually has: Multiple Choice O O a penalty for early withdrawal of funds.…
A: A Certificate of deposit (CD) is a type of savings account that typically has a set time period,…
Q: 15. If a project has an initial investment of $20,000, for 9 years a monthly interest rate equal to…
A: The magnitude and timing of cash flows of a project are known. The IRR has to be determined. IRR is…
Q: Since it is still pandemic, the Luxury Hotel is planning to invest in a blue-chip stock at 100 per…
A: The expected rate of return is the return that the investors expect on their investment alternatives…
Q: 1. Which step in the financial planning process comes before monitoring? a. Presenting the plan. b.…
A: Step 1 Making a plan for your future, specifically one that addresses how you will handle your…
Q: Benjamin Netanyahu sells fruit and vegetables from his market stall for cash. His budgeted sales for…
A: Net cash inflow is the difference between the total cash inflows and the total cash outflows of a…
Q: Rate of return-Annuity What is the rate of return on an investment of $11,733 if the investor will…
A: The rate of return on the investment is calculated in excel using IRR function
Q: 0 1 i = 7%/year A = $1000/yr Less than 3950 3 A₁ = $500 @t=5 Between 3950-3400 O Between 3400-3450 O…
A: The concept of money's time value reveals that any sum today is worth more as compared to the same…
Q: Problem No. 1 Cash Conversion Cycle Chastain Corporation is trying to determine the effect of its…
A: Ratio Analysis: The magnitude of the difference between two specified values generated from an…
Q: the lenzie corporation's common stock has a beta of 1.10. if the risk-free rate is 5.1% and the…
A: Cost of equity capital can be calculated using the Capital asset pricing model (CAPM). CAPM is an…
Q: The following graph plots the current security market line (SML) and indicates the return that…
A: As per Capital Asset Pricing Model, the return of a stock is the summation of risk-free rate of…
Q: Consider the following maturity / yield to maturity for all treasuries. Interest compounds…
A: a) A zero-coupon security is a type of bond that does not pay interest but instead is issued at a…
Q: A business has two investment choices. Alternative 1 requires an immediate outlay of $2,000 and…
A: Here, Initial Outlay of Alternative-1 is $2,000 Initial Outlay of Alternative-2 is $3,000 Return in…
Q: You expect to receive a payout from a trust fund in 4 years. The payout will be for $13,600. You…
A: Number of years it will take for the account to be worth $22900 is calculated in excel below
Q: According to Mr. Santos' calculations, he should invest the same amount in an asset with a risk-free…
A: A mix of multiple investment alternatives in which the investor puts in his funds is a portfolio. A…
Q: has big travel plans. She wants to save and take 3 the world. currently has $1500 saved for the trip…
A: Investment savings refer to an amount that is invested in the bank or financial institution for the…
Q: Cynthia wants to accumulate at least $40,000 by depositing $1,200 at the end of each month into a…
A: The concept of TVM states that the money received earlier can earn interest which makes it more…
Q: A metallurgist purchases a car for total cost including tax and license of $31,795.66. If the…
A: Compound = monthly = 12 Present value = pv = $31,795.66 Time = t = 4 * 12 = 48 month Interest rate =…
Q: t say all answers above are incorrect, i need the yield on the debt percentage plz and thank u
A: The original solution that you have with you is incorrect. It's little unfortunate, but the fact is…
Q: Mayberry, Inc., is considering a design change that will cost $6,000 and will result in an annual…
A: Annual worth is helpful for the interpretation of the data for one year which shows the recovery…
Q: A)What is the amount of RSA, RSL and the income gap amount? B) Calculate the duration gap. C)What…
A: A) RSA (Rate Sensitive Assets) = Required Reserves + Excess Reserves + T-bills + Mortgages +…
Q: 2. Follie Corp.'s bonds have a 20-year maturity, a 7.80% semiannual coupon, and a par value of…
A: Step 1 Bond Price The bond price is the discounted present value of the future cash flow that a bond…
Q: 1. What is the estimated volume sold of the Quick Fresh Car Wash (OFCW) bond? COMPANY (TICKER)…
A: A bond quote shows the coupon rate of the bond, the date of maturity, the last price traded, the…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Which is not a benefit of debt to the corporation?a. interest payments are tax deductibleb. when debt is used heavily, it increases stock valuec. In periods of inflation, debt is paid back with amounts that are worth less than the ones borrowed.d. compared to equity, debts have a lower cost of capitale. answer not givenWhich of the following statements is true? O Interest on bonds is not tax deductible O Interest on bonds is tax deductible O Dividends to stockholders are tax deductible O Bonds do not have to be repaidWhich of the following is incorrect about debt financing? A. Debt financing always generates excess returns which benefits equity investors b. One benefit of debt financing is that interest on most debt is fixed c. One benefit of debt financing is that interest is a tax deductible expense d. It increases financial leverage
- Which of the following is CORRECT? Select one: 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 rate will have a greater effect on the after-tax cost of common stock as measured by the CAPM. d. Higher flotation costs reduce investors' expected returns, and that leads to a reduction in a company's WACC. e. All of the above are correct. Which of the following is CORRECT? Select one: a. If the NPV of a project is negative, the IRR for the project must also be negative. b. A project's MIRR can never exceed its IRR. c. If a project with normal cash flows has an IRR less than WACC, the project must have a positive NPV. d. If Project 1's IRR exceeds Project 2's IRR, then 1 must…Why does issuing debt result in an income tax advantage when compared to issuing equity?Which of the following liabilities should always be included in the debt calculations for a firm? a. accounts payableb. commercial paperc. deferred revenued. deferred tax liabilities
- Which of the following will increase the WACC for a tax-paying company? Decrease the proportion of equity financing Decrease the proportion of debt financing Decrease the market value of the equity Increase the market value of the debtThe tax shield provides one of the benefits for obtaining debt financial capital True FalseWhile computing the cost of equity using the formula , we do not make any adjustment to express the cost of equity on an after-tax basis whereas while computing the cost of debt, a tax adjustment is required to arrive at after-tax cost of debt. Why is this so? Explain briefly.
- Which of the following statements about the characteristics of debt and equity is true? a. All of the statements are true b. They can both be long-term financial instruments. c. They both involve a claim on the issuer's income. d. They both enable a corporation to raise funds.Indicate whether the following statements is true or false. Provide the relevant explanations. In the presence of corporate taxes, a company would prefer to raise debt only when the benefits of the tax shield fully offset the cost of debt. (Explain your reasoning – in your explanation, provide a numerical example supporting your answer.)How a company takes tax advantage of Bonds Payable (or any other fixed cost financing)?