203 Fin15-q.xlsx - Please email [email protected] for the answer to the below question You can also email us for help on an Test 1

203 Fin15-q.xlsx - Please email...

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Test 1 - Finance 306 Company XYZ has the following capital structure as of 12/31/10: 1) Debt 250,000 Equity (Common Stock) 100,000 Equity (Preferred Stock) 50,000 The company expects to maintain this capital structure in the future and any future financing will be done as they have done in the past. In '11, they are considering the purchase of as asset which would cost $75,000. Th includes the impact of this asset. All changes from '10 to '11 can be attributed to th of this asset. The asset would be depreciated based on 10 year MACRS. The project will be evalu over 3 years. The company's financial situation is as follows: Please email helpinh
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12/31/2010 12/31/2011 Revenue 1,000,000 1,094,000 Expenses 880,000 935,000 Revenue is expected to increase by 4% each and every year (after year 1) ; Expens expected to decrease by 2% each and every year (after year 1). Company is in the 40% tax bracket Select information relative to projected stock prices, dividends and bond rates are Stock prices: Common - projected'11 50.00 Preferred - projected'11 Dividends Dividend - Common '07 0.75 Dividend - Common '08 0.82 Dividend - Common '09 0.87 Dividend - Common '10 0.94 Dividend - Preferred '11-pro Bond - Market rates Market rate - '09 11.0% Market rate - '10 12.0% Market rate - '11 10.0% Anticipated administrative cost to issue stock are as follows: Common 5% of sales price Preferred 6% of sales price Based on NPV - at Cost of Capital plus 3% - should the asset be purchased? Based on NPV - If the company elects to finance strictly via bonds - should the purc What is the IRR of this project? What is the Payback? In '06 ABC Company is considering the purchase of an asset which would cost $100 2) information includes the impact of this asset. All changes from '05 to '06 can be att of this asset.
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The asset would be depreciated based on 7 year MACRS The company's financial situation is as follows: 12/31/2005 12/31/2006 Revenue 245,000 350,000 Expenses 200,000 250,000 Revenue is expected to increase by 6% each and every year (after year 1) ; Expens expected to increase by 1% each and every year (after year 1).
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