BE ........... The following pertains to the Excelsior Corp. for the year ended December 31, 2014. Depreciation expense $ 12,000 Issuance of common stock 105,000 Cash dividends paid. 18,600 Increase in inventory 43,500 A decrease in accounts receivable 68,700 A decrease in accounts payable 27,600 Retirement of long-term debt 120,000 Net income 150,000 Proceeds from sale of equipment ($15,000 loss)... 63,000 Purchase of equipment 84,000 Cash and cash equivalents, beginning of year... 200,000 Based on the above-given information, the statement of cash flows should present a cash flow from financing activities with an amount equal to: "ABC" Corporation's share had a rate return (r) that equates to 11.50% last year since: 1. the market risk premium (MRP) was equal to 4.75%. and 2. the risk-free rate (RF) on US treasury bills was equal to 5.50%. Now assume that there is a change in investor risk aversion and the market risk premium rises by 2%. What is"ABC" Corporation's new required return if The risk-free rate and "ABC" Corporation's beta remain fixed.? If "ABC" Company has preference shares (preferred stock) that pays an annual dividend of $1.00 per quarter (every 3 months). As a result, "ABC" Company preference shares (preferred stock) sells for $55.00 per share. Based on the above-given information, what is the effective annual rate of return? Last year "ABC" Coprpartion had the folliang financial information: 1. Total sales revenue with an amount of $500,000, 2. Total operating costs with an amount of $450,000, and 3. The year-end assets amounted to $395,000. 4. The debt ratio was equal to 17%, the interest rate on the debt was 7.5%, and 5. The firm's tax rate was 35%. The current CFO wants to see how the ROE would have been affected if the firm had used a 50% debt ratio. Assume that sales operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. 1. What is the current (old) ROE? 2. What is the new ROE? 3. By how much would the ROE change in response to the change in the capital structure? Suppose you borrowed $15,000 at a rate of 8.5% and must repay it in 5 equal installments at the end of each of the next 5 years. How much would you still owe at the end of the first year, after you have made the first payment? "ABC" Corporation lately issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest on a semiannual basis. Their price has continued to be stable since they were issued. Due to extra financing requirements, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of $1,000, and pay $40 in interest every semiannually. If both bonds have the same yield, how many new bonds must "ABC" Corporation issue to raise $2,000,000 cash? Under MACRS, an asset that originally cost $200,000 is being depreciated using a 10-year normal recovery period. The depreciation expense in year 11 is
