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Linda_us
Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7046
Experience:  Post Graduate Diploma in Management (MBA)
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1. Clanton Company is financed 75 percent by equity and 25

Customer Question

1. Clanton Company is financed 75 percent by equity and 25 percent by debt. If the firm expects to earn $30 million in net income next year and retain 40% of it, how large can the capital budget be before common stock must be sold? (Points : 1)
$7.5 million
$12.0 million
$15.5 million
$16.0 million


2. J.B. Enterprises purchased a new molding machine for $85,000. The company paid $8,000 for shipping and another $7,000 to get the machine integrated with the company's existing assets. J.B. must maintain a supply of special lubricating oil just in case the machine breaks down. The company purchased a supply of oil for $4,000. The machine is to be depreciated on a straight-line basis over its expected useful life of 8 years. J.B. is replacing an old machine that was purchased 6 years ago for $50,000. The old machine was being depreciated on a straight-line basis over a ten year expected useful life. The machine was sold for $15,000. J.B.'s marginal tax rate is 40%. What is the amount of the initial outlay? (Points : 1)
$89,000
$87,000
$91,000
$85,000


3. A project for Jevon and Aaron, Inc. results in additional accounts receivable of $400,000, additional inventory of $180,000, and additional accounts payable of $70,000. What is the additional investment in net working capital? (Points : 1)
$580,000
$510,000
$270,000
$150,000


4. J.B. Enterprises purchased a new molding machine for $85,000. The company paid $8,000 for shipping and another $7,000 to get the machine integrated with the company's existing assets. J.B. must maintain a supply of special lubricating oil just in case the machine breaks down. The company purchased a supply of oil for $4,000. The machine is to be depreciated on a straight-line basis over its expected useful life of 8 years. What will depreciation expense be during the first year? (Points : 1)
$13,000
$12,500
$11,625
$11,500


5. Five Rivers Casino is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. Gamblers flotation expense on the new bonds will be $50 per bond. Gamblers marginal tax rate is 35%. What is the pre-tax cost of debt for the newly-issued bonds? (Points : 1)
8.76%
8.12%
7.49%
10.25%


6. Porky Pine Co. is issuing a $1,000 par value bond that pays 8.5% interest annually. Investors are expected to pay $1,100 for the 12-year bond. Porky will pay $50 per bond in flotation costs. What is the after-tax cost of new debt if the firm is in the 35% tax bracket? (Points : 1)
8.23%
4.55%
4.70%
7.45%


7. Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The profitability index for Project A is (Points : 1)
1.27.
1.22.
1.17.
1.12.


8. The simulation approach provides us with (Points : 1)
a single value for the risk-adjusted net present value.
an approximation of the systematic risk level.
a probability distribution of the project's net present value or internal rate of return.
a graphic exposition of the year-by-year sequence of possible outcomes.


9. Jones Distributing Corp. can sell common stock for $27 per share and its investors require a 17% return. However, the administrative or flotation costs associated with selling the stock amount to $2.70 per share. What is the cost of capital for Jones Distributing if the corporation raises money by selling common stock? (Points : 1)
27.00%
18.89%
18.33%
17.00%


10. Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The internal rate of return for Project A is (Points : 1)
31.43%.
29.42%.
25.88%.
19.45%.
Submitted: 2 years ago.
Category: Homework
Expert:  Linda_us replied 2 years ago.
Hi JACUSTOMER

Welcome to JA.

I can help you with this question. Whats your deadline for this question?

Regards

Linda
Customer: replied 2 years ago.
Today as soon as possible
Expert:  Linda_us replied 2 years ago.
I am working on it and will post the solution in 20-30 minutes.

Regards

Linda
Expert:  Linda_us replied 2 years ago.


Please Click here for Solution

Please note that I get credit for my work only when you click accept.

You can request me in future by writing "FOR LINDA" in front of your post.

Regards

Linda
Customer: replied 2 years ago.
How do you feel about your answers?
Expert:  Linda_us replied 2 years ago.
I am confident about my answers.

Regards

Linda
Customer: replied 2 years ago.
Did you have any trouble in any of your answers at all. I want to check before I submit my work.
Expert:  Linda_us replied 2 years ago.
I have done this type of question before also so I faced no trouble in answering these.

If you want you can verify it at your end but I am confident about my answers.

Regards

Linda
Customer: replied 2 years ago.

.

Attachment: 2011-10-29_155201_question.docx

Question :

Clanton Company is financed 75 percent by equity and 25 percent by debt. If the firm expects to earn $30 million in net income next year and retain 40% of it, how large can the capital budget be before common stock must be sold?

 

Student Answer:

$7.5 million

 

$12.0 million

 

 

$15.5 million

 

 

$16.0 million

Expert:  Linda_us replied 2 years ago.
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Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7046
Experience: Post Graduate Diploma in Management (MBA)
Linda_us and 3 other Homework Specialists are ready to help you
Expert:  Linda_us replied 2 years ago.
Let me know if you need any further explanation.

Please note that I get credit for my work only when you click accept.

You can request me in future by writing "FOR LINDA" in front of your post.

Regards

Linda
Customer: replied 2 years ago.

Hello Linda,

 

I wanted to apologize for not paying you on time and not providing you the feedback you deserve. You were prompt and I only got 1 question wrong. I emailed my instructor about the first question I got wrong and he did gave me the point. I have authorize payment and will like to know If you would be interested in helping me this coming Saturday. If not I understand. I have two more assignments where I am going to need help with. Please let me know how you feel.

 

Thanks

Norene

Expert:  Linda_us replied 2 years ago.
Hi Norene

Thanks for accept and feedback. I am here to help you just let me know at what time do you want me online.

Regards

Linda
Customer: replied 2 years ago.
I will be on line this coming Saturday November 5th at 10:00 am. How do I ask for you? I have two diferent assignments: One which is the one for this Saturday and the final assignment which will be due on Next Saturday. Do you want me to send you the information for my final assingment now?
Expert:  Linda_us replied 2 years ago.
You can create a new post and write "FOR LINDA" in front of your post or you can post your question on my profile.

LINK TO MY PROFILE

Regards
Linda
Customer: replied 2 years ago.
Hello Linda are you there
Expert:  Linda_us replied 2 years ago.
Yes I am.

Are we doing any timed assignment today, if yes then request you to start later as I am currently busy. If no, then open up a new thread and ask you question and do write "FOR LINDA" in front of your post and I will post the solution in few hours.


Regards

Linda
Customer: replied 2 years ago.
I though we had a 10:00 apmt. Ok, as long as it is done in a few hours today that will be fine. Also is it the same price I paid last week? THey are the same questions.
Expert:  Linda_us replied 2 years ago.
Yes but start a new thread.

Regards

Linda
Customer: replied 2 years ago.
ok
Expert:  Linda_us replied 2 years ago.
I am sorry but I got stuck in some personal work that why I am requesting a time extension.

If you want you can work with other expert and in that case please don't write my name.

Regards

Linda

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