red shoe co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $49 to $47.60 ($49 is the rights on price $47.60 is the ex rights price also known as the when issued price) the company is seeking 16.5 million in additional funds with a per share subscription price equal to $34. how many shares are there currently before the offering? (assume that the increment to the market value of the equity equals the gross proceeds from the offering)

. Joe Avery recently graduated from college and has an idea for a juice shop using only organic and locally-sourced ingredients. He has saved just enough money to cover the initial investment required to open the shop, $40,000. Using his corporate finance training, he estimates that the free cash flow from the shop will be $4,000 per year, forever. Consider a rate of return of 15%.

a. What is the NPV of the project?

b. In fact, the annual cash flow of $4,000 is an expected value: there is a 50% chance that annual cash flow will be $10,000 and a 50% chance that it will be -$2,000. Because of a very restrictive leasing contract, he cannot close down the shop even if there is no demand. What is the expected NPV of the project?

c. Fortunately, Joe's relatives are willing to provide him with enough capital to open another 10 shops after the first year if there is a lot of demand. What is the true NPV of the project?

d. What is the value of the option to expand?

Prepare an assessment of Canada's potential to be the global market leader in supplying cannabis, as well as a market assessment.

Would you rather have had a DB or a DC in the summer of 2008? Explain.

Explain the role of a devil’s advocate in relation to group cohesion.

suppose the current share price of dimension stock is $46. one year from now, this this stock will sell for either $38 or $52 a share. T-bills currently yield 3.3 percent. what is the per share value of dimension call option if the exercise is $40 per share and the expiration is one year from now?

As a policymaker, how would you convince someone to allocate financial resource to address important issue such as plastic waste?

Please be thorough in your explanation.

Pension funds pay lifetime annuities to recipients. If a firm remains in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $2.0 million per year to beneficiaries. The yield to maturity on all bonds is 16%.

a. If the duration of 5-year maturity bonds with coupon rates of 12% (paid annually) is 4.0 years and the duration of 20-year maturity bonds with coupon rates of 4% (paid annually) is 8.6 years, how much of each of these coupon bonds (in market value) will you want to hold to both fully fund and immunize your obligation? (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place.)

b. What will be the par value of your holdings in the 20-year coupon bond? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

Ski season just​ ended, however, so the president of the company has started to focus more on the financial aspects of managing the business. He has set up a meeting for next week with the​ CFO, Maria​ Sanchez, to discuss matters such as the business and financial risks faced by the company.

​Accordingly, Maria has asked you to prepare an analysis to assist her in her discussions with the president. As a first step in your​ work, you compiled the information in the popup​ window,

​, regarding the cost structure of the​ company:

                                               As the next​ step, you need to determine the​ break-even point in units of output for the company. One of your strong points has been that you always prepare supporting work papers that show how you arrived at your conclusions. You know Maria would like to see these work papers to facilitate her review of your work.​ Therefore, you will have the information you require to prepare an analytical income statement for the company. You are sure that Maria would also like to see this statement. In​ addition, you know that you need it to be able to answer the following questions. You also know Maria expects you to​ prepare, in a format that is presentable to the​ president, answers to the following questions to serve as a basis for her discussions with the president.

a. What is the​ firm's break-even point in sales​ dollars?

b. If sales should increase by 20 percent​ (as the president​ expects), by what percentage would EBT​ (earnings before​ taxes) and net income​ increase?

c. Prepare another income​ statement, this time to verify the calculations from part (b​).

a. Before you can compute the​ firm's break-even point in sales​ dollars, you need to compute some items on the​ firm's income statement.

The​ firm's operating assets are 3,400,000 and the operating asset turnover is 6 times. What are the​ firm's sales​ revenues? (Round to the nearest​ dollar.)

The​ firm's operating assets are 3,400,000 and the return on operating assets is 31​%. What is the​ firm's EBIT? (Round to the nearest​ dollar.)

Given the degree of operating leverage of 4 times the sales and EBIT computed in previous​ steps, what are the​ firm's total variable​ costs? (Round to the nearest​ dollar.)

Based on the computed​ sales, EBIT, and variable​ costs, what are the​ firm's total fixed​ costs? (Round to the nearest​ dollar.)

Compute the​ EBT, taxes, and net income to complete the following income statement.  ​(Round up all items to the nearest​ dollar.)  

What is the​ firm's break-even point in sales​ dollars?

​

​b. If sales should increase by 20 percent​ (as the president​ expects), by what percentage would EBT​ (earnings before​ taxes) and net income​ increase?

c. Prepare another income statement to verify the calculations from part (b​).

If sales should increase by 20 percent, what will the forecast level of sales revenues​ be?

Since Variable costs also increase by 20 percent, what is the forecast level of variable​ costs?

Complete the following income statement after the increase in sales.

Using the EBT from the two income​ statements, what is the percentage change in the​ EBT?

​%

​(Round to the nearest whole​ percent.)

Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies—a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Company Correlation with Treynor Pie Company Sales ($ millions) Expected Earnings ($ millions) Standard Deviation in Earnings ($ millions) Treynor Pie Company + 1.0 $ 197 $ 9 $ 4.0 Gourmet restaurant + 0.6 64 4 1.3 Baby food company + 0.3 54 2 1.8 Nutritional products company − 0.7 75 3 3.2 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as ".10"). Round your answers to 3 decimal places.) a-2. Which company is the least risky? Nutritional products company Baby food company Treynor Pie Company Gourmet restaurant a-3. Which company is the most risky? Baby food company Nutritional products company Gourmet restaurant Treynor Pie Company b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? Gourmet restaurant Nutritional products company Baby food company

The Duo Growth Company just paid a dividend of $1.2 per share. The dividend is expected to grow at a rate of 24% per year for the next 3 years and then to level off to 6% per year forever. You think the appropriate market capitalization rate is 21% per year.

a. What is your estimate of the intrinsic value of a share of the stock?

b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield?

c. What do you expect its price to be 1 year from now? Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?

Your client is 22 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future.

1. If she follows your advice, how much money will she have at 65? Round your answer to the nearest cent.

   $ _____

2. How much will she have at 70? Round your answer to the nearest cent.

   $ ____

3. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Round your answers to the nearest cent.

   Annual withdrawals if she retires at 65: $ ____

   Annual withdrawals if she retires at 70: $ ____

Jordan Broadcasting Company is going public at $48 net per share to the company. There also are founding stockholders that are selling part of their shares at the same price. Prior to the offering, the firm had $30 million in earnings divided over 10 million shares. The public offering will be for 6 million shares; 3 million will be new corporate shares and 3 million will be shares currently owned by the founding stockholders.

a. What is the immediate dilution based on the new corporate shares that are being offered? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

b. If the stock has a P/E of 26 immediately after the offering, what will the stock price be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

c. Should the founding stockholders be pleased with the $48 they received for their shares?
  

Your best friend Steve just celebrated his 30th birthday and wants to start saving for his anticipated retirement. Steve plans to retire in 30 years and believes that he will have 25 good years of retirement (he has looked at the life expectancy tables and is playing the odds here) and believes that if he can withdraw $120,000 at the end of each year, he can enjoy his retirement. In this problem, assume that the full 25 years of retirement payments are made, and the account has a zero balance at the end. Assume that a reasonable rate of interest for Steve for all scenarios presented below is 7% per year. This is an annual rate, review each individual question for more specifics on compounding periods per year. Because Steve is planning ahead, the first withdrawal will not take place until one year after he retires. he wants to make equal annual deposits into his account for his retirement fund. A. If he starts making these deposits in one year and makes his last deposit on the day he retires, what amount must he deposit annually to be able to make the desired withdrawals at retirement? A1) First: Amount Steve needs to have saved as of his retirement (3 pts): A2) The amount Steve must save each year (beginning at the end of the first year) to fund his retirement is (3 pts): A3) If Steve decides to make monthly deposits for 35 years to reach his same retirement goal, how much must Steve start depositing one month from today (3 pts)? B. If Steve decides he isn’t earning enough money yet and wants to wait several years before starting his investment deposits. Assume that instead of starting immediately (that is, the end of year 1), Steve waits for 7 years (first deposit at the end of year 7) leaving 7 fewer years to grow his retirement nest egg, what amount must he deposit annually to be able to make the desired withdrawals at retirement (4 pts)? C. Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, he has decided to make one lump sum deposit today to cover his retirement needs. What amount does he have to deposit today? (3 pts) D. We are now back to Steve staring his retirement investments at the end of the first year (30 years to retirement). Suppose Steve's employer will contribute $2,500 to the account each year as part of the company's profit sharing plan. In addition, assume that Steve has a trust fund that will pay out $35,000 to him when he is 50 (20 years from now). What amount must he deposit annually under these assumptions to be able to make the desired withdrawals at retirement? Hint: This is your answer in part D4, D1-3 help you build to the final answer. To find the amount of the annual deposit now, it is easier to break down the components of the problem. Doing so for each of the following to find your friend's annual deposit, we get: D1) Value of employer's contribution at retirement (1 pt): D2) Value of trust fund at retirement (1 pt): D3) Remaining amount that Steve needs at retirement (1 pt): D4) (Final answer) Amount to save each year under these assumptions (1 pt):