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The Pyro Corporation has outstanding twenty thousand
shares of common stock, of which nineteen thousand
are owned by Peter B. Arson; five hundred shares are
owned by Elizabeth Arson, his wife; and five hundred
shares are owned by Joseph Q. Arson, his brother. These
three individuals are the officers and directors of the
corporation. The Pyro Corporation obtained a $750,000
fire insurance policy to cover a certain building it
owned. Thereafter, Peter B. Arson set fire to the building, and it was totally destroyed. Can the corporation
recover from the fire insurance company on the
$750,000 fire insurance policy? Why or why not?
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- Horton plc, an all-equity firm, is proposing to convert its all-equity capital structure to one that is 50 per cent debt. Frank is a shareholder in the firm and he prefers the all-equity capital structure. There are no corporate taxes, and firms and individuals can borrow/lend at the same rate. If Horton does go ahead with the conversion, Frank could and use them/the proceeds replicate the payoffs of Horton with the all equity capital structure. so as to What are the missing words? а. borrow money + to buy shares in Horton b. borrow money + to buy bonds (lend) C. sell Horton shares + to buy shares in an all equity firm d. buy more Horton shares + as collateral е. sell Horton shares + to buy bonds (lend)The board of directors of Divided Airlines has declared a dividend of $2.50 per share pay able on Tuesday, May 30, to shareholders of record as of TuesdayMay 9. Cal buys 100 shares of Divided on Tuesday, May 2, for $ 150 per share. What is the ex date? Describe the events that will occur with regard to the cash dividend and the stock price.The Amherst Company has a net profits of $11 million, sales of $194 milion, and 4.8 milion shares of common stock outstanding. The company has total assets of $115 milion and total stockholders' equity of $54 milion. It pays S1.08 per share in common dividends, and the stock trades at $20 per share, Given this information, determine the following a. Amherst's EPS. b. Amhersts book value per share and price-to-book-value ratio. c. The firm's PE ratio. d. The company's net profit margin. e. The stock's dividend payout ratio and its dividend yield. 1. The stock's PEG ratio, given that the company's aarnings have been growing at an average annual rate of 8.8%
- Identify specific asset, liability, and owner’s equity accounts that Cookie Creations will likely use to record its business transactionsEnergy entrepreneur T. Boone Pickens has proposed converting the trucking fleet in the United States to liquefied natural gas (LNG) and using wind power to replace the missing LNG in electric power production. What infrastructure issues do you see that must be resolved before the Pickens plan could be adopted?Tropical Leisure Limited Tropical Leisure Limited has been making high quality Caribbean leisure wears for over twenty-fiveyears, in old rented premises located in the heart of the Barbadian capital of Bridgetown. Thecompany has a flexible labour force of about twenty employees and three directors, only one ofwhom, namely Mr. Grant, the managing director, is fully active in the business.The company specializes in leisure and swim wear garments. Their current range consists of teeshirts, shorts, skirts and bath suits in rich vibrant Caribbean colours and styles for men, women andchildren. The company capacity is 400-500 garments per week, depending on style and continuityof the production run, but additional floor space and machines could be brought in quickly to raiseproduction levels to a maximum of 1000 garments weekly if required.Trade sources estimated that the Barbadian market was valued at US$ 1.5 billion in 2010 but sincethen inflation and recession has deflated the market,…
- Pak China Railroad reported net income of $770 millionafter interest expenses of $320 million in a recentfinancial year. (The corporate tax rate was 36%.) It reporteddepreciation of $960 million in that year, and capitalspending was $1.2 billion. The firm also had $4 billionin debt outstanding on the books, was rated AA (carryinga yield to maturity of 8%), and was trading at par(up from $3.8 billion at the end of the previous year).The beta of the stock is 1.05, and there were 200 millionshares outstanding (trading at $60 per share), witha book value of $5 billion. Union Pacific paid 40% of itsearnings as dividends and working capital requirementsare negligible. (The Treasury bond rate is 7%.)ASAPSunland Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 8 percent discount rate for production system projects. Year 0 1 2 3 System 1 -$13,900 13,900 13,900 13,900 System 2 NPV of System 1 is $ -$45,200 32,100 32,100 32,100 Calculate NPV. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not round discount factors. Round other intermediate calculations and final answers to 2 decimal places, e.g. 15.25.) 19,585.72 and NPV of System 2 is $ In which system should the firm invest? The firm should invest in System 2 34,649.07
- Calculate the equity of the Gravel Construction Company if it has $10 million worth of assets. Gravel has $1.3 million in current liabilities and $2.5 million in long-term liabilities.A firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflowsare $0.35M indefinitely. If market demand for theproduct is low, then over the next five years thefirm will have the option of discarding the equipment on a secondary market for $2.2M. Assume thatMARR = 12%, s = 50%, and r = 6%. What isthe value of this investment opportunity for the firm?M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $45, and annual holding cost per unit is $7. Allen Mfg. Baker Mfg. Quantity Unit Price Quantity Unit Price 1-499 $16.00 1-399 $16.10 500-999 15.50 400-799 15.60 1000+ 15.00 800+ 15.10 a) What is the economic order quantity if price is not aconsideration? (round your response to the nearest whole number). b) Which supplier, based on all options with regard todiscounts, should be used? c) What is the optimal order quantity and total annual cost ofordering, purchasing, and holding the component?