Question 1
Bob's Farm Rental and Party Supply posted an EBIT of $45,000 and has no investments in working capital or assets. Shareholders are requiring a return of 22%. Calculate the value of the company. Assume a tax rate of 15%.
◦ $204,545
◦ $173,864
◦ $300,000
◦ $234,000
◦ $217,865
Question 2
Café Americain Coffee Inc. is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Café Americain has a 100% payout rate, 1,000 shares outstanding, and that shareholders require a return of 6%. Assume that the tax rate is 0%.
Café Americain is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares at the price of $10.00 per share. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds worth a total sum of $2,000 and a coupon rate (and yield) of 4%. Assume that the tax rate is 0%.
If Café Americain goes ahead with the repurchase, then what is the required return of stock holders after the repurchase is complete?
◦ 6.1%
◦ 6.2%
◦ 6.3%
◦ 6.4%
◦ 6.5%
How noncyclic electron flow during the light reactions generates ATP and NADPH.
Use tap water when making coffee, tea, or juice from concentrate, and for food preparation
Coffee will not sober you up. An intoxicated person who drinks coffee will end up being a stimulated
Wood coffee table
Custard Dessert With Coffee
For the circuit in Figure 1, assume ideal diodes. The peak inverse voltage is approximately