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Red Frog Brewery has $1,000 par value bonds outstanding with the following characteristics: currently selling at par; 5 years until final maturity; and a 9 percent coupon rate (with interest paid semiannually). Interestingly, Old Chicago Brewery has a very similar...

To increase sales from their present annual $24 million, Kim Chi Company, a wholesaler, may try more liberal credit standards. Currently, the firm has an average collection period of 30 days. It believes that, with increasingly liberal credit standards, the following...

The Bone Company has been factoring its accounts receivable for the past 5 years. The factor charges a fee of 2 percent and will lend up to 80 percent of the volume of receivables purchased for an additional 1.5 percent per month. The firm typically has sales of...

Solid Arity Corporation is a chain of appliance stores in Chicago. It needs to finance all of its inventories, which average the following during the four quarters of the year:   QUARTER   1 2 3 4 Inventory level (in thousands) $1,600 $2,100 $1,500 $3,200...

Stallings Specialty Paint Company has fixed operating costs of $3 million a year. Variable operating costs are $1.75 per half pint of paint produced, and the average selling price is $2 per half pint. a. What is the annual operating break even point in half pints...

David Ding Baseball Bat Company currently has $3 million in debt outstanding, bearing an interest rate of 12 percent. It wishes to finance a $4 million expansion program and is considering three alternatives: additional debt at 14 percent interest (option 1),...

Archimedes Torque and Gear Company has $7.4 million in long term debt having the following payment schedule:     AMOUNT 15% serial bonds, $100,000 payable annually in principal $2,400,000 13% first mortgage bonds, $150,000 payable annually in principal...

The Andrea S. Fault Seismometer Company is an all equity financed firm. It earns monthly, after taxes, $24,000 on sales of $880,000. The tax rate of the company is 40 percent. The company’s only product, “The Desktop Seismometer,” sells for $200, of which $150 is...

Cybernauts, Ltd., is a new firm that wishes to determine an appropriate capital structure. It can issue 16 percent debt or 15 percent preferred stock. The total capitalization of the company will be $5 million, and common stock can be sold at $20 per share. The...