I would make an investment in the company’s 5% convertible bonds. Sepracor’s ROA and ROE is above the average and showing that it is profitable; however, the company’s debt to asset ratio is above 1, which means that most of its assets are financed through debt instead of equity. Sepracor would be in trouble if its creditors were to start demanding repayment. C.) To make valid comparisons between Sepracor and Bayer, you would have to compare the rules for fair value under the U.S GAAP and iGAAP. Under IFRS, convertible bonds are separately recorded as liabilities and stockholder’s equities.
What advantage does buying stock on margin offer Victor? Under the following conditions the percentage earned by Victor is: 50.5% One advantage Victor has buying the stock on margin is that he will be able to use the borrowed funds to increase his percentage of return. 3. What would be the percentage returns if the sale prices had been $50 or $100? If the sale price was $50: The percentage of returns for Darin would be at a loss of -16.3% The percentage of returns for Victor would be at a loss of -31.8% If the sale price was $100: The percentage of returns for Darin would be at a gain of 66.1% The percentage or returns for Victor would be at a gain of 105.4% 4.
Financial Analysis * The tax rate is approximately 30% 5.618.8=29.79% 5.418.1=29.83% 5.418=30% * Based on the industry average, a sports store of similar size should be making around $21000 or 67% more profitable than Rhodes’ store. * Assuming the lots are of the same size and bear the same tax burden, if the unused lot is sold off property taxes would be reduced by $6000 at the 2008 rate. All else being equal, this would increase net profit by 6000×0.30=$1800, for a total of $14400. Profit as a percentage of sales would increase from 2.1% to 2.4%. * Of the $18400 Rhodes made in mortgage payments last year, $8000 was interest.
Assume that (i) if the trial proceeds it is expected to last less than a month and result in two possible outcomes in terms of the price per share established in court: the $273,000 claimed by the plaintiffs, or the $55,400 being defended by Herbert Kohler; (ii) Kohler estimates the probabilities of these outcomes at 30% and 70%, respectively. 5. How would your answer to question 4 change if you also assume that (i) the inheritance tax owed on Frederic Kohler’s estate was 50.2% of its holdings in Kohler Co. (equivalent to 489 shares of the 975 he owned); (ii) the taxes paid by the estate amounted to $27 million (489 shares at $55,400 each); (iii) were the settlement or the trial to result in a revised share price in excess of $55,400, the IRS would likely demand a similar valuation for its claim on Frederic’s estate; and (iv) Herbert Kohler estimates the probability of the IRS’s demand at 100% if he proceeds to trial, and 50% if he
The Lerner index equals price minus marginal cost divided by marginal cost (Lerner index = (P – MC)/MC ). The equation would be as follows: (275-50)/50 = 4.5 therefore Lerner index equals 4.5. 5. The top four firms in Industry A have market shares of 30, 25, 10, and 5 percent, respectively. The top four firms in Industry B have market shares of 15, 12, 8, and 4 percent, respectively.
FI 515 Course Project a) The net cost of the spectrometer would include the original cost of the equipment, the modification costs and the increase in working capital due to having the equipment. Therefore, the net cost would be the $70,000 base costs, plus the $15,000 in modification costs and the $4,000 in capital, which equals $89,000. b) To find the operating cash flows for the three years, we have to find the cost savings after taxes and add the tax of depreciation. To find the cost savings, we have to take the $25,000 that is expected to be saved and reduce it based on a tax of 40%, or $25,000(1-.4), which equals $15,000. The tax on depreciation requires several steps to calculate.
The Maize stock would result in a long term capital gain property deduction of 200,000, the stock's FMV, and the recognition of the associated gain could be avoided. The Brown stock is considered ordinary income since if it were sold on the contribution date, a short-term capital gain would have been recognized (due to the holding period). Therefore, the deduction is limited to the FMV less the amount that would've been a STCG ($130,000), which is essentially the basis, $70,000) A cash donation would be deducted in full,
How much total income tax will Custom Craft Services and Jaron pay (combining both corporate and shareholder level tax) on the $200,000 of income if CCS pays Jaron a salary of $150,000 and distributes its remaining after-tax earnings to Jaron as a dividend? c. Why is the answer to part b lower than the answer to part a? ?
At the purchase price of $60.5 million, we can also confirm that the Market Value/EBITDA (5.4) of Cheddars’ is higher than its competitor’s (2.6) when we compare multiple ratios, which means Cheddar’s is overvalued. 2. What are your major concerns with the proposed deal? Should Brazos allow the company to sell the managers some stock? Is the real estate subsidiary a good idea?
Using product offered by Continental Bank would require a higher cost for J&L, and illiquid compared with NYMEX. However, they won’t need to post a margin at the beginning of the contract. The use of a monthly average price a net would be an advantage to J&L. 3. Using the estimate of 4.5 million gallons per month, how would you construct a futures hedge for the next 12 months?