Western Wear is considering a project that requires an initial investment of $602,000. The firm maintains a debt-equity ratio of .55 and has a flotation cost of debt of 4.9 percent and a flotation cost of equity of 10.2 percent. The firm has sufficient internally generated equity to cover the equity portion of this project. What is the initial cost of the project including the flotation costs?

Suppose ALK Company needs $13.8 million to build a new assembly line. The target debt-equity ratio is .48. The flotation cost for new equity is 9.6 percent, but the floatation cost for debt is only 5.1 percent. What is the true cost of building the new assembly line after taking flotation costs into account?

Three months ago, you purchased a stock for $73.67. The stock is currently priced at $80.25. What is the EAR on your investment?

Assume a project has cash flows of −$54,300, $18,200, $37,300, and $14,300 for Years 0 to 3, respectively. What is the profitability index given a required return of 12.6 percent?

Franklin, Incorporated, has an inventory turnover of 19.3 times, a payables turnover of 11.4 times, and a receivables turnover of 9.9 times. What is the company’s cash cycle? Assume 365 days per year.

A stock has a beta of 1.08 and an expected return of 13.2 percent. A risk-free asset currently earns 1.2 percent. The beta of a portfolio comprised of these two assets is .94. What percentage of the portfolio is invested in the stock?

SheltonCompany purchased a parcel of land six years ago for $855,500. At that time, the firm invested $127,000 in grading the site so that it would be usable. Since the firm wasn’t ready to use the site itself at that time, it decided to lease the land for $45,000 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $907,000. What value should be included in the initial cost of the warehouse project for the use of this land?

You are researching a company and find that it has an inventory period of 21.6 days, an accounts payable period of 34.1 days, and an accounts receivable period of 30.2 days. The company’s operating cycle is _____ days and its cash cycle is _____ days.

JoAnn Manufacturing has projected the following sales for the coming year: Q1 Q2 Q3 Q4 Sales $ 54,600 $ 61,600 $ 69,900 $ 75,550 The company places orders each quarter that are 25 percent of the following quarter’s sales and has a 30-day payables period. What is the payment of accounts for the third quarter?

A company has a collection period of 36 days and factors all receivables immediately at a discount of 2.6 percent. What is the effective annual cost of borrowing? Assume 365 days per year.