INTERMEDIATE FINANCIAL MANAGEMENT
INTERMEDIATE FINANCIAL MANAGEMENT
14th Edition
ISBN: 9780357516669
Author: Brigham
Publisher: CENGAGE L
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Chapter 21, Problem 8Q

Is it true that most firms are able to obtain some free trade credit and that additional trade credit is often available, but at a cost? Explain.

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Last year Lewis Bank paid an annual dividend of $7 per share. The bank expects the growth of its dividends to be stable at 2% per year going forward. a) If investors require an 8% return, what is the current value of Lewis Bank's stock? (round to nearest cent) b) If the stock currently trades at $124.55 per share, what is the dividend growth rate investors expect? (round to nearest percent)
A food processing company is considering replacing essential machinery. Cost and relevant cash flow details are provided in the table at the right. The company requires an 11% return on its capital. a) What is the present value of the yearly cash flows? Use a Time Value of Money function for full credit. (round to nearest dollar) b) What is the net present value of the project? (round to nearest dollar) c) What is the internal rate of return of the project? Use a Time Value of Money function for full credit. (round to two decimal places)
Barnsa is planning to raise a total of $5,000,000 with a bond issue. Each of the bonds has a face (par) value of $1,000 and coupon rate of 4%. The company's applicable tax rate is 21%. a) What is the annual coupon payment, per bond, that investors expect to receive? b) What is the total after-tax annual interest expense to Barnsa?

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INTERMEDIATE FINANCIAL MANAGEMENT

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Debits and credits explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=n-lCd3TZA8M;License: Standard Youtube License