Author: Anonymous

During the Common Final Pathway of coagulation, which substance causes the direct conversion of fibrinogen into insoluble fibrin fibers?

Erythropoesis is stimulated by which hormone, that is released when hypoxia occurs?

In regards to Rh, an Rh negative person will become Rh positive if they become exposed to Rh positive blood.

The 10-year loan for a project we are evaluating requires $425,000 in flotation costs. These costs can be straight-line amortized over the life of the loan. If our cost of debt is 9 percent and our tax rate is 25 percent, what is the NPV of the flotation costs?

Janice purchased 300 shares of a company whose capital structure is 40 percent debt. The company announced that it will sell new shares of stock to pay off all of its debt (that is, become unlevered). The value of the shares is $55 per share before and after the restructuring. How can Janice use homemade leverage to replicate the company’s old capital structure? Ignore taxes in your analysis.

ABC Co. has a debt-equity ratio of 4, which will stay the same forever. Their cost of debt is 10 percent per year, which means their annual interest payment is $1.4 million each year forever. The firm’s unlevered cost of capital is 15 percent and their tax rate is 20 percent. The firm’s assets will generate an annual EBIT of $2.75625 million in perpetuity. Depreciation, agency costs, and bankruptcy costs are all zero in perpetuity. What is the value of the company’s equity? (Hint: use the Flow-to-Equity approach)

Cobalt Corp. has an unlevered value of $30 million and their debt has a market value $25 million. Their tax rate is 25 percent. Ignoring agency costs, what is value of the firm’s bankruptcy costs at this level of debt if the actual market value of the company is $29 million? (Hint: start with the M&M Propositions)

Management at an unlevered firm is evaluating a new project. The project is expected to generate earnings before depreciation of $[EBIT] million per year for the next two years. The project will require an initial investment in equipment that will be straight-line depreciated to zero over the two years of the project. The firm’s tax rate is 21 percent and their cost of capital is currently [R0] percent. If they were to borrow funds, they’d pay the risk-free interest rate of [RB] percent. The firm is currently negotiating the price of the equipment with the equipment’s manufacture. What is the maximum price management should be willing to pay for the equipment? (Enter your answer in dollars, not millions of dollars. For example, for $2.5 million, enter 2500000, not 2.5)

Southern Wind is an all-equity firm with 25,700 shares of stock outstanding and a total market value of $374,000. Based on its current capital structure, the firm is expected to have earnings before interest and taxes of $37,000 if the economy is normal, $22,800 if the economy is in a recession, and $51,200 if the economy booms. Ignore taxes. Management is considering issuing $94,600 of debt with an interest rate of 8 percent. If the firm issues the debt, the proceeds will be used to repurchase stock. What will the earnings per share be if the debt is issued and the economy booms?  

The 10-year loan for a project we are evaluating requires $200,000 in flotation costs. These costs can be straight-line amortized over the life of the loan. If our cost of debt is 5 percent and our tax rate is 25 percent, what is the NPV of the flotation costs?