Kent Co. is an all-equity firm with two divisions. The first division is involved in the construction business and constitutes 30% of the firm’s total assets. The second division produces computer hardware and constitutes the remaining 70% of the firm’s total assets. Kent’s equity beta is 1.8. You have found a pure play comparable company in the construction business, Avco Inc. Suppose that Avco is a perfect comparable, i. e., its business risk totally matches the risk of Kent Co.’s construction division. Avco is financed by 40% debt and 60% equity. Avco equity beta is 2 and its debt is riskless. The market risk premium is 5% and the risk-free rate is 2%.

The local electronics store is offering a promotion "1-year: same as cash," meaning that you can buy a tv now, and wait a year to pay (with no in

Last year, western corporation had sales of $5 million, cost of goods sold of $3 million, operating expenses of $175,000 and depreciation of $125,000. the firm received $40,000 in dividend income and paid $200,000 in interest on loans. also, western sold stock during the year, receiving a $40,000 gain on stock owned 6 years, but losing $60,000 on stock owned 4 years. what is the firm's tax liability?

Which of the following statements is correct? a. two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition. b. free cash flow (fcf) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations. c. retained earnings as reported on the balance sheet represent cash and, therefore, are available to distribute to stockholders as dividends or any other required cash payments to creditors and suppliers. d. if a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow. e. after-tax operating income is calculated as ebit(1 - t) + depreciation.