Olsen Brothers Paving has a total market value of $100 milli…

Olsen Brothers Paving has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company’s EBIT is $14.22 million, and its tax rate is 15%. Olsen can change its capital structure by either increasing its debt to 60% (based on market values) or decreasing it to 40%. If it decides to increase its use of leverage, it must call its old bonds and issue new ones with a 14% coupon. If it decides to decrease its leverage, it will call its old bonds and replace them with new 7% coupon bonds. The company will sell or repurchase stock at the new equilibrium price to complete the capital structure change. Olsen expects no growth in its EBIT, so gL is zero. Its current cost of equity, rs, is 14%. If it increases leverage, rs will be 16%. If it decreases leverage, rs will be 13%. Assume that the firm changes its capital structure to increase its debt to 60%.  What is its total corporate value under that capital structure? Do not round intermediate calculations. Enter your monetary answers in millions. For example, an answer of $1.234 million should be entered as 1.234, not 1,234,000. Round your answers to three decimal places. Do not enter $ or % in your answer.  

Edge Technologies purchases inventory with a net price of $2…

Edge Technologies purchases inventory with a net price of $250,000 each day. The company purchases the inventory under the credit terms of 2/15, net 40. Edge always takes the discount but takes the full 15 days to pay its bills. What is the average accounts payable for Edge? Round your answer to the nearest dollar. Do not enter $ or % in your answer. 

Super Value Company has no debt outstanding, and its financi…

Super Value Company has no debt outstanding, and its financial position is given by the following data: Expected EBIT $700,000 Growth rate in EBIT, gL 0 % Cost of equity, rs 10 % Shares outstanding, no 200,000 Tax rate, T (federal-plus-state) 25 %   What is earnings per share (EPS)?   Round to two decimal places.  Do not enter $ or % in your answer.  

ABC Corporation had sales of $3.3 million last year, and it…

ABC Corporation had sales of $3.3 million last year, and it earned a 5% return (after taxes) on sales. Recently, the company has fallen behind in its accounts payable. Although its terms of purchase are net 30 days, its accounts payable represent 75 days’ purchases. The company’s treasurer is seeking to increase bank borrowing in order to become current in meeting its trade obligations (that is, to have 30 days’ payables outstanding). The company’s balance sheet is as follows (in thousands of dollars):   Cash $100 Accounts payable $600 Accounts receivable 300 Bank loans 700 Inventory 1,400 Accruals 200    Current assets $1,800    Current liabilities $1,500 Land and buildings 600 Mortgage on real estate 700 Equipment 600 Common stock, $0.10 par 300 Retained earnings 500 Total assets $3,000 Total liabilities and equity $3,000   How much bank financing is needed to eliminate the past-due accounts payable? Enter your answer as a positive value. Do not round intermediate calculations. Enter your answer as follows: if your answer is $50,000 enter as 50,000.