Flow Co. Inc. has $500 million of bonds at face value outstanding. The bonds have a coupon rate of 6.0% and a yield to maturity of 7.0%. They are currently traded in the market at 90% of face value. The company is publicly traded and has 20 million shares of common stock outstanding that sell for $67.50 per share. The stock's beta is 1.35, and the current 20 year treasury yield is 2.0%. The expected market risk premium is 7.0% and the relevant corporate tax rate is 25%. 1) What is the cost of debt that should be used in the calculation of the weighted cost of capital

Which is part of the sales process? a. customer retention b. billing c. cost planning d. customer relations

When the federal reserve buys and sells bonds to member banks, it is called a. monetary policy b. reserve ratio c. interest rate adjustment d. open market operations

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?