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3 days ago

1. Assume that Walmart can borrow at yield of 5% in USD (5-year, zero coupon debt, issued in the US), before issuance costs. Alt

ernatively, they could issue the same debt denominated in EUR in the eurobond market at a yield of 5.25%. Unfortunately, issuance costs are 3% for EUR debt but only 2% for USD debt. Assume also that annualized risk-free, zero coupon rates for 5 years are 4% USD, 4.5% EUR. Assume covered interest parity holds. a. What are the all-in costs of the two debt issues, assuming Walmart hedges their exchange rate exposure in the forward market? (Note that the AIC of the EUR debt does not depend directly on the spot or forward exchange rates, but only on the ratio.) b. Ignoring issuance costs, at what EUR yield would the cost of EUR debt equal that of USD debt (i.e., 5%), again assuming Walmart hedges the exchange rate risk? c. What are the multiplicative credit spreads in the USD and EUR markets at these yields?

Business

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INCOME STATEMENT Little Books Inc. recently reported $3 million of net income. Its EBIT was $6 million, and its tax rate was 40%

Katen [3525]

Answer:

The interest amounts to $1,000,000.

Explanation:

The standard format of an income statement includes:

Revenue/Sales (+)

Cost of Goods Sold (COGS) (-)

=Gross Profit

Marketing, Advertising, and Promotion Expenses (-)

General and Administrative (G&A) Expenses (-)

=EBITDA

Depreciation & Amortization Expense (-)

=Operating Income or EBIT

Interest (-)

Other Expenses (-)

=EBT (Pre-Tax Income)

Income Taxes (-)

=Net Income

For this case:

EBIT equals $6,000,000.

The interest is to be determined.

Tax is calculated as 0.40.

EBITDA stands at $3,000,000.

The interest formula is: interest = [EBITDA / (1 - tax)] - EBIT

Substituting values, interest = 3000000 / 0.60 - 6000000 = -$1,000,000.

With EBIT at 6 million, the interest is $1 million, and the tax amounts to 2 million (calculated as (EBIT - interest) * 0.40).

Thus, the net income is $3 million.

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2 months ago

Say you own an asset that had a total return last year of 11.65 percent. If the inflation rate last year was 2.75 percent, what

harina [3808]

Answer:

8.66%

Explanation:

The calculation for the real rate of return is displayed below:

Real rate of return = {(1 + nominal rate of return) ÷ (1 + inflation rate)} - 1

= {(1 + 11.65%) ÷ (1 + 2.75%)} - 1

= {(1.1165) ÷ (1.0275)} - 1

= 1.086 - 1

= 0.0866 or 8.66%

By applying the formula where the numerator is the nominal rate of return and the denominator is the inflation rate

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Which concept of marketing is described in the following scenario?

stepan [3596]

Conclusion: Advertisement

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2 months ago

Midwest Corporation has provided the following data concerning manufacturing overhead for 2020: Estimated manufacturing overhead

marusya05 [3725]

Answer:

$18,000

Explanation:

The manufacturing overhead calculation is detailed below:

First, we need to find the overhead rate, which is calculated as follows:

= $30,000 ÷ 2,000

= $15

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= $1,200 × $15

= $18,000

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