Locomotive corporation is planning to repurchase part of its common stock by issuing corporate debt. as a result, the firm’s debt–equity ratio is expected to rise from 0.35 to 0.5. the firm currently has $3.6 million worth of debt outstanding. the cost of this debt is 8 percent per year. locomotive expects to have an ebit of $1.35 million per year in perpetuity. locomotive pays no taxes. a. what is the market value of locomotive corporation before and after the repurchase announcement? b. what is the expected return on the firm’s equity before the announcement of the stock repurchase plan? c. what is the expected return on the equity of an otherwise identical all-equity firm? d. what is the expected return on the firm’s equity after the announcement of the stock repurchase plan?

The larger the investment you make, the easier it will be to: get money from other sources. guarantee cash flow. buy insurance. streamline your products.

Suppose that jim plans to borrow money for an education at texas a& m university. jim will need to borrow $25,000 at the end of each year for the next five years (total=$125,000). jim wishes his parents could pay for his education but they can’t. at least, he qualifies for government loans with a reduced interest rate while he is in school. he has a special arrangement with aggiebank to lend him the money at a subsidized rate of 1% over five years without having to make a payment until the end of the fifth year. however, at the end of the fifth year, jim agrees to pay off the loan by borrowing from longhorn bank. longhorn bank will lend him the money he needs at an annual interest rate of 6%. jim agrees to pay back the longhorn bank with 20 annual payments and the payments will be uniform (equal annual payments including principal and interest). (i) calculate how much money jim has to borrow at the end of 5 years to pay off the loan with aggiebank. a. $121,336 b. $127,525 c. $125,000 d. $102,020 e. none of the above

17.     chef a says that garnish should be added to a soup right before serving. chef b says that garnish should be cooked with the other ingredients in a soup. which chef is correct? a. chef a is correct. b. both chefs are correct. c. chef b is correct. d. neither chef is correct. student c   incorrect which is correct answer?