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If you required rate of return does not change, how much would you be willing to pay if this were a 20-year annuity of $1,250 annual payment instead of a perpetuity?
UND will receive $2,000 of donation next year. The donation payments are going to increase at a constant rate every year and will go on forever. If the present value of the donation is $35,000 and
Stanley Corp. common stock has a required return of 17.5% and a beta of 1.75. If the expected risk free return is 3%, what is the expected return for the market based on the CAPM. Please show calcul
Ebersoll Mining has $6 million in sales, its ROE is 12%, and its total assets turnover is 3.2x. The company is 50% equity financed, and it has no preferred stock outstanding. What is its net income?
If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the
Why are interest rates on short-term loans not necessarily comparable to each other? Give three possible reasons.
According to the purchasing power parity and everything else held constant, which of the following would we expect to happen?
Assume that you need $1,000,000 to work with and you approach a bank for a loan. The loan is a discount loan (discount rate is 10%) with a compensating balance requirement of 5%.
Discuss the relationship that relative inflation rates between countries have on the specific exchange rates between those countries' currencies.
Given the information for Schism, Inc., in Problems 11 and 12, suppose you also know that the firm's net capital spending for 2010 was $910,000, and that the firm reduced its net working capital inv
What is the yield to maturity of a corporate bond with 10 years to maturity a coupon rate of 6% per year, a $1,000 par value, and a current market price of 1,147?
Last year Chuck company issued a 10-year, 12% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 4 years at a price of $1,060 and it sells for $1,100. What is th
There are call options on the common stock of XYZ Corporation. Which of the following best describes the factors that affect call option values? The price of call options will rise if XYZ's stock p
What is expected return on invested capital (EROIC)? Why is the spread between EROIC and WACC so important?
You want to deposit sufficient money today into a savings account so that you will have $1,000 in the account three years from today.
The real risk-free rate is 3% and inflation is expected to be 3% for the next 2 years. A 2 years Treasury Security yields 6.3%. What is the maturity risk premium for the 2-year security?
The truck has a $9,600 FMV when it is transferred to her business, which is operated as a sole proprietership. a. What is the basis of the truck for determining depreciation?
The truck has a $9,600 FMV when it is transferred to her business, which is operated as a sole proprietership. What is the basis of the truck for determining depreciation?
Bradford Manufacturing Company has a beta of 2.3, while Farley Industries has a beta of 0.40. The required return on an index fund that holds the entire stock market is 11.5%.
PDQ Corp. has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is
Stock R has a beta of 2.3, Stock S has a beta of 0.30, the expected rate of return on an average stock is 9%, and the risk-free rate of return is 4%. By how much does the required return on the risk
A 6-month put option on Makler Corp.'s stock has a strike price of $47.50 and sells in the market for $8.90. Makler's current stock price is $41.00. What is the exercise value of the option?
The foreign exchange market for one U.S. dollar today. If the yen depreciates by 23.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?
An investment will pay $100 at the end of each of the next 3 years, $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If other investments of equal risk earn 8% an
A- rated municipal bonds carry to make this investor indifferent as to the yield difference between the corporate and the municipal bond?