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The S&P 500 Index price is 1492.28 and its annualized dividend yield is 2.30%. LIBOR is .2%. How many futures contracts will you need to hedge a $240 million portfolio with a beta of 1.16 for on
The S&P 500 Index is priced at $1450.91. The annualized dividend yield on the index is 2.10%. The continuously compounded annual interest rate is .12%. What is the price of a forward contract t
Six months from today you plan to borrow $433 million for 6 months at LIBOR. You hedge your interest rate risk with a euro dollar futures contract priced at 99.4.
Assume a corporation has earnings before depreciation and taxes of $82,000, depreciation of $45,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?
Lamar Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 60; and it currently pays after 5 days and takes discounts. Lamar plans to expand, which will require additional fin
You are evaluating two different silicon wafer milling machines. The Techron I costs $210,000, has a three-year life, and has pretax operating costs of $34,000 per year.
Assume your firm is zero-growth and pays all its net income in dividends each year Also assume your firm can borrow money when it needs to at an interest rate of 7%.
You bought one of Great White Shark Repellant Co.'s 9 percent coupon bonds one year ago for $770. These bonds make annual payments and mature 15 years from now.
Western Electric has 23,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 percent. The firm has 6,000 shares of 7 percent preferred stock outstanding at
Dhaka Jute Co. is experiencing rapid growth. Dividends are expected to grow at 30percent per year during the next three years, 18 percent over the following year, and then 5 percent per year, indefi
What is the after-tax cost of the interest expense to the Sanchezes in 2013? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Your employer contributes $50 a week to your retirement plan. Assume that you work for your employer for another 20 years and that the applicable discount rate is 9 percent annually (with weekly co
The 2008 balance sheet of Maria's Tennis Shop, Inc., showed $2.3 million in long-term debt, $700,000 in the common stock account, and $6.5 million in the additional paid-in surplus account.
Holiday Tours (HT) has an employment contract with its newly hired CEO. The contract requires a lump sum payment of $23 million be paid to the CEO upon the successful completion of her first three y
Firm A has $10,000 in assets entirely financed with equity. Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10 percent rate of interest) and $5,000 in equi
On december 21, 1988, Pan Am Flight 103 exploded 31000 feet in the air over Lockerbie, Scotland, killing all 259 passengers and crew on board and 11 people on the ground. Among those killed was Roge
Total Risk Rank the following three stocks by their level of total risk, highest to lowest. Rail Haul has an average return of 10 percent and standard deviation of 15 percent.
Garrison Appliances is considering expanding its international presence. The company believes it can sell more of its product if it has a production facility located oversees. Estimates concerning t
FlavR Co stock has a beta of 2.0, the current risk-free rate is 2, and the expected return on the market is 9 percent. What is FlavR Co's cost of equity?
Bart's Barometer Business (BBB) is a retail outlet that deals exclusively with weather equipment. Currently, BBB is trying to decide on an inventory and reorder policy for home barometers
If Zocco's annual sales are $4,935,390 and all sales are on credit, what is the investment in accounts receivable? Round your answer to the nearest cent.
Recalculate the NPV for the proposal, now assuming that the $45,000 in annual revenues will grow at a 6% annual rate and that the $15,000 in annual expenses will grow at a 5% annual rate. Does this
Suppose there is a financial asset ABC, which is the underlying asset for a futures contract with settlement six months from now. You know the following about this financial asset and the futures co
If the company could get the funds from a bank at a rate of 7%, interest paid monthly, based on a 365-day year, what would be the effective cost of the bank loan? Round your answer to two decimal p
If Primrose could lower its inventories and receivables by 7% each and increaseits payables by 7%, all without affecting sales or cost of goods sold, what would be the new CCC? Round your answer to