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How many shares will be repurchased? What is the value of equity after the repurchase has been completed? What is the price per share?
Your coworker just heard that senior management had rejected the department's latest proposed project. Although the Net Present Value of the first 5 years' cash flow is a positive $2.3 million, the
Hartzell Inc. had the following data for 2010, in millions: Net income = $600; after-tax operating income [EBIT (1-T)] = $700; and Total assets = $2,000.
RHPS Compnay is considering the purchase of a new machine. The new machine falls into the MACRS 7-year class, has an estimated life of 8 years, it costs $200,000 and RHPS plans to sell the machine a
Amazon.com stock prices gave a realized return of 5%, -5%, 10%, and -10% over four successive quarters. What is the annual realized return for Amazon.com for the year?
Ballack Co.'s common stock currently sells for $51.00 per share. The growth rate is a constant 8.4%, and the company has an expected dividend yield of 3%.
General industries is expected to generate $22 million, $26 million, $29 million, $30 million, and $32 million in free cash flows over the next five years, after which free cash flows are expected t
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,120,000 and will be sold for $1,320,000 at the end of the project. I
Carter Corporation has some money to invest, and its treasurer is choosing between City of Chicago municipal bonds and U.S. Treasury bonds. Both have the same maturity, and they are equally risky an
A high school decided to hold a fundraiser and to make and sell scarves and tuques. Two classes were participating, one that would make the scarves, and the others the tuques.
Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years.
Determine the value of a share of DuPont Series A $3.50 cumulative preferred stock to an investor who requires the following rates of return: 9%? 10%? 12%?
Assume the WACC for a firm if it was unlevered is 8%, beta unlevered is 1.0, the market return is 8%, and the risk free rate is 2%. Also assume that the firm has $100 in debt and $100 in equity and
One issue of these bonds, the 8 1/4 percent coupon bonds due in 1996, was selling at 109% of par value, or for approximately $1,090. Why would someone pay $1,090 for the bonds of a bankrupt firm?
How long will it take you to save an adequate amount for retirement if you deposit $2,500 per quarter year into an account beginning today that's pays an effective annual rate (EAR) of 4 percent if
Assume your marketing people have a great plan to boost the unit sales. Unit sales rise to 500,000, but the plan requires your firm to drop the price to $29,000/unit and the marketing will cost your
Suppose the real risk-free rate is 3.50%. Inflation is expected to be 2% next year, 3% the following year and then 3.5% thereafter. There is a maturity premium of 0.08% per year to maturity i.e., MR
The first payment of the mortgage is due at the beginning of April 2009. You will sell the property on April 1st 2024 (15 years later) at appraised value. MARR is 10% per year compounded monthly.
You find a certain stock that had returns of 4 percent, -5 percent, -15 percent, and 16 percent for four of the last five years. The average return of the stock for the 5-year period was 13 percent.
A stock has an expected return of 15.5 percent, its beta is 1.65, and the expected return on the market is 12.6 percent. What must the risk-free rate be?
The average annual return over the period 1886-2006 for stocks that comprise the S&P 500 is 10%, and the standard deviation of returns is 20%. Based on these numbers, what is a 95% confidence i
Plot the expected returns and standard deviations of the portfolios in parts (a) and (b) along with the expected returns and standard deviations for each of the two stocks ( ie. for portfolios inves
To finance the purchase, you have arranged for a 30-year mortgage loan for 80 percent of the $2,800,000 purchase price. The monthly payment on the loan will be $22,000. What is the principal repay
You buy an eight-year bond that has a 6% current yield and a 6% coupon (paid annually). In one year, promised yields to maturity have risen to 7%. What is your holding period return?
Aerelon Airways, a commercial airline, suffers a major crash. As a result, passengers are considered to be less likely to choose Aerelon as their carrier, and it is expected free cash flows will fal