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Money Penny Bank has an issue of preference shares with a fixed dividend of $6 that just sold for $94. What is the bank's cost of preference shares?
Shares in Kelpie Industries have a beta of 0.9. The market risk premium is 8%, and short-term government bonds are currently yielding 4.5%.
Star Jet Ltd's ordinary shares have a beta of 1.3. If the risk-free rate is 5% and the expected return on the market is 13%, what is Star Jet's cost of equity capital?
Fama's Llamas has a WACC of 10.5%. The company's cost of equity is 14% and its cost of debt is 8%. The tax rate is 30%. What is Fama's target debt-equity ratio? (Assume a classical tax system.)
You have $250 000 to invest in a share portfolio. Your choices are shares in Homestead Ltd, with an expected return of 16%, and shares in Limestone Ltd, with an expected return of 9.5%.
Dingo Ltd shares have a beta of 1.5 and an expected return of 16%. Shares in White Shark Ltd have a beta of 0.70 and an expected return of 11.5%.
A portfolio is invested 20% in House, 40% in Door and 40% in Window. The expected returns on these investments are 9%, 17% and 23%, respectively. What is the portfolio's expected return?
Share J has a beta of 1.35 and an expected return of 17%, while Share K has a beta of 0.8 and an expected return of 10%. You want a portfolio with the same risk as the market.
Why is liquidity important in analysis of financial statements? Explain its importance from the viewpoint of more than one type of user.
What is the justification for including prepaid expenses in current assets?
What is the current ratio? What does the current ratio measure? What are reasons for using the current ratio for analysis?
Certain industries are subject to peculiar financing and operating conditions calling for special consideration in drawing distinctions between current and noncurrent. How should analysis recognize
If she gets an MBA, her salary will be a constant $100,000 per year. What is the net present value (NPV) of her decision if Vivian decides to do an MBA?
The rate on 6-month T-bills is 2%, and the return on the S&P 500 index is 15%. What is the appropriate cost for retained earnings in determining the firm's cost of capital?
Clothier, Inc. has a target capital structure of 40% debt and 60% common equity, and has a 40% marginal tax rate. If Clothier's yield to maturity on bonds is 7.5% and investors require a 15% return
Estimate the average length of the firm's short-term operating cycle. How often would the cycle turn over in a year?
Creamy Custard common stock is currently selling for $79.00. It just paid a dividend of $4.60 and dividends are expected to grow at a rate of 5% indefinitely. What is the required rate of return on
Metal Fabricators just issued $1,000 par 20-year bonds. The bonds sold for $758.18 and pay interest semi-annually. Investors require a rate of 9% on the bonds. What is the bonds' coupon rate?
Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Swanson, Inc. bonds have a 10% coupon rate with semi-annual coupon payments. They have 12 and 1/2 years to maturity and a par value of $1,000. Compute the value of Swanson's bonds if investors' requ
The present market value of the bonds is $1,125. If the bonds have 15 years remaining until maturity, what is the current yield on Alaska Power Company bonds?
What is the expected rate of return on a bond that matures in 8 years, has a par value of $1,000, a coupon rate of 12%, and is currently selling for $976? Assume annual coupon payments.
You own a portfolio that is invested 38 percent in stock A, 43 percent in stock B, and the remainder in stock C. The expected returns on these stocks are 10.7 percent, 15.4 percent, and 9.1 percent,
The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 11.6 percent?
What are the salient differences between Cash Flow and Net Income?