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Find the prepaid forward price and the forward price of a 30 month forward contract for a stock currently priced at $36, assuming that the risk free rate is 4% compounded continuously and that divid
If a banker's spread is 6.5% of the total issue size, with $60,000 out-of-pocket exp, what is the total issue size necessary to yield 10 million in cash? Use formula.
The price of a nine month forward contract on one share of this stock is $47.56. Is there an arbitrage opportunity on the forward contract? If so, describe the strategy to realize profit and find th
The corporate tax rate is 30 percent. What is the weighted average flotation cost?
Central Systems, Inc. desires a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 6 percent and a cost of equity of 11 percent. What debt-equity ratio is neede
The accounting manager of Gateway Inns has noted that every time the inn's average occupancy rate increases by 3 percent, the operating cash flow increases by 7.11. What is the degree of operating l
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. If the corporate tax rate is 33 percent, what is the aftertax
Flotation costs for issuing new common stock are 8 percent, for new preferred stock, 7 percent, and for new debt, 4 percent. What is the true initial cost figure Southern should use when evaluating
What is the accounting break-even level of revenues for a firm with $6 million in sales, variable costs of $3.9 million, fixed costs of $1.2 million, and depreciation of $1 million?
ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is
What is the appropriate discount rate to use in evaluating the acquisition? Explain clearly and concisely why this is the appropriate discount rate.
The Elvis Alive Corporation, makers of Elvis memorabilia, has a beta of 2.35. The return on the market portfolio is 13%, and the risk-free rate is 7%. According to CAPM, what is the risk premium on
A marketing group has estimated that adding the senior's meal would change the weekly meals sold to 345 adult, 65 senior, and 40 children's meals. What is the amount of the weekly revenue that shoul
What is the risk factor associated with international investing that potentially can also be viewed as a benefit [and hence, a 4th reason to invest internationally -- see question #1]. IF this facto
You bought Chemtron stock for $45 a year ago. It is selling for $54 today. What is your holding period return?
The probability of a boom is 63 percent while the probability of a recession is 37 percent. What is the variance of the returns on RTF, Inc. stock?
Ward's debt has a market value of $1,800 million and Ward has no preferred stock. If Ward has 80 million shares of common stock outstanding, what is Ward's estimated intrinsic value per share of co
A stock has returns of 4 percent, 18 percent, -24 percent, and 17 percent for the past 4 years. Based on this information, what is the 95 percent probability range for any one given year?
The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
In addition, the firm generally receives an average of $16,400 a day in checks. Deposited amounts are available after 2 days. What is the amount of the firm's disbursement float?
A particular set of golf clubs in the U.S. costs $990. According to absolute purchasing power parity, what should the identical set of clubs cost in the U.K. when the spot rate is £0.6703 = $1
A firm offers terms of 2/5, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount?
Suppose the Swiss franc exchange rate is Sf1.1426 = $1, and the euro exchange rate is €0.7538 = $1. What is the cross rate in terms of Swiss francs per euro?
Which of the following statements concerning futures markets is false?
Midwest Bank also offers to lend you the $50,000, but it will charge an annual rate of 7.0%, with no interest due until the end of the year. How much higher or lower is the effective annual rate cha