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A firm will pay a $1.50 dividend at the end of year one (D1), has a stock price of $60 (P0), and a constant growth rate (g) of 8 percent. (a) Compute the required rate of return (Ke).
what interest deduction can the company take on these bonds in the first year? In the last year?
Costs of Borrowing: Come and Go Bank offers your firm a discount interest loan at 9% compensating balance against the amount borrowed. What is the effective annual interest rate on this lending arra
Second, the Profitability Index (PI) has been revised giving a Modified Profitability Index (MPI). Why were the IRR and the PI revised? When are these measures appropriate to use?
What internal rate of return can the firm earn from this project? (round to the nearest percent.)
Assume the car can be purchased for 0% down for 60 months (in lieu of rebate). A car with a sticker price of $42,950 with factory and dealer rebates of $5,100 (a) Find the monthly payment if finance
What is the discounted payback period for these cash flows if the initial cost is $8,100? C.What is the discounted payback period for these cash flows if the initial cost is $11,100?
You purchase a bond with a coupon rate of 8.1 percent and a clean price of $860. If the next semiannual coupon payment is due in two months, what is the invoice price?
Imagine you are a small business owner. Determine the financial ratios that are important to the business. Compare your ratios with those that are important to a manager of a larger corporation.
what is the current value of the stock? A) $100 B) $105 C) $110 D) $120 I know the answer is B) $105 but can you please show me the full formula for P and how to fit the numbers in to come up with t
What are the calculations involved with pricing a bond and a stock?
An annual rate of interest on the borrowings of 6% Commission of 0.5% of the stocks value for buying and selling Be sure to factor in any dividends that are paid on the stock.
According to the expectations theory, what should be the interest rate on 3-year, risk free securities?
Dividens are expected to continue growing at a rate of 5.5% per year into the indefinite future. If the firm's tax rate is 30%, what discount rate should you use to evaluate the equipment purchase?
A detailed financial analysis of the firm's prospects suggests that the long term EBIT will be above $315,000 annually. Taking this into consideration, which plan will generate the higher EPS?
PK Software has 8.4 percent coupon bonds on the market with 23 years to maturity. The bonds make semiannual payments and currently sell for 110.25 percent of par. What is the current yield on PK's b
Osbourne Corporation has bonds on the market with 12.5 years to maturity, a YTM of 9.8 percent, and a current price of $949. The bonds make semiannual payments. What must the coupon rate be on the b
Merton Enterprises has bonds on the market making annual payments, with 14 years to maturity, and selling for $967. At this price, the bonds yield 7.9 percent. What must the coupon rate be on Merton
f a portfolio of the two assets has a beta of 2.26, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.
What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20 percent each in A and B, and 60 percent in C?
Using the IRS amortization rule, what interest deduction can the company take on these bonds in the first year? In the last year? c. Repeat part (b) using the straight-line method for the interest d
Now the required return on an average stock increases by 30.0% (not percentage points). Neither betas nor the risk-free rate change. What would Fantasty 's new required return be?
which was the same as the prior year, and its stock increased in value by 2% on the day of the announcement.
National Steel 15-year, $1000.00 par value bonds pay 8 percent interest annually. The market price of the bonds is $1,085.00 and your required rate of return is 10 percent.