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New Mexico Lumber recently reported that its earnings per share were $ 5 .00. The company has 6 00,000 shares of stock outstanding. The company's interest expense was $ 3 00,000. The corporate tax r
The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent. What is the total value of the terminal year non-operating cash flows at the end of Year 3? Round
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $3,200,000 purchase price. The monthly payment on this loan will b
If the required return is 12 percent and the company just paid a $2.65 dividend, what is the current share price? (Hint: Calculate the first four dividends.)
You are considering investing in a project with the following possible outcomes: Calculate the expected rate of return and standard deviation of returns for this investment, respectively. Probabilit
Over the past six years, a stock had annual returns of 2 percent, -5 percent, 6 percent, 3 percent, 3 percent, and -2 percent, respectively. What is the standard deviation of these returns? 3.61 per
Anton, Inc., just paid a dividend of $2.85 per share on its stock. The dividends are expected to grow at a constant rate of 4.5 percent per year, indefinitely. Assume investors require a return of 1
Calculate the weighted average floatation cost. Use this number to figure out how much money the company must pay to issue the new securities.
What sales volume would be required in order to meet this profit goal?
Willington rings produces class rings that sell for $75.00 ea and cost $35.00 to produce. they havea fixed cost of $50,000. How is the break-even point calculated?
The Fitness Studio, Inc., with the help of its investment bank, recently issued $43.155 million of new debt. The offer price (and face value) on the debt was $1,000 per bond and the underwriter's sp
A loan commitment of $4.36 million has an up-front fee of 65 basis points and a back-end fee of 35 basis points. The take down on the loan is 50 percent. Calculate the total fees you will pay on thi
In your own words, what is risk decomposition and risk aggregation? Summarize the role of banks in the economy? Summarize the roles and activities of insurance companies and pension plans in the eco
The firm can borrow at a rate of 8%. The corporate tax rate is 30%. What is the NPV of the lease relative to the purchase?
What is the total added value of debt financing to Telescoping Tube if their tax rate is 34% and Albanic raises it for them?
The common stock of Winsson, Inc. is currently priced at $52.50 a share. One year from now, the stock price is expected to be either $54 or $60 a share. The risk-free rate of return is 4%. What is t
Projected income is $150,000 and 40% of this amount will be paid out immediately as dividends. What will the ending retained earnings account be?
The incremental value of theacquisition is $5,500. What is the net present value of acquiring Alto to Solo?
Firm B has 1,800 shares outstanding at a price of $15 a share. What is the value per share of the merged firm?
The Tip-Top Paving Co. has an equity cost of capital of 16.97%. The debt to value ratio is .6, the tax rate is 34%, and the cost of debt is 11%. What is the cost of equity if Tip-Top was unlevered?
The market portfolio of common stocks earned 14.7% in one year. Treasury bills earned 5.7%. What was the real risk premium on equities?
This is a constant growth stock, and you know the price, the last dividend paid, and the growth rate in the dividend. Simply calculate the next dividend to be paid and back-out the required return (
what would be the current value of these collection payments: a) at a 4% rate of return? b) at a 14% rate of return?
John Deposits $500 in a savings account at 5% interest for 5 years. At the end of the period how much will he have if no withdrawals are made.
Bondholders expected return-The market price for a 13 year bon is (1,000 par value) that pays 5.5 percent Seimiannually.What is the expected rated of return?