• Q : Computation of new equilibrium price of stock....
    Finance Basics :

    A toxic spill results in a lawsuit and potential fines, and the beta of the stock jumps to 1.6. The new equilibrium price of the stock is

  • Q : International parity conditions....
    Finance Basics :

    What are international parity conditions? What are some examples of international parity conditions? How do these conditions impact global business?

  • Q : Conversion price and conversion value of bond....
    Finance Basics :

    Each debenture can be converted into 25 shares of common stock at any time before 2005. What is the conversion price (CP) and the conversion value of the bond?

  • Q : Pressure on developing projects quickly....
    Finance Basics :

    Rapid technological advances and intense global competition create pressure on developing projects quickly. This is an example of reducing project duration caused by:

  • Q : Part of the depreciable cost of asset....
    Finance Basics :

    By how much would that number change if the firm could treat the $2-million installation cost as a deductible expense rather than include it as a part of the depreciable cost of the asset?

  • Q : Factors affecting exchange rates....
    Finance Basics :

    In the 1990s, Russia was attempting to import more goods but had little to offer other countries in terms of potential exports. In addition, Russia's inflation rate was high. Explain the type of pre

  • Q : Determining the nominal cost of credit....
    Finance Basics :

    Ajax intends to expand and will need additional financing. If Ajax decides to forgo discounts, how much additional credit could it get, and what would be the nominal cost of that credit?

  • Q : Short term financing with bank loans....
    Finance Basics :

    The Hand-to-Mouth Company needs $20,000 loan for the next 60 days. It is trying to decide which of the three alternatives to use:

  • Q : Calculation of cost of newly issued preferred shares....
    Finance Basics :

    The investment bankers have advised Seven Eleven that floatation costs will be 8% per share. What will be the cost of the newly issued preferred shares?

  • Q : Problem on the capital structure....
    Finance Basics :

    Fama's Llamas has a weighted average cost of capital of 10.5 percent. The company's cost of equity is 15.5 percent, and its cost of debt is 7.5 percent. The tax rate is 35 percent. What is Fama's de

  • Q : Calculation of current price of van buren stock....
    Finance Basics :

    Van Buren currently expects to pay a year-end dividend of $2.00 a share. Van Buren's dividend is expected to grow at a constant rate of 5% a year, and its beta is 0.9. What is the current price of V

  • Q : Calculation the cost of common equity....
    Finance Basics :

    Javits and Sons common stock is currently trading at $30 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year, and the dividend is expected to grow at a constant

  • Q : Implications of the efficient market hypothesis....
    Finance Basics :

    What are the implications of the efficient market hypothesis for investors who buy and sell stocks in an attempt to "beat the market"?

  • Q : Conversion value of the bond....
    Finance Basics :

    Plunkett Gym Equipment, Inc., has a $1,000 par value convertible bond outstanding that can be converted into 25 shares of common stock. The common stock is currently selling for $34.75 a share, and

  • Q : Permanent assets financing....
    Finance Basics :

    Alternatively, Wicker can sell 8.5 percent coupon bonds with a 2-year maturity and $1,000 par value at a price of $973.97. How many percentage points lower is the interest rate on the less expensive

  • Q : Current price of abc common stock....
    Finance Basics :

    The last dividend paid by ABC Company was $2.00. ABC's growth rate is expected to be a constant 4 percent. ABC's required rate of return on equity (ks) is 9 percent. What is the current price of ABC

  • Q : Possible meaning of the changes in stock price....
    Finance Basics :

    What is the possible meaning of the changes in stock price for GEICO and Berkshire Hathaway on the day of the acquisition announcement?

  • Q : Bond nominal coupon interest rate....
    Finance Basics :

    O'brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $850. Wha

  • Q : Introduction of new product and the financial impact....
    Finance Basics :

    Describe the risks associated with the introduction of the new product and the financial impact that these risks may have.

  • Q : Introduction of new product and financial impact....
    Finance Basics :

    Describe the risks associated with the introduction of the new product and the financial impact that these risks may have.

  • Q : Intrinsic value of warrant-speculative premium on warrant....
    Finance Basics :

    The Preston Toy Co has warrants outstanding that allow the holder to purchase a share of stock for $22. (exercise price) The common stock is currently selling for $28, while the warrant is selling

  • Q : Bond closing price-price of bond....
    Finance Basics :

    Today's closing price of a bond, with the par value of $1,000.00 and 8% coupon rate, was listed as 103.50. The information also indicates that today's price was 7.20 higher then yesterday. Based on

  • Q : Calculation of project coefficient of variation....
    Finance Basics :

    In the previous problem you were asked to find the expected NPV of a project TWI is considering. Use the same data to calculate the project's coefficient of variation.

  • Q : Calculation of stock current value per share....
    Finance Basics :

    Thomas Brothers is expected to pay a $.50 per share dividend at the end of the year ( so D1 = $0.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on

  • Q : Appropriate discount rate for valuing the acquisition....
    Finance Basics :

    Eastern's post-merger beta is estimated to be 2.0, and its post-merger tax rate would be 34%. The risk-free rate is 8%, and the market risk premium is 4%. What is the appropriate discount rate for

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