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Erine's Smooth Stories has a current yield of 9.20% on their bonds that are selling for $1060.00 each. These bonds mature in 19 years. The bond pays interest semiannually and have a face value of 1,
Stembridge Company is setting up to manufacture a new line of products. The cost of the manufacturing equipment is $750,000. Expected cash flows over the next four years are $125,000, $250,000, $400
The cost of the project will be $23 million, and the project is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company's cost of capital i
CCC Corp. has beta 1.5 and is currently in equilibrium. Required rate of return on stock is 12% versus required return on average stock which is 10%. Now the required return on average stock increas
What is the yield to maturity of a bond that pays an 11% coupon rate with annual coupon payments, has a par value of $1,000, matures in 9 years, and is currently selling for $897?
First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 16% APR compounded daily. The EAR for First Choice and National Emerald Bank are:
Lydia wishes to invest $3000 in company A and $7000 in company B. She currently only has 5000 and will borrow the remaining amt to form her 2 asset portfolio. If company A has beta of 1.21 and compa
One drawback of switching from a partnership to the corporate form of organization is the following:
Johnson Enterprises Inc. is involved in the manufacture and sale of electronic components used in small AM/FM radios. The firm needs #300,000 to finance an anticipated expansion in receivables due t
The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assume the loan will be held to maturity, what is the increme
You purchase 100 shares of stock for $38 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment for the end-of-year stock prices listed below?
What net investment is required to acquire the ICX system and replace the old system? Compute the annual net cash flows associated with the purchase of the ICX system.
Kittie, Inc., has an issue of preferred stock outstanding that pays a $2.50 dividend every year, in perpetuity. If this issue currently sells for $69.85 per share, what is the required return?
"Investors believe that a certain stock will pay a $4 dividend next year. The market price of the stock is $66.67, and investors expect a 12 percent return on the stock. What long-run growth rate in
Sadik Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their y
Tiny's Diet Supplements had earnings after taxes of $800,000 in the year 2008 with 200,000 shares of stock outstanding. On January 1, 2009, the firm issued 50,000 new shares
You used Dell as a pure play company to estimate the cost of capital for HCI. Are there potential problems with this approach in this situation?
So Much, Inc., has declared a $4.60 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the
Compute a 90% confidence interval for the population mean, based on the sample 25, 27, 23, 24, 25, 24, and 59. Change the number from 59 to 24 and recalculate the confidence interval.
At the 6-month point, what is the breakeven index price for a strategy of longing the market index at a price of 830? Interest rates are 0.5% per month.
What is the break-even point that an investor can obtain from a 6-month strategy employing a long 830 call and a short 850 call? Interest rates are 0.5% per month.
The Gecko Company and the Gordon Company are two firms whose business risk is the same but that have different dividend policies. Gecko pays no dividend, whereas Gordon has an expected dividend yiel
You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share.
Mack's Mild Lemonade has taken a five year project with an NPV of $4,500. If the discount rate on the project is 12 percent, then what is the equivalent annual annuity for the project?
How might management practices speed up or slow down the collection of receivables? How have recent changes in the banking industry influenced the collection process? Provide examples.