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FinCorp's free cash flow to the firm is reported as $205 million. The firm's interest expense is $22 million. Assume the tax rate is 35% and the net debt of the firm increases by $3 million.
Ironwood Beats, Inc. has taken a project that has reduced working capital needs of $12,000 last year as well as $23,000 this year. What should be the terminal cash flow at the conclusion of the proj
Calculate a weighted beta with weights of 0.25 for each stock. Write up the implications of the portfolio return and risk with respect to what you learned about beta and the CAPM in 2-3 pages.
The Peterson Company has FCFF of SI 000. FCFF is expected to grow by 12% next year. The cost of capital is 12% and the level of debt is $5000. The number of shares outstanding is 500. Calculate the
Natural Footware has total fixed costs of $30,000 per month, which includes $3000 per month of depreciation expense. It sells natural sole shoes for $29 a pair, and the variable cost of each pair of
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?
Depreciation was $200,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12%
What is the firm's weighted average cost of capital? HInt: This is a three step problem requiring to find the cost of common stock, the cost of preferred stock; the total value (V) of the capital ba
Conflicts between two mutually exclusive projects,where the net present value method chooses one project but the annual rate of return method chooses the other , should generally be resolved in favo
Calculate the market value of Lotle Group, a firm with total assets of $80 million and $30 million of perpetual debt in its captital structure. The firm's cost of equity is 14% and the cost of debt
After investing the additional funds, she wants the fund's required return to be 13.00%. What must the average beta of the new stocks added to the portfolio be to achieve the desired required rate o
Taggart Inc.'s stock has a 50% chance of producing a 25% return, a 30% chance of producing a 10% return, and a 20% chance of producing a -28% return. What is the firm's expected rate of return?
Assume you own shares in Honeywell Inc. and that the company currently earns $2.96 per share and pays quartely dividend payments that total $1.00 a share each year. Calculate the dividend payout for
Miller Inc. is considering a capital budgeting project that has an expected return of 10% and a standard deviation of 30%. What is the project's coefficient of variation?
Discuss what the pure expectations theory would imply about the yield curve. Compare and contrast the yields and maturities for each of the securities. Discuss which you would hold and why relative
Horgan's Music sells 460 musical instruments a year at an average price per instrument of $750. All sales are credit sales with terms of 2/10 net 30. Horgan's has found that 85 percent of the discou
On any given day a firm receives numerous checks with an average combined total of $3,800. The funds from the deposited checks are generally available after 2 days. Every day, the firm mails out che
Axel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. The company anticipates that its capital budget for the upcoming year will be $5,000,000. If Axel rep
Exxon bonds yielding 9.5 percent; GM preferred stock with a dividend yield of 9 percent. West's corporate tax rate is 35 percent. What is the after-tax return on the best investment alternative?
Assume the spot rate in 90 days is 5.30 Euros per U.S. dollar. How much in U.S. dollars did the firm save by eliminating its foreign exchange currency risk with its forward market hedge? You will re
The preferred shares of TX Bank pay a constant dividend of $2.50 per year. A dividend has just been paid. The required rate of return for the first 3 years is 6% per year compounded annually and the
The Lashgari Company is expected to pay a dividend of $1 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5% per year in the future.
Calculate the price of a six-month Americal call option on gold futures when the current futures prices is $260 per troy ounce, the strike price is $270, the risk-free is 8 percent per annum, and th
Calculate the value of a three-month European put on that index with an exercise price of 650, using Merton's index option pricing formula.