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Thress Industries just paid a dividend of $1.50 per share (i.e., D1=$1.50). The dividend is expected to grow 5% a year for the next three years, and then 10% a year thereafter. What is the expected
Assume that an investor lends 100 shares of Jiffy, Inc. common stock to a short seller. The bidask prices are $32.00 - $32.50. When the position is closed the bid-ask prices are $32.50 - $33.00.
What are some of the guidelines we should use for storing receipts and payments? What should we be doing for our tax records?
You are told that the market value of a perpetuity that pays $50 at the end of each year is $877.19. What is the appropriate discount rate associated with the perpetual cash flow?You are told that t
Ronaldo Inc. has a capital budget of $1,000,000, but it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts this year's net income to be $600,000. If the c
Collins Inc's latest net income was $1 million, and it had 200,000 shares outstanding. The company wants to pay out 40% of its income. What dividend per share should the company declare?
Over the past year, good old SVF has realized an increase in our current ratio and a drop in total assets turnover ratio. Conversely, SVF s sales, quick ratio, and fixed assets turnover ratio have r
The portfolio's beta is 1.120. Now suppose you decided to sell one of your stocks that has a beta of 1.000 and to use the proceeds to buy a replacement stock with a beta of 1.750. What would the por
Tom Skinner has $45,000 invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 1.4. These are the only two investments in his portfolio. What is his portfolio'
For the upcoming week, Nobel National Bank plans to issue $25 million in mortgages and purchase $100 million 31-day T-bills. New deposits of $35 million are expected, and other sources will generat
They engage in the following swap: A will make a fixed 7.95 percent payment to B, and B will make a floating rate payment equal to LIBOR to A. What are the resulting net payments of A and B?
An open-end fund has a net asset value of $10.70 per share. It is sold with a front-end load of 6%. What is the offering price?
What is a contagious run? what are the some potentially serious adverse social welfare effects of a contagious run? How does deposit insurance help mitigate the problem of bank runs?
What is the degree of financial leverage for each plan at $7,000,000 of EBIT? What is the financial breakeven point for each plan?
A share of common stock has just paid a dividend of $2.00. If the expected long-run growth rate for this stock is 7%, and if investors require a(n) 11% rate of return, what is the price of the stock
Southwest U's campus book store sells course packs for $16 each. The variable costper pack is $10, and at current annual sales of 50,000 packs, the store earns $75,000 before taxes on course packs.
Please justify how a firm should make financial decisions with respect to bond prices and interest rates. What approach would you recommend? Why?
Assuming there are no market frictions such as corporate or personal income taxes, calculate the expected return on equity for MEC shareholders, under both the current all-equity capital structure a
Tunney Industries can issue perpetual preferred stock at a price of $59.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, r
What issues arise when the firm is deciding how to partition profits between dividends and retained earnings?
What is the degree of operating leverage at 20,000 bags and at 25,000 bags? Why does the degree of operating leverage change as the quantity sold increases?
If the bonds are noncallable, what is the price of the bonds today? If the bonds are callable one year from today at $1,450, will their price be greater than or less than the price you computed in (a
Wilson Wonders's bonds have 12 years remaining to maturity. Interest is paid annually; the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What
Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating depreci