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The income statement for the year ended December 31, 2009, the balance sheets for December 31, 2009 and 2008, and the statement of retained earnings for the year ended December 31, 2009, for Technic
Nick's Enchiladas Incorporated has preferred stock outstanding that pays dividend of $5 at the end of the each year. The preferred sells for $59 a share. What is the stock's required rate of return?
What is the default risk premium for ABC's 5 year bonds? What circumstances in the marketplace would have to exist for ABC company to have a liquidity premium?
The real risk-free rate is 2.50%, investors expect a 3.50% future inflation rate, the market risk premium is 5.50%, and Krogh Enterprises has a beta of 1.40. What is the required rate of return on K
Sarah has $30,000 for a down payment on a house and wants to borrow $120,000 from a mortgage banker to purchase a $150,000 house. The mortgage loan is to be repaid in monthly installments over a thi
Calculate the net present value (NPV) for the following 20-year projects. Comment on the acceptability of each. Assume that the firm has an Opportunity cost of 14%.
Which of the following is true regarding the efficient market hypothesis?
Porter Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market risk premium?
Determine the range of annual cash inflows for each of the two projects. project A's range is $1600 and project B's range is $200.
Briefly explain what will happen to a bond's duration measure if each of the following events occurs.
At the end of 2000, current liabilities were $ 1 million consisting of $ 250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrual. The after tax profit margin forecasted to be
Prepare a statement showing the incremental cash flows for this project over an 8-year period. Calculate the Payback Period (P/B) and the NPV for the project.
Calculate the historical inflation rate using CPI data between each of the following three one year intervals
Merchants Bank offers to lend you the $50,000, but it will charge 6.0%, simple interest, with interest paid at the end of the year. What's the difference in the effective annual rates charged by th
Air Purifier, Inc., computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,400,000, but 15 percent of this value is represented
Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 8.2% on these bonds. What is the bond'
A portfolio consisting of four stocks is expected to produce returns of 9%, 11%, 3% and 17%, respectively, over the next four years. What is the standard deviation of these expected returns?
Calculate the estimated operating cash flow and net present value for this project. Explain how these calculations may impact the project. Based on the above information, recommend whether or not the
The forecasted revenues are $5 million a year and operating costs ar $4 million. A major refit costing $2 million will be required after both the fifth and tenth years. After 15 years, the ship is e
The call premium would be 10 percent of the face amount. New 20-year, 12 percent, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 2 percent, or $20,000. What
Discuss the 2004 Statement of Cash Flow of Nurse-at-Home. Did the company's cash position increase or decrease from 2003 to 2004? Did the company's operating activities generate positive cash flow?
You expect net income in year 1 and 2 to be $10,000, and at the end of year 2, you know you can sell the machine for $90,000. If the firm has a WACC(weighted average cost of capital) of 12%, what is t
Describe what capital budgeting is, and why it is important in relation to creating value for the firm. (hint - make sure you discuss Weighted Average Cost of Capital in your answer)
The Fridge-Air Company's preferred stock pays a dividend of $4.50 per share annually. If the required rate of return on a comparable quality preferred stock is 14 percent, calculate the value of Fri
The value of a $100,000 fixed rate 30 year mortgage falls to $89,537 when interest rates move from 5% to 6%. What is the approximate duration of the mortgage?