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Miller Juice traditionally pays out 35% of its earnings as dividends. Last year Miller's earnings available for common stockholders were $256 million and the book value of its equity was $678 millio
A company has a bond issue outstanding that pays $150 annual interest plus $1000 at maturity. The bond has a maturity of 10 years. Compute the value of the bond when the interest rate is 5%, 9%, and
The bonds may be called in 5 years at 107% of face value. Complete parts (a) through (c) below. Compute the bonds' current yield. Compute the yield to maturity.
Compute the market price of the bonds if interest is paid annually. Compute the market price of the bonds if interest is paid semiannually.
You are a CFO preparing to consider an introduction of a dividend payout policy, What factors would affect your judgment? Also, as a CFO of a company, given these factors, would you go ahead and pur
Tim Smith is shopping for a used car. He has found one priced at $4,500. The dealer has told Tim that if he can come up with a down payment of $500, the dealer will finance the balance of the price
You have $10,000 to invest in one of them. If you expect the average inflation rate to be 4.5% per year, which bond offers the higher expected rate of return? Ignoring any difference in risk, which
What are the typical transaction costs on various derivative securities?
If the acquisition is at $1,000,000 and the Income stream after operating expenses (EBIT) for the subject investment is at $132,000 does this parcel meet your cost of capital model?
If a company paid a dividend of $0.40 last month and it is expected to grow at 7% for the next 6 years and then grow at 4% thereafter, the dividend expected in year 8 is ___.
Explain the goal of the firm and how manager decisions in the areas of working capital management and capital structure act to achieve this goal.
How much is your initial margin? If stock goes down to $42, what is your percentage gain or loss on the initial margin (equity)? If stock goes up to $67.50, what is your percentage gain or loss on the
Calculate the annualized geometric and arithmetic returns over this 5-year period. Which manager performed the best, and is there a significant enough difference for Sally to move her money to the wi
The farm is expected to produce revenue of $1,800,000 each year, and an after tax annual cash flow from operations of $1,580,400. The marginal tax rate is 35 percent, and the appropriate discount ra
Calculate your current profit, and your maximum possible gain and loss. Now assume that you buy a put option to protect your position. Your put has a strike price of $69 per share, maturity of 6 mont
Use Black Scholes option valuation to find the value of a put option with a strike price of $20, a risk free rate of 8%, variance of returns = 36%, an expiration date six months from now, given tha
Malkin Corp. has no debt but can borrow at 6.5%. The firm's WACC is currently 10%, and there is no corporate tax.
Consider a bond with a 6.1 percent coupon rate and a yield to call of 7 percent. The bond currently sells for $1,103. If the bond is callable in 5 years, what is the call premium of the bond?
You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $44.75. What is the tota
A company has a bond issue outstanding that pays $150 annual interest plus $1000 at maturity. The bond has a maturity of 10 years. Compute the value of the bond when the interest rate is 5%, 9%, an
Suppose a corporation's bonds have a current market price of $1400. The bonds have a 13% annual coupon rate, a $1000 face value, and 10 years left until maturity. The bonds may be called in 5 years
Assume the best case scenario NPV is 50% higher than the base case and assume the worst case scenario NPV is 25% lower than the base case. Both the best case scenario and the worst case scenario hav
Truman Industries is considering an expansion project. The necessary equipment could be purchased for $9 million, and the project would also require an initial $3 million investment in net working c
Six Twelve is considering opening up a new convenience store in downtown New York City. The expected annual revenue is $800,000. To estimate the increase in working capital,