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A mutual fund manager expects her porfolio to earn a rate of return of 11% this year. The beta of her portfolio is .8. If the rate of return available on risk-free assets is 4% and you expect the ra
A share of stock with a bera of .75 now sells for $50. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 4%, and the market risk premium is 7%. If the stock is perc
A similar company with no debt has a cost of equity of 11% (i.e. rEU = 11%). According to the MM extension with growth, what is the value of Gomez's interest tax savings?
The growth rate in dividends is expected to be a constant 5 percent per year, indefinitely. Investors require a 17 percent return on the stock for the first 3 years, a 12 percent return for the next
An investment in a startup company will pay you or your heirs $2500 a year forever. If the first payment is received 18 years from today and the discount rate is 15%, what is the total value of the
Comment on Facebooks financial status, using ratio analysis, industry, and market data. What conditions favor Facebook? What economic conditions may create a challenge?
The Congress Company has identified two methods for producing playing cards. One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards
You are the financial manager of a firm with a market value debt ratio (debt-to-value) of 0.5 and a cost of equity of 18.08 percent. The risk-free rate is 8.0 percent and the required rate of return
Lackner Bros. Has 12 percent semiannual bonds outstanding which mature in 10 years. Each bond is now eligible to be called at a call price of $1,060.
Pit Row Auto, a national auto parts chain, is considering purchasing a smaller chain, Southern Auto. Pit Row's analysts project that the merger will result in incremental net cash flows of $2 millio
Prepare in general journal form the budgetarty entry the debt service fund would make to account for this serial bond issue. what adjustmens,if any, would need to be made to the General Fund budget
Does the Capital Asset Pricing Model (CAPM) make sense? What are the pros and cons of having an asset's return determined by one factor?
Identify common political factors for an MNC to consider when assessing country risk. Briefly elaborate on how each factor can affect the risk to the MNC
In the past you spent $25,000 per year on coal. The new company says you will spend no more than $15,000 per year on heating oil. If your required return is 12 percent, should you make this investme
Discus the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer? Explain why you
The company will pay a $12 per share dividend in 16 years and will increase the dividend by 3 percent per year thereafter. What is the current share price if the required return on this stock is 8 p
As an alternative to buying on credit, you can borrow funds from the bank, but the bank will make you pay interest each month. At what nominal bank interest rate should you be indifferent between th
How many shares do you own in 2013? What's the cost of those shares in 2013? If ABC, pays an annual dividend of $2.395, what is the amount of your dividend check?
What are the key roles of an investment banker? (explain in detail), 200 words minimum.
Carson Company is a large manufacturing firm in California that was created 20 years ago by the Carson family. It was initially financed with an equity investment by the Carson family and ten other
Give three (3) different ways to transfer capital flow efficiently in a well functioning economy from the capital supply and the capital demander
Calculate the project's annual free cash flow (FCF) for each of the next five years, where the firm's tax rate is 35%. If the cost of capital for the project is 12%, what is the projected NPV for the
What is the difference between an expenditure-changing policy and an expenditure-switching policy?
What are the factors affecting the demand for foreign currency? Are they interrelated or do they move independently?
Jordan Enterprises in considering a capital expenditure that requires an initial investment of $42,000 and returns after-tax cash inflows of $7,000 per year for 10 years. The firm has a maximum acce