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The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Koy's bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium
What will be the Feds target for the Prime Rate? What do you think will be the results on employment of using this new target for monetary policy?
The beta of a project under analysis is 1.4, with expected net cash flows estimated to be $1,500 per year for five years. The required investment outlay on the project is $4,500. What is the require
You own 10 shares of Standard Motors bonds. These bonds pay an annual coupon payment of $100 dollars, have a par value of $1000 and 10 years until maturity. Standard Motors is having financial diffi
In 2-3 paragraphs explain that If you were a credit analyst who approved or disapproved commercial loans, which financial statement(s) and financial ratios would you be most concerned with? Which wo
Inside directors should constitute the majority of a corporate board, because insiders have superior understanding of the firm's business operations.
Construct the balance sheet for this depository financial institution. Could this be the balance sheet for St. Ann's Credit Union or Bank of America? Explain fully the reasons for your choice.
Bavarian sausage just issued a 10 year 12% coupon bond. the fave value of the bond is 1000 and the bond makes semiannual coupon payments. if the bond is trading at 867.25, what is the bond's yield t
A proposed new investment has projected sales of $825,000. Variable costs are 55% of sales, and fixed costs are $187,150 per year. Depreciation is $91,000 and the corporate tax rate is 35%. What is
The terms of the loan require you to make 12 equal end-of-month payments each year for 5 years and then an additional balloon payment of $5,000 at the end of the last month. What will your equal mon
What is the Payback Period for this project? What is the NPV of this project, if the discount rate is 8.6%? Should the firm accept this project? What is the IRR of this project? Should the firm accept
Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.20, $16.20, $21.20, and $3.00. Afterwards, the company pledges to maintain a constant 5.50 percent gr
If the appropriate discount rate for the following cash flows is 8.4 percent, what is the present value of the cash flows?
The bonds have 25 years to maturity and sell for $890.78. The market risk premium is 8%, T-bills are yielding 5%, and Greenfield's tax rate is 25%. Answer the following questions. What is the firm's
What is the expected return on the stock if you buy today and sell next year? What is the expected standard deviation of the stock?
In 2008 the MKA Corporation reports EPS of $5.75, ROE equals 15% and the company has a dividend payout ratio of 60%. Calculate the dividend growth rate.
(a) If he were to sell the bond today, what return would De'Andre earn? (b) What portian of this return represents the capital gains, and what portion represents the current yield?
Assume that you currently own 7,200 shares of stock in the company and decide not to participate in the rights offering. How much can you get for selling all of your rights?
BUC would have used a discount rate of 23% to discount the cash flows from its Honduran operations if the threat of expropriation were not present. Evaluate whether BUC should sell the plantation no
Calculate the appropriate selling price of a 30-year 5% coupon, $10,000 Treasury bond that was purchased five years ago. Marketplace interest rates are averaging 8%.
If the cost of common equity for the firm is 17.6%, the cost of preferred stock is 10.1%, the before-tax cost of debt is 7.7% and the firm's tax rate is 35%, what is QM's weight cost of capital
The most optimistic price estimate is $60.00/ton, and the most pessimistic estimate is $160.00/ton. (Note there are 3 data points in for this estimate.) What is the expected price of the material?
Suppose that the principal assigned to the senior, mezzanine, and equity tranches is 85%, 5%, and 10% instead of 75%, 20%, and 5% in Figure 16.4. How are the results in Table 16.1 affected? Discuss
What is your etimate of the enterprise value of Carswell? What is the value of the equity of Carswell if the acquisition goes through and Smidgeon borrows $2,4 million and finances the remainder usi
The standard deviation of Shamrock corp. Stock is 19 percent. The standard deviation of Cora Co. stock is 14 percent. The covariance between these two stocks is 100. What is the correlation between