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We are evaluating a project that costs $750,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project.
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff is $21.2 million. If the DVDR fails, the present value of the payoff is $9.1 million.
Describe a specific business that seems to follow trade-off theory and another that follows pecking-order theory. Compare and contrast trade-off theory and pecking-order theory.
Market, Inc. has a 7-year, 6 percent annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent.
A 10-year bond paying 8% annual coupons pays $1000 at maturity. If the required rate of return on the bond is 7%, then today the bond will sell for
A stock has a beta of 1.20 and an expected return of 14 percent. A risk-free asset currently earns 3.0 percent. What is the expected return on a portfolio that is equally invested in the two assets?
Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a German firm, for >1,250,000. The sale was made in June with payment due six months later in Decem
Using one of the financial websites, look up the five following stocks: Coca-Cola, General Electric, Exxon Mobil, Humana, and Home Depot.
A project has a forecasted cash flow of $110 in year 1 and $121 in year 2. The interest rate is 5%, the estimated risk premium on the market is 10%, and the project has a beta of .5.
Contrast the use of calls and puts and determine which scenarios would be better suited to one over the other. Provide examples of each in the context of an MNE.
I found the expected rate of return for stock A and B, which is 8% and 10% respectively. I need to find the standard deviation of both A and B as well.
The value of an asset is the present value of the expected returns from the asset during the holding period. An investment will provide a stream of returns during this period,
Make a suggestion for improving the methods for valuing derivatives so that the reporting becomes more transparent for investors.
Given the following information for Huntington Power Co., find the WACC. Assume the company's tax rate is 35 percent. Debt: 5,000 6 percent coupon bonds outstanding, $1,000 par value, 25 years to matu
The financial managers of a firm have options when it comes to the capital structure of the firm. The usual components include short term debt, long term debt, preferred stock, and common stock.
In 2008, Pfizer had 12,000 million shares of common stock authorized, 8,863 million in issue, and 6,746 million outstanding (figures rounded to the nearest million). Its equity account was as follows:
Here are alphas and betas for Intel and Conagra for the 60 months ending April 2009. Alpha is expressed as percent per month.
A small business is receiving a five-year $1,000,000 loan at a subsidized rate of 3% per year. The firm will pay 3% annual interest payment each year and the principal at the end of five years.
Chandeliers Corp. has no debt but can borrow at 7.4 percent. The firm's WACC is currently 9.2 percent, and the tax rate is 35 percent.
A project has a contribution margin of $5, projected fixed costs of $13,000, projected variable cost per unit of $12, and a projected present value break-even point of 5,500 units. What is the operati
Today, you sold 200 shares of SLG, Inc. stock. Your total return on these shares is 12.5%. You purchased the shares one year ago at a price of $28.50 a share.
Consider whether you would buy a used car from a person or from a dealership. What are the pros and cons of each and how does that relate to the chapter material?
What applications do you think functions have for the business world? Can functions be used to predict next year's profits, or how much your company will grow?
Monica and her friend Linda each believe they have a superior savings plan. Monica saved $4,500 at the end of each year for 15 years and then let her money grow for 30 years.
Jordan wants to retire in 15 years when he turns 65. Jordan wants to have enough money to replace 75% of his current income less what he expects to receive from Social Security at the beginning of eac