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Klaven is 100 percent equity financed, and it faces a 40 percent tax rate. What is the company’s net income? What is its net cash flow?
The Herrmann Company has made $150,000 before taxes during each of the last 15 years, and it expects to make $150,000 a year before taxes in the future.
If D0 = $1.60, rs = 10%, and gn = 6%, what is TTC’s stock worth today? What are its expected dividend yield and capital gains yield at this time?
What will be Levine’s stock value if the previous dividend was D0 = $2 and if investors expect dividends to grow at a constant compound annual rate.
The dividend is expected to grow 5 percent a year for the next 3 years, and then 10 percent a year thereafter.
Harrison Clothiers’ stock currently sells for $20 a share. The stock just paid a dividend of $1.00 a share (i.e., D0 = $1.00).
A company currently pays a dividend of $2 per share, D0 = 2. It is estimated that the company’s dividend will grow at a rate of 20 percent per year.
A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $4 per share (D1 = 4).
Martell Mining Company’s ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year.
If the risk-free rate is 9 percent and the expected rate of return on an average stock is 13 percent, what are the required rates of return on Stocks C and D?
Microtech Corporation is expanding rapidly, and it currently needs to retain all of its earnings; hence it does not pay any dividends.
Suppose interest rate levels rise to the point where the preferred stock now yields 12 percent. What would be the value of Ezzell’s preferred stock?
You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250.
Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6 percent. At what price would the bonds sell?
Assuming that interest rates in the economy are expected to remain at their current level, what is the best estimate of Lloyd’s nominal interest.
Discuss the advantages and disadvantages of each procedure from the viewpoint of both the firm and its bondholders.
The rate of return you would get if you bought a bond and held it to its maturity date is called the bond’s yield to maturity.
The values of outstanding bonds change whenever the going rate of interest changes.
Callaghan Motors’ bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value.
Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10 percent. The bonds sell at a price of $850.
Heath Foods’ bonds have 7 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8 percent.
The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity.
Six years ago, The Singleton Company sold a 20-year bond issue with a 14 percent annual coupon rate and a 9 percent call premium.
A 10-year, 12 percent semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,060.
You just purchased a bond that matures in 5 years. The bond has a face value of $1,000 and has an 8 percent annual coupon.