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Prove to yourself that it does not matter the point in lime at which you compare the prizes" cash flows: the better prize has both the bigger present value and future value.
How much in new savings will Frank have available at age 65 before subsequent withdrawals? How much will he have to save per year to exactly meet his need?
What is the product, and why do you think it became scarce? What happened to the price of the product when it was scarce?
How does the use of financial leverage effect a firm's earnings? When is using financial leverage beneficial? When is it disadvantageous?
Imagine you are considering acquiring a company. You have received their financial statements, and have learned that they have annual cash flows of:
Pay out 70 percent as dividends. If the firm wants to limit its external financing to $1 million, what is the growth rate it can support?
Companies U and L are identical in every respect except that U is unlevered while L has $10 million of 5% bonds outstanding. What value would MM estimate for each firm?
Under the Miller model, what is the value of the levered firm if the corporate tax rate is 34%, the personal tax rate on equity is 10%, and the personal tax rate on debt is 35%?
An unlevered firm has a value of $500 million. An otherwise identical but levered firm has $50 million in debt. Under the MM zero-tax model, what is the value of the levered firm?
Zhao Automotive issues fixed-rate debt at a rate of 7.00%. Zhao agrees to an interest rate swap in which it pays LIBOR to Lee Financial and Lee pays 6.8% to Zhao. What is Zhao"s resulting net payme
Would it be a sound rule to liquidate whenever the liquidation value is above the value of the corporation as a going concern? Discuss.
What amounts of old-issue flotation costs have not been expensed? Can these deferred costs be expensed immediately if the old issue is refunded? What is the value of the tax savings?
What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price?
What is the first price that results in a margin call if the maintenance margin on short positions is 30%? Show your calculation
At what year do you expect the bonds will be forced into conversion with a call? What is the bond"s value in conversion when it is converted at this time?
Goodwood Golfing's earnings available for common shareholders (EAC) for this fiscal year is $6.5 million. Goodwood has 5 million common shares outstanding. The current share price is $24. Good wo
Imagine that you are the financial manager for a firm, and your company has a WACC of 4.5%. Two district managers would like funds to pursue a project, and are asking for your approval based on thei
By which the conversion price exceeds the stock price over the current market price of the common stock. What will the conversion price be if it is set at a 10% premium? At a 30% premium?
Calculate the exercise value of the firm"s warrants if the common sells at each of the following prices: (1) $20, (2) $25, (3) $30, (4) $100.
Does the convertible issue"s lower coupon rate suggest that it is less risky than the straight bond? Is the cost of capital lower on the convertible than on the straight bond? Explain.
Whizzkid Inc. is experiencing a period of rapid growth. Dividend is expected to grow at a rate of 15 percent during the next two years, 13 percent in the third year, 10 percent in the fourth year,
If a firm expects to have additional financial requirements in the future, would you recommend that it use convertibles or bonds with warrants? What factors would influence your decision?
International Finance Critics of the field of international finance charge that the field is simply "corporate finance with an exchange rate.
U.S. cents to the Canadian dollar. By the end of the month, it has unexpectedly dropped to 70 cents. Has your company made a gain or loss as a result, and by how much?
Assume that the managers of Fort Winston Hospital are setting the price on a new outpatient service. Here are the relevant data estimates: