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Assume that this project has average risk. Construct a decision tree and determine the project's expected NPV.
If a firm went from zero debt to successively higher levels of debt, why would you expect its stock price to first rise, then hit a peak.
Tunney Industries can issue perpetual preferred stock at a price of $50 a share. The issue is expected to pay a constant annual dividend of $3.80 a share.
The going rate of interest on new long-term debt, rd, is 10 percent, and this is the present yield to maturity on the bonds.
If the firm's beta is 1.6, the risk-free rate is 9 percent, and the expected return on the market is 13 percent, what will be the firm's cost of equity.
The Bouchard Company's current EPS is $6.50. It was $4.42 5 years ago.
Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively.
Is the stock in equilibrium? Explain, and describe what will happen if the stock is not in equilibrium.
Assume that the average firm in your company's industry is expected to grow at a constant rate of 6 percent and its dividend yield is 7 percent.
If the required return on the stock is 15 percent, what is the value of the stock today?
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?
What is the firm's income tax liability and its after-tax income? What are the company's marginal and average tax rates on taxable income?
Assuming that the investments are equally risky and that Shrieves chooses strictly on the basis of after-tax returns, which security should be selected?
The Klaven Corporation has operating income (EBIT) of $750,000. The company's depreciation expense is $200,000.
What differences would you expect to find between a grocery chain such as Safeway and a steel company?
Doublewide Dealers has an ROA of 10 percent, a 2 percent profit margin, and a return on equity equal to 15 percent.
What will be the firm's quick ratio after Petry has raised the maximum amount of short-term funds?
The H. R. Pickett Corporation has $500,000 of debt outstanding, and it pays an interest rate of 10 percent annually.
Security A has an expected return of 7 percent, a standard deviation of returns of 35 percent, a correlation coefficient with the market of 0.3.
If investors' aversion to risk increased, would the risk premium on a high-beta stock increase more or less than that on a low-beta stock? Explain.
What is the required rate of return for a portfolio consisting of 80 percent of Stock X and 20 percent of Stock Y?
Thatcher Corporation's bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8 percent coupon rate, paid semiannually.
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?
Harrison Clothiers' stock currently sells for $20 a share. The stock just paid a dividend of $1.00 a share.
Based on calculations of ratios, and use an industry competitor to Compare company's ratios, and analyze company's performance.