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Instead, assume that the restructuring is completed and Martin is now 20% debt and 80% common equity. But the after tax cost of debt is 9% and the cost of common equity is 13.5%. What is Martin's ne
The pharmacy of a large metropolitan hospital has a counter used exclusively for nurses' requests for medications. The time between requests is estimated to be about five minutes. A pharmacist can h
A bond has a par value of $1000, a time to maturity of 6 years, and a coupon rate of 9% with interest paid annually.If the current market price is $845.
What effective annual interest rate does the firm earn when a customer does not take the discount? (Use 365 days a year.Do not round intermediate calculations and round your final answer to 2 decima
I have another table with actual quanity used, unit cost, total cost, and patient days.
A company is evaluating whether to use its warehouse for storing its own inventory or whether to rent it out to a local theatre group for housing props. Describe what information might be relevant w
What is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the end of the month?
Assuming interest rates decline substantially (i.e., they decline to 4 percent), discuss what will happen to the bond's call-adjusted duration and the reason for the change.
One is a corporate bond carrying an 8 percent coupon and selling at par. The other is a municipal bond with a 5½ percent coupon, and it, too, sells at par. Assuming all other relevant factors
You placed a bet on Chicago for this year's Super Bowl. To cover your loss, you agree to pay your bookie $612.52 in three years. Assuming 7% interest, how much was your total bet?
What is the present value of a security which promises to pay you $5,000 in 20 years? Assume you can earn 7 percent if you were to invest in other securities of equal risk.
Today you buy a used car. The dealer accepts a down payment of $2,000 and lets you pay $1,900 per year for 5 years. The interest rate on the loan was 6%. How much was the car?
These two possibilities are equally like. If you wait, the true outcome will be appraent in period 1, at the expense of a one period delay for all cash-flows. What is the value of the option to dela
Smeagal Industries is considering a new division, making pixie dust in a handy resealable pouch. THey intend to finance it with 60% equity, and 40 risk-free debt. They have identified the following
Calculate both the direct expense of issuance and the indirect (i.e., underpricing) expense. What percentage of the market value of the shares is represented by these costs?
A machine can be purchased for $10,500, including transportation charges, but installation costs will require $1,500 more. The machine is expected to last four years and produce annual cash revenues
what do you think the stock price will range with a 95% probability over the next two months? what about the continously compounded rate of change in the stock price?
Discuss the lower bound for option prices and the put-call parity with and without dividend yields; and explain why.
if the required return declines to 9% and the dividend remains $1, what is the value of the stock? if the stock is selling foor $20, what does that imply?
Southern Home Cookin' just paid its annual dividend of $.80 a share. The stock has a market price of $26 and a beta of 1.1. The return on the U.S. Treasury bill is 4 percent and the market risk prem
An investment is available that pays a tax-free 5%. The corporate tax rate is 25%. Ignoring risk, what is the pre-tax return on taxable bonds?
Assume that the real risk-free rate is r* = 2% for all maturities and that there are no maturity premiums. If 3-year Treasury notes yield 2 percentage points more than 1-year notes, what inflation r
The real risk-free rate is 4%. Inflation is expected to be 3% this year, 5% next year, and then 5% thereafter. The maturity risk premium is estimated to be 0.0003 x (t - 1), where t = number of year
You just purchased a bond that matures in 4 years. The bond has a face value of $1,000 and has an 9% annual coupon. The bond has a current yield of 7.63%. What is the bond's yield to maturity? Round
Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price. Round your answer to two decimal places.