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Company ABC wants to invest in a Swedish manufacturing company that has an optimal debt ratio of 60%. Company ABC's cost of equity capital is 16% and its before-tax borrowing rate is 12.3%. As the C
A British government perpetuity pays £4 a year forever and is selling for £48. What is the interest rate?
Define the concept of management. Describe the major functions of the management process and why they are important. Describe the roles of the manager as outlined by Mintzberg.
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?
Valley Corporation is attempting to select the best of a group of independent projects competing for the firm's fixed capital budget of $4.5 million.
Assume that the risk free rate is 10%, and the dividend yield on both the potfolio and the index is 2%. If the portfolio has a beta of 0.5, how many put option contracts should be purchased? If the
The S&P 100 index is currently standing at 500 and each contract is on 100 times the index. If the portfolio has a beta of 1, how many put option contracts should be purchased?
In a merger, we often say that synergies arise, where the value of the whole exceeds the sum of the parts. What could these synergies arise from? Be specific, using supporting examples.
How does government regulation affect a bank's expansion in the global market? What are the possible strategies to deal with those constraints?
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