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The firm is deciding whether to invest in a new project. The project would have to be financed by equity; the cost is $2,000 and will return $2,500 or 25% in one year. The discount rate for both bo
A debenture with a face value of $1,000 is selling for $996. The coupon is 10% pa paid semi-annually. What is the annual effective yield if the debenture has three year maturity? Show workings and n
What is the book value of the machine? Calculate the firm tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200 and $15,000.
Provide a detailed overview of a U.S. publicly traded company. This should be one to two (1-2) pages. Evaluate the company's vulnerability to current financial threats such as a recession, higher in
Reconcile high standards of ethical business practices with the concept of shareholder wealth maximization and stakeholder theory. What responsibility do executives have to their shareholders and th
Violation of any standard or restrictive provision by the borrower gives the lender the right to do all of the following except
Paul's Fish Market issues only common stock and coupon bonds. The firm has a debt-equity ratio of 0.48. The cost of equity is 9 percent and the pre-tax cost of debt is 7.5 percent. The tax rate is 3
Highway Express has paid annual dividends of $1.16, $1.20, $1.25, $1.10, and $0.95 over the past five years respectively. What is the average dividend growth rate?
You have just borrowed $20,000 to buy a new car. The loan agreement calls for 60 monthly payments of $444.89 each to begin one month from today. What is the annual interest rate you are paying? What
The real risk free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 6.3%. What is the maturity risk premium for the 2-year security?
Wilson Wonder's bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850.
Hanster Inc. is a levered firm with publicly traded shares. The company has 250 million shares outstanding with a share price of $16 and a estimated equity beta of 1.50.
Assume that the risk free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7?
The CFO of your firm has asked you for an approximate answer to this question: What was the increase in real purchasing power associated with both 3-month Treasury bills and 30-year Treasury bonds?
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e. Do= $1.50). The dividend is expected to grow 5% a year for the next 3 years and then 10% a year thereaf
Fielding Wilderness Outfitters had projected its sales for the first six months of 2008 to be as follows:
Similarly, because Hydro-Luxes require six labor hours, the profit margin on this product should be $96 less. Who is right and why?
The yield to maturity is 10%. Please determine if the bond sells for a premium, par or discount and explain you answer. Calculate the value of the bond if interest is paid on an annual basis versus
What is the present value of $12,500 to be received 10 years from today? Assume a discount rate of 8% compounded annually and round to the nearest $10.
The bonds have a face value of $1,000 and an 8 percent coupon rate, paid semiannually. The price of the bonds is $1,100. The bonds are callable in 5 years at a call price of $1,050. What is the yiel
Assume your existing portfolio is valued at $9,000 and its beta of 1.0. You plan to buy additional $3,000 of a particular stock that has a beta of 1.8(without selling any other stock). What is the
Mark can earn an annual interest rate of 8% compounded quarterly. Which of the four following four options would you recommend that Mark choose? Why?
If Mitchem expands its receivables and inventories using its short-term line of credit, how much additional short-term funding can it borrow before its current ratio standard is reached?
Given the following information, prepare a statement of cash flows.
These bonds have an average YTM of 5%. ABC Inc. has 100 million shares outstanding with a price of $5 per share and a beta of 1.2. Corporate tax rate is assumed to be 40%. The risk free rate is 2% a