Question 1) The Joe company is experiencing financial difficulties. Its dividends and earnings are falling at a constant rate of 7% per year. It's stock just paid an annual common stock dividend of $1.50 per share; the stock has a beta of o:45; three-month U.S Treasury Bill rate is 4.8%, and the market risk premium is 7%. What's the value of the Joe Company's Stock.
Question 2) A firm's stock presently sells for $71 per share. The stock just paid a dividend of $2.12. The dividend is anticipated to increase at a constant rate of 5.5% a year. What stock price is anticipated one year from now?
Question 3) A firm has a target capital structure of 30% equity and 70% debt. The firm's tax rate is 35% and the yield to maturity on the firm's outstanding bonds is 8.2%. The firm's weighted average cost of capital is 8.76%. What's the firm's cost of equity capital?
Question 4) A firm has an equity multiplier of 3.71. The firm's assets are financed with some combination of common equity and long-term debt. What's the firm's debt ratio?
Question 5) A company's project has expected net cash inflows of $4,000 per year for seven years. The project has a cost of $12,200 and the cost of capital is 17% What's the project's modified internal rate of return?
Question 6) A project has an upfront cost of $21,300,000. It's estimated that the project will produce the following net cash flows:
Year Project Net Cash Flows
1 $13,000,000
2 $3,000,000
3 $7,200,000
a) What's the project's net present value when the cost of capital is 4%?
b) What's the project's net present value when the cost of capital is 11%