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How much do you have to deposit today so that beginning 16 years from now you can withdraw $16,000.00 a year for the next 6 years (periods 16 through 21 ) plus an additional amount of $32,000.00 in that last year (period 21 )? Assume an interest rate of 12 percent.
a. What is the value of the $16,000.00 withdrawals in years 16 through 21 at the end of year 15 if the annual interest rate is 12 percent? (Round to the nearest cent.)
Currently the index is standing at 1,097. The risk-free rate is 4% per annum and the dividend yield is 1% per annum. A 6-month European put option on the index with a strike price of 1000 is trading at $32.04. What must be the value of a 6-month Euro..
Lohn Corporation is expected to pay the following dividends over the next four years: $18, $14, $13, and $6.50. Afterwards, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is ..
Lenows Drug stores and Halls Pharmaceyticals are competitors in the discount drug chain store business. Complete the following given earnings before interest and taxes of 20,000,30,000 and 120,000. Assume the tax rate is 30%. Leave nothing blank but ..
Your firm has borrowed $15 million from a bank under the following terms: Payments are to be mode end of every quarter for next 25 years. Interest rate is 8.4% compounded quarterly. Prepare an amortization table using XL. What is the outstanding bala..
Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost of 10 percent annually. Wh..
Yang Corp. is growing quickly. Dividends are expected to grow at a rate of 28 percent for the next three years, with the growth rate falling off to a constant 6.4 percent thereafter. Required: If the required return is 16 percent and the company just..
We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 44,000 units per year. Calculate the best-case an..
Blackwater Tours pays an annual dividend which increases by 4 percent each year. The next dividend is expected to be $1.36 a share. Blackwater recently announced that they will be ceasing all dividends after 3 more years as they are planning a major ..
Suppose your company needs $20 million to build a new assembly line. Your target debt−equity ratio is 0.80. The flotation cost for new equity is 9 percent, but the flotation cost for debt is only 6 percent. What is your company’s weighted average flo..
What types of value would you consider when assigning “value” to a firm’s stock or bond? What is the significance of each of the different types of value in the valuation process? Use examples to support your response.
No More Books Corporation has an agreement with Floyd Bank whereby the bank handles $7.0 million in collections a day and requires a $450,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region..
Consider a project to supply 118 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $2,080,000 five years ago; if the land were sold today, it would net you $2,280,0..
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