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Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon of 8 percent, and sells for 94 percent of par. The second issue has a face value of $40 million, a coupon of 9 percent, and sells for 107 percent of par. The first issue matures in 23 years, the second in 6 years. a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Equity/Value Debt/Value b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Equity/Value Debt/Value c. Which are more relevant, the book or market value weights?
You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent. Ignoring tax..
Determine what criteria a state should use to equalize capital-outlay expenditures in districts. How should it be decided where new buildings are to be built? When buildings are needed? What kinds of capital equipment should be provided? When capital..
Which of the following statements concerning preferred stock is most correct?
KADS, Inc., has spent $350,000 on research to develop a new computer game. The firm is planning to spend $150,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $45..
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $33.6 million. If the DVDR fails, the present value of the payoff is $11.6 million. Calculate the N..
Corporation X, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Corporation X had revenues of $500 Millions of USDs and earnings of $125 of Millions of USDs. Estimate the IPO price for Co..
Draw a payoff diagram for Buy a bond with a face value of $80, buy a call, with X = $80, and sell a put, with X = $80.
Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semi-annual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what i..
Jada deposited an amount of money in a bank 3 years ago. If the bank had been paying interest at the rate of 6%/yearcompounded daily (assume a 365-day year) and she has $16,000 on deposit today, what was her initial deposit? (Round your answer to the..
Bond X is a premium bond making annual payments. The bond has a coupon rate of 9%, a YTM of 7%, and has 13 years to maturity. Bond Y is a discount bond making annual payments. In 13 years? What’s going on here? Illustrate your answers by graphing bon..
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.9%. The correlation between th..
Suppose that a person won the Florida lottery and was offered a choice of two prizes: (1) $500,000 or (2) a coin-toss gamble in which he or she would get $1 million if a head were flipped and zero if a tail. What is the expected dollar return on the ..
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