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Compute the cost of capital for the firm for the following:
1. A bond that has a $1,000.00 Par value (face value) and a contract or coupon interest rate of 10.7%.The bonds have a current market value of $1.126 and will mature in 10 years.The firms' marginal tax rate is 34%
2. A new common stock issue that paid a $1.81 dividend last year.The firms dividends are expected to continue to grow 6.7% per year forever. The price of the firm's common stock is now $27.93.
3. A preferred stock paying a 9.7% dividend on a $1.50 par value
4. A bond selling to yield 11.7% where the firm's tax rate is 34%.
Evaluation of EBIT-EPS indifference point - One piece of information the company desires for its decision analysis is an EBIT-EPS indifference point.
XXX maintains its records on the cash basis. During 2011, XXX collected cash of $670,000 from customers and paid $321,000 to suppliers. Depreciation expense of $25,000 would have been recorded on the accrual basis.
If the cost of the capital is 15% by continuous compounding, the risk-free rate is 5% and the volatility is 0.3. What is the Static NPV and what is the Strategic NPV?
Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.
The Booth Corporations sales are forecasted to double from dollar 1,000 in 2010 to dollar 2,000 in 2011. December 31, 2010, balance sheet is given.
A game of chance offers following odds and payoffs. Every play of the game costs $100, so net profit per play is the payoff less $100. Probability .10, .50 and .40.
A new tax is levied on airline benefits to finance improvements in the nation's airports. The current market value of interest is 8 percent. However, airline benefits are subject to a 50 percent tax.
You have created the given income statement for the Hugo Bass Company. It represents the most recent year's operations, which ended by tomorrow.
Assume that Shepard uses a 10% discount rate and is in the 34% tax bracket for all years. What type of reorganization is this contemplated transaction?
Debenture holders were paid $2,59,375 together with interest preferential creditors were pain in full. Expenses of liquidation came to $2,550 and cash on hand was $5,000, and assets realized $3,95,000. Calculate the liquidator's remuneration.
What would be the value of the bonds three years after issue in each scenario above, assuming that interest rates stayed steady at either 7 percent or 13 percent?
Ferris, an investment management company located in New York, has recently been keptas the endowment fund manager for a small Midwestern college. Formulate a linear goal programming model.
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