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Suppose the dividends for the Seger Corporation over the past six years were $1.51, $1.59, $1.68, $1.76, $1.86, and $1.91, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk premium is 12.0 percent, Treasury bills yield 4.1 percent, and the projected beta of the firm is .86. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
If we incorporate Financial Distress and Bankruptcy Costs and also Taxes, then we have altered the fundamental assumptions of Modigliani and Miller. Explain the relationship between leverage and capital structure under the new assumptions.
After grad you worked on Wall Street made. Fortune & now wish to endow a professorship here at Morgan. You'd like endowment to pay 10000 forever. If appropriate interest rate is 6.7% what is the present value of perpetuity?
If the market yield is 18% p.a. compounding semi-annually, how much did you spend?
Why is NPV considered a superior method of evaluating the cash flows from a project? Suppose the NPV for a project’s cash flows is computed to be $3,000. What does this number represent with respect to the firm’s shareholders? Describe how the IRR is..
What is the nominal and effective cost of trade credit under the credit terms of 3/10, net 35? Assume 365 days in a year for your calculations.
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $5,100,000, and it would be depreciated straight-line to zero ove..
A company builds a new plant and finances its construction by issuing stock. Which ratio is least likely to be affected, all else being equal?
You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $400 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in ..
Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 8% annual coupon. The second issue consisted of 20-year bonds with a 6% annual coupon with warrants attached.
Why is the focus on cash flow important? Why not just look at a company's 'net income' amount? Explain your thoughts in detail and give examples as to why the net income and cash flow differ.
Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 4% and the market risk premium is 6%. Harrison estimates that if it acquires Van Buren, the year-end dividend will remain at $2.30 a ..
Bill plans to fund his individual retirement account (IRA) with the equal amount contribution at the end of year for the next 20 years. If Bill can earn 12 percent on his contributions and he wants to accumulate $1,000,000 at the end of twentieth yea..
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