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Orlando Co. has its U.S. business funded with dollars with a capital structure of 60 percent debt and 40 percent equity. It has its Thailand business funded with Thai baht with a capital structure of 50 percent debt and 50 percent equity. The corporate tax rate on U.S. earnings and on Thailand earnings is 30 percent. The annualized 10-year risk-free interest rate is 6 percent in the United States and 21 percent in Thailand. The annual real rate of interest is about 2 percent in the United States and 2 percent in Thailand. Interest rate parity exists. Orlando pays 3 percentage points above the risk-free rates when it borrows, so its before-tax cost of debt is 9 percent in the United States and 24 percent in Thailand. Orlando expects that the U.S. stock market return will be 10 percent per year, and the Thailand stock market return will be 28 percent per year. Its business in the United States has a beta of .8 relative to the U.S. market, while its business in Thailand has a beta of 1.1 relative to the Thai market. The equity used to support Orlando's Thai business was created from retained earnings by the Thailand subsidiary in previous years. However, Orlando Co. is considering a stock offering in Thailand that is denominated in Thai baht and targeted at Thai investors. Estimate Orlando's cost of equity in Thailand that would result from issuing stock in Thailand.
Shrieves's corporate tax rate is 40%, and 70% of the dividends received are tax exempt. Find the after-tax rates of return on all three securities. Round your answers to two decimal places.
In 1998, a particular Japanese imported automobile sold for 1,476,000 yen or $8,200. If the car still sells for the same amount of yen today but the current exchange rate is 144 yen per dollar, what is the car selling for today in U.S. dollars?
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Most qualified plan sponsors seek an advance determination letter from the IRS stating that the plan provisions meet Code requirements.
Provide a detailed overview of the U.S. publicly traded company, Priceline. This should be 3 pages. Evaluate the company's vulnerability to current financial threats, such as a recession, higher interest rates, and global competition.
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Rogue Racing Inc. has $1,000 par value bonds with a coupon rate of 8% per year making semiannual coupon payments. If there are twelve years remaining prior to maturity and these bonds are selling for $876.40, what is the yield to maturity for thes..
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