After-tax cost of debt) Fitbite,Inc. currently has an outstanding bond that pays interest annually, a coupon rate of 6% and 5 years until Maturity. If is is in the 35 % marginal tax rate, what is its After-tax cost of debt? What is the After-tax cost..
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Price the following Option. The right to sell 1 share of stock at time T=1 for $1, when current price is $1, and historical volatility is 0.2, interest rate is 10%. Give one step Binomial price and Black-Scholes price at time t=0. Give replicating po..
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If the constant growth ("Gordon" or "Constant Growth Dividend Discount") model is to give a reasonablea valuation of a stock, which of the following is not a valid assumption for the model?
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Consider the following financial statement information for the Ayala Corporation: Item Beginning Ending Inventory $ 11,100 $ 12,100 Accounts receivable 6,100 6,400 Accounts payable 8,300 8,700 Credit sales $ 91,000 Cost of goods sold 71,000 Calculate..
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Suppose you are committed to owning a $207,000 Ferrari. If you believe your mutual fund can achieve a 13 percent annual rate of return and you want to buy the car in 10 years on the day you turn 30, how much must you invest today?
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Alex Karez has taken out a loan of $180,000 with an annual rate of 11% compounded monthly to pay off hospital bills from his wife Izzy's illness. If the most Alex can afford to pay is $3,500 a month, how long will it take to pay off the loan? How lon..
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“Despite its forbidding name, the CDS (Credit Default Swap) is a simple idea: it allows an investor to buy insurance against a company defaulting on its debt payments. Here you have some terms that come to my mind: hedging, speculation, naked positio..
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Consider a project to supply 116 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 $2,060,000 five years ago; if the land were sold today, it would net you $2,260,0..
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What is an open-end mutual fund? What types of companies usually manage open-end funds? Describe how these funds work on a day-to-day basis.
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Yield to maturity and future price- A bond has a $1,000 par value, 7 years to maturity, and a 9% annual coupon and sells for $1,095. What is its yield to maturity (YTM)? Round your answer to two decimal places.
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Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what..
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You own a house worth $400,000 that is located on a river. If the river floods moderately, the house will be completely destroyed. This happens about once every 50 years. If you build a seawall, the river would have to flood heavily to destroy your h..
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