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A firm has 5 million shares outstanding with a market price of $30 per share. The firm has $30 million in extra cash (short-term investments) that it plans to use in a stock repurchase, the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, and not 1,200,000. Round your answer to two decimal places.
How many shares will remain after the repurchase? Round your answer to the nearest whole number.
You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 11 percent and 15 percent, respectively. The standard deviations of the assets are 23 percent and 31 percent, respectively. The correlation be..
Suppose you believe that Johnson Company's stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $310.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per..
Based on the cash flows shown in the chart below, compute the NPV for Project Huron. Suppose that the appropriate cost of capital is 12 percent. Advise the organization about whether it should accept or reject the project.
Suppose that papa bell inc.'s equity is currently selling for $61 per share, with 4.6 million shares outstanding. Assume the firm also has 23,000 bond outstanding, and they are selling at 94% of par. What are the firm's current capital structure weig..
Compute the expected return given these three economic states, their likelihoods, and the potential returns: (2 points) Economic State Probability Return
Assume that company G pays no interim dividends, so you receive $536 at the end of the project. What is G's market value at time 1, 2, and 3?
Consider a project with the following data: accounting break-even quantity = 7,440 units; cash break-even quantity = 6,800 units; life = five years; fixed costs = $170,000; variable costs = $40 per unit; required return = 12 percent. Ignoring the eff..
Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project? Cannibalization is a type of externality that is not against the law, and any harm it causes is done to the firm itself. If a proj..
Dandee Lions, Inc. has a cash balance of $105,000; accounts payable of $290,000; inventory of $213,000; accounts receivable of $310,000; notes payable of $95,000; and accrued wages and taxes of $65,000. How much net working capital does the firm need..
Stanley Roper has $2,500 that he is looking to invest. His brother approached him with an investment opportunity that could give Patrick $4,700 in 4 years. What interest rate would the investment have to yield in order for Stanley’s brother to delive..
Your company has a new project to be considered. You are given the following information on the best guess of related outcomes for the project. The cost of developing and market testing the product over the next year is $225 million. Determine the ne..
Specifically, the stock price is $100, the annually compounded risk free rate is 5%, and the strike price is $100. Use a one-period binomial model with u =4/3 and d = 3/4. Calculate the p and h. Explain
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