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A company's assets have a total book value is $163.2 million. The company has 8.3 million shares of common stock outstanding which are trading at $53 per share. They also have two bond issues circulating on secondary markets. One set of bonds has a face value of $70 million and a coupon rate of 7 percent; it matures in 8 years an is trading at 108.3 percent of par. The other bond issue has a face value of $60 million and a coupon rate of 7.5 percent; it matures in 27 years and is trading at 108.9 percent of par. On a book value basis, the company's capital structure weights are:
Suppose you purchase shares of Engel, Inc (EI) which recently executed an IPO at the post-offering market price of $32 per share and you hold the shares for one year. You the sell you EI shares for $35 per share. EI does not pay dividends and you not..
Gardial GreenLights, a manufacturer of energy efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a $20 million investment in new machinery. How much ext..
Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.6 percent. The company also has 4 million shares of common stock outstanding.
Haskell Corp. is comparing two different capital structures. Plan I would result in 18,000 shares of stock and $95,000 in debt. Plan II would result in 14,000 shares of stock and $190,000 in debt. The interest rate on the debt is 5 percent. Assuming ..
Bank Z offers a$1,000 loan at 9.24% interest paid quarterly. Bank M offers a $1,200 loan at 9.21% interest paid monthly. Which loan has the lowest cost?
A city may choose to purchase municipal bond insurance:
The Shakey Company can finance the purchase of a new building costing $2 million with a bond issue, for which it would pay $100,000 interest per year, and then repay the $2 million at the end of the life of the building. Use AW analysis based on equi..
Determine the Marginal profitability of additional sales, Cost of additional investment in receivables, Additional bad-debt loss and Cost of additional investment in inventory.
Let's say you short sell 500 shares of XYZ corporation when its price is $40 per share. The IMR is 45%, The MMR is 25%, and the broke charges 9% per year on borrowed funds. If within three months, the price of XYZ rises to $58 per share; will you be ..
Portfolio Return Year-to-date, Company X had earned a -3 percent return. During the same time period, Company Y earned 12 percent and Company Z earned 7 percent. If you have a portfolio made up of 50 percent Company X, 30 percent Company Y, and 20 pe..
When you retire you will initially require an annual income of 125,000 per year. You anticipate living for 25 years during retirement with an 8% investment return. How much do you need in your pension plans to cover this need? How much will you have ..
You have been assigned to build a new system that automates and improves the interview process for the Human Resources Department of your organization. Your task is to develop a requirements definition for the new system. Include both functional and ..
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