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Filer Manufacturing has 7.6 million shares of common stock outstanding. The current share price is $46, and the book value per share is $3. The company also has two bond issues outstanding. The first bond issue has a face value of $68.6 million and a coupon rate of 6.3 percent and sells for 109 percent of par. The second issue has a face value of $58.6 million and a coupon rate of 6.8 percent and sells for 107.5 percent of par. The first issue matures in 7 years, the second in 28 years. Suppose the company’s stock has a beta of 1.3. The risk-free rate is 2.4 percent, and the market risk premium is 6.3 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 34 percent. What is the company’s WACC?
Do you think a market's efficiency is affected by the number of transactions that take place, the amount of time it takes to complete the transaction and the number of buyers and sellers present? How do these questions relate to the Primary and Secon..
Wayne State offers a tuition financing plan where a $40,000 loan taken at the beginning of the freshman year would pay for all 4 years of college tuition. The plan calls for the loan to be repaid over a ten year period starting 5 years from the date ..
What additional risks will the company face as a result of the proposed international sales? b. What happens to the company's profits if the U.S. dollar strengthens? What if the U.S. dollar weakens?
Consider a no-load mutual fund with 200 million in assets and 10 million shares at the start of the year and with 250 million in assets and 11 million shares at the end of the year. During the year investors have recieved income distributions of $2 p..
If an investor is long May Wheat and it is initially trading at 4.25 and short the September Wheat contract which is trading at 4.75. One month later the May Corn contract is closed at 4.50 and Sept Corn closed at 4.25, the gain or loss per contract ..
Pasqually Mineral Water, Inc., will pay a quarterly dividend per share of $1.20 at the end of each of the next 12 quarters. Thereafter, the dividend will grow at a quarterly rate of 1.8 percent, forever. The appropriate rate of return on the stock is..
In the machine scheduling problem of Section 2.3.7, Job 4 is assigned to Machine B in iteration k = 0. - What is the resulting sub problem P(xk) on this machine, and what is its inference dual?
The key inputs for preparing pro forma income statements are:
Compute the fair price of the following perpetual bond. Its first interest, $120, will be paid 15 years from now and will be adjusted upward by 3% every year to compensate for the risk of inflation. Investors require 8% return on the bond.
Instead of increasing its long-term debt by borrowing money from a bank to purchase new stereo equipment, Jay's Jams Inc. decides to lease the equipment on a long-term basis. How will the long-term debt ratio differ if the lease option is selected ov..
Theo is a consultant who earns 72,000$ annually. His wife, Julia is a homemaker and theey have one child, Ben. Theo is covered by 200,000$ life insurance policy. The couple assumes an annual inflation rate of 3%. How would you design a finance plan f..
Given this information, is triangular arbitrage possible?- If so, explain the steps that would reflect triangular arbitrage, and calculate the profit from this strategy if you had $1,000,000 to use.
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