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Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, a coupon rate of 5 percent, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon rate of 6 percent, and sells for 104 percent of par. The first issue matures in 20 years, the second in 4 years.
Suppose the most recent dividend was $4.20 and the dividend growth rate is 4 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 38 percent. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Bono is considering a project that will result in initial aftertax cash savings of $3.8 million at the end of the first year, and these savings will grow at a rate of 5 percent per year indefinitely. What is the discount rate that should be set for t..
Currency Futures Definition. What are currency futures? How do they differ from currency forwards?
Your firm is considering purchasing an old office building with an estimated remaining service life of 25 years. Recently, the tenants signed long-term lease, which leads you to believe that the current rental income of $220,000 per year will remain ..
A retirement plan guarantees to pay to you or your estate a fixed amount for 20 years. At the time of retirement you will have $73,425 to your credit in the plan. the plan anticipates earning 9% interest. Given the following information, how much wil..
Profits made by directors, officers, or owners of 10 percent or more of the securities of a corporation as a result of buying and selling the securities within a six month period. A type of business organization formed and authorized by state law to ..
On Dec 31 an investor longs 18 contracts of Gold with a settlement price of 1185.40. What is the investors overall profit/loss? The contract size is 100 troy oz
The payment of a stock dividend would result in increase earnings per share b) a decrease in the per share par value, c) a reduction of retained earnings d) an increase in the book value per share.
An embedded option associated with each of the following instruments potentially alters the rate sensitivity of the underlying instrument. Indicate when the option is typically exercised and how it affects rate sensitivity. The current prime rate is ..
Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.77 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. The firm has a target debt–equity ratio..
You’re considering investing in a project with the following characteristics: The discount rate for all cash flows is constant and equal to 20% per year. The investment of $400 can be depreciated to zero book value over 10 years. Compute the NPV of t..
intended learning outcomes 1. evaluate the performance of a company using various financial analytical tools.2.
Suppose Palmer Properties is considering investing $2.6 million today (i.e., C0 = -2,600,000) on a new project that is expected to last for 7 years. What is the payback period for the project? Show your work. What is the net present value of the proj..
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