What is the right price for a stock? Is it book value, liquidation value or simply its market price at a given moment of time? Would you value a privately-owned company where there is no market value differently than a publicly owned company where th..
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You are considering an investment that costs $152,000 and has projected cash flows of $71,800, $86,900, and -$11,200 for years 1 to 3, respectively. If the required rate of return is 15.5 percent, should you accept the investment based solely on the ..
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Assume an investment project that has 250,000 dollars of capital cost for purchasing some machines and 150,000 dollars for buying a piece of land at time zero. Consider the straight line method to deprecate the investment for machines equally over 8 ..
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You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 10.60 percent semi-annual coupon bonds are selling at a price of $1,034.33. These bonds are the only debt outstanding for the firm. What is the after-..
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An investment project provides cash inflows of $1,350 per year for eight years. What is the project payback period if the initial cost is $4,250? What is the project payback period if the initial cost is $5,300? What is the project payback period if ..
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Assuming that the company’s overall beta is 1.2102. The risk-free rate is 5%, and the required rate of return on the market is 11%. You are considering a low-risk project whose market beta is 0.5 less than the company’s overall beta.
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Miller's Hardware plans on saving $42,000, $54,000, and $58,000 at the end of each year for the next three years, respectively. How much will the firm have saved at the end of the three years if it can earn 4.5% on its savings?
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Compact fluroscent lamps (CFLs) have become popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.50 and lasts 1,000 hours. A Kilowatt-hour of electricity costs $.101, which is about nati..
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The Holtzman Corp has assets of $400,000, current liabilities of $50,000, and long term liabilities of $100,000. There is $40,000 in preferred stock outstanding; 20,000 shares of common stock have been issued. Compute book value (net worth) per share..
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A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $55. What is the total rate of return on the stock? What is the dividend yield? What is the Capital Gains Yield?
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Revenue recognition. Read the notes to the financial statements. For each company, what is the company's revenue recognition policy? Is the company aggressive in revenue recognition? What is the level of receivables compared to sales? Analyze the all..
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Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $2.75 dividend per share (D0 = $2.75). The stock's price is currently $30.50, its dividend is expected t..
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