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A company currently pays a dividend of $2.25 per share (D0 = $2.25). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 1, the risk-free rate is 6%, and the market risk premium is 5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
Developing a Product-Positioning Map for McDonald's Purpose Organizations continually monitor how their products and services are positioned relative to competitors. This information is especially useful for marketing managers but is also used by oth..
Determine the current value of the bond if present market conditions justify a 14 percent required rate of return.
Suppose your company needs to raise $35.4 million and you want to issue 24-year bonds for this purpose. Assume the required return on your bond issue will be 7.9 percent, and you’re evaluating two issue alternatives: a 7.9 percent semiannual coupon b..
Calculate the value of a 6-month European call futures option when the futures price is $21, the strike price is $20, the risk-free rate is 12% per annum and the volatility of the futures price is 20% per annum.
Five years ago, Cayman’s Crafters, Inc. issued new 25 year convertible bonds with a 4% coupon rate, compounded semi-annually. The bond has a par value of 10,000. The market’s required rate of return on similar securities at the time of issuance was 3..
You are considering two mutually exclusive projects. Project A has cash flows of -$72,000, $21,400, $22,900, and $56,300 for years 0 to 3, respectively. Project B has cash flows of -$81,000, $20,100, $22,200, and $74,800 for years 0 to 3, respectivel..
Naperville Corporation plans to buy a piece of construction equipment for $225,000 and depreciate it fully over 5 years using straight-line method of depreciation. However, it plans to use it for 8 years and then sell it for an unknown amount. The eq..
Applying the 1.7 extra minutes per discharge, we estimated it would take an extra 425 minutes (1.7 times 250) to code the discharges in the first month. At $50 per hour, the cost per minute is $0.83 ($50 divided by 60 minutes) and the cost per claim ..
What is the value of a bond that has a par value of $1000, a coupon rate of 15.67% (paid annually), and that matures in 7 years. Assume a required rate of return on this bond is 19.81%
The December 28, 2013 income statement of Snap-On Incorporated includes the amounts shown below. The company paid dividends of $93.2 (in millions). Prepare the closing entries for the company for 2013. (in millions) Net sales $3,056.5 Deferred revenu..
The portfolio managers of a firm determined that over the next year interest-sensitive assets are in the amount of $1.5 billion while interest-sensitive liabilities are in the amount of $1.8 billion. Calculate GAP and Duration GAP (DGAP) for this sit..
Frost Inc. issued a 20-year, 8% semi-annual bond 5 years ago. The bond currently sells for 105% of its face value. The company’s tax rate is 40%. What is the pre tax cost of debt? What is the after-tax cost of debt?
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