The firm you are CEO if has a current period cash flow of 1.0 million and pays no dividend. The present value of the company’s future cash flows is $2.5 million. The company is entirely financed with equity and there are 500,000 shares outstanding. Assume the dividend tax rate is zero.

What is the share price of your firm?

Suppose you and the board announce a plan to pay out 60 percent of the current cash flows as a dividend to its shareholders. How can a shareholder, who owns 1000 shares, achieve a zero pay-out policy on their own?

How much money will you have at the end of one year : Assume you just deposited $1,000 into a bank account. The current real interest rate is 3?%, and inflation is expected to be 6?% over the next year. What nominal rate would you require from the bank over the next?year? How much money will you have at.. |

What is the? bonds yield to maturity : Consider a coupon bond that has a par value of $1,000 and a coupon rate of 6?%. The bond is currently selling for $1,009.23 and has 2 years to maturity. What is the? bond's yield to maturity? (YTM)? What is the price of a perpetuity that has a coupon.. |

What is the price to earnings ratio : Plyer Overhead Door has $1,747,000 in sales, generates a net profit margin is 9.3% and the firm had 18,000 shares of stock outstanding. The company's stock price is $130. What is the price to earnings ratio? |

What is the least you could pay to acquire a bill : A Treasury bill has a bid yield of 3.66% and an ask yield of 3.6%. The bill matures in 129 days. Assume a face value of $1,000. What is the least you could pay to acquire a bill? |

Assume the dividend tax rate is zero : The firm you are CEO if has a current period cash flow of 1.0 million and pays no dividend. The present value of the company’s future cash flows is $2.5 million. The company is entirely financed with equity and there are 500,000 shares outstanding. A.. |

Treasury bond with the longest maturity : Treasury bond with the longest maturity (30 years) has an ask price quoted at 97:19. The coupon rate is 3.00 percent, paid semi annually. What is the yield to maturity of this bond? |

Why might this not be the best capital structure : Tampa Manufacturing, an established producer of printing equipment, expects its sales to remain flat for the next 3 to 5 years because of both a weak economic outlook and an expectation of little new printing technology development over that period. .. |

About the constant growth valuation : Woidtke Manufacturing's stock currently sells for $32 a share. The stock just paid a dividend of $2.25 a share (i.e., D0 = $2.25), and the dividend is expected to grow forever at a constant rate of 4% a year. What stock price is expected 1 year from .. |

Estimate the cost of capital of the firm : You are analyzing Tiffany Corp, an upscale retailer. The regression estimate of the firm's beta is 0.75. Standard error of beta estimate is 0.50. The average unlevered beta of comparable specialty retailing firms is 1.15. Estimate the Cost of Capital.. |

## About the replicating portfoliosReplicating portfolios: Stock ABC is currently trading at $20. There is a 60% real-world probability that six months in the future the price will go up to $23. There is a 40% real-world probability that six months in the future the price will go down.. |

## Discuss interest rate swaps and stock options describe the1 explain interest rate swaps and stock options.2 explain the role that credit default swaps played in the financial |

## Calculate equity ratio and weighted average cost of capitalFord Motor Company, Inc. Capital structure. Review Ford’s consolidated financial statements. Calculate the company’s debt/equity ratio and the earnings per share & return on investment and the weighted average cost of capital. What is the meaning of .. |

## Considering adding miniature golf course to its facilityOutdoor Sports is considering adding a miniature golf course to its facility. The course would cost $138,000, would be depreciated on a straight line basis over its 5-year life, and would have a zero salvage value. The project will require $3,000 of .. |

## Based on an internal rate of return analysisRealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire $20,000 purchase price. The loan would be repaid with four equal annual payments at an interest rate of 12%/year. Show the internal rate of ret.. |

## Variable cost per unit projection for a projectLes is concerned that his variable cost per unit projection for a project may not be reliable. Which type of analysis will help him determine the effect that an incorrect variable cost estimate will have on the final outcome of the project? |

## What is the best estimate of these bonds remaining lifeLloyd Corporation's 14% coupon rate, semi annual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from today at $1,050. They sell at a price of $1,353.54, and the yield curve is flat. Assume that interest rates are expe.. |

## What is before-tax cost of capital for this debt financingBlack Hill Inc. sells $100 million worth of 21-year to maturity 8.91% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $988 for each $1,000 bond. What is the before-tax cost of capital for this debt financing? |

## Calculate the total return on your investmentYou purchased one of Big Corp.’s 8%, 10-year convertible bonds at its $1,000 par value a year ago when the company’s common stock was selling for $20. Similar bonds without a conversion feature returned 12% at the time. The bond is convertible into s.. |

## Bonds will greatest percentage decrease in valueWhich of the following bonds will have the greatest percentage decrease in value if all interest rates increase by 1 percent? |

## Importance of knowing a companys wacc and npvCalculate GBATT's WACC - using the WACC and the above cash flows, calculate the NPV of each project and justify the importance of knowing a company's WACC and NPV. |

## Value of a firm is independent of its capital structureWhich of the following argued that the value of a firm is independent of its capital structure? |

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