Consider two firms, Firm X and Firm Y, that have identical assets that generate identical cash flows. Firm Y is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share. Firm X has 2 million shares outstanding and..
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Barnes Enterprises has bonds on the market making annual payments, with 18 years to maturity, a par value of $1,000, and a price of $960. At this price, the bonds yield 8.7 percent. What must the coupon rate be on the bonds?
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Betancourt International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 29,000 solaris, debt in the amount of 10,500 solaris, and equity of 18,500 solaris. Assume the equity increases by 2,000 solar..
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Portfolio Return Year-to-date, Company X had earned a -3 percent return. During the same time period, Company Y earned 12 percent and Company Z earned 7 percent. If you have a portfolio made up of 50 percent Company X, 30 percent Company Y, and 20 pe..
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Schweser Satellites Inc. produces satellite earth stations that sell for $95,000 each. The firm's fixed costs, F, are $2 million, 50 earth stations are produced and sold each year, profits total $500,000; and the firm's assets (all equity financed) a..
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A company invests $500,000 at the beginning of the year. It withdraws $45,000 at the beginning of the second quarter, and $55,000 at the beginning of the third quarter. The company earned $20,000 of interest during the first quarter, $15,000 in the s..
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Mr. Greg is considering another bond, Bond D. It has an 8% semi-annual coupon and a $1,000 face value. Bond D is scheduled to mature in 9 years and has a price of $1,150. It is also callable in 5 years at a call price of $1,040. What is the bond’s YT..
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Determine the present value now of an investment of $3,000 made one year from now and additional $3,000 made 2 years from now if the annual discount rate is 4%
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If a project has a NPV of zero, will that project provide a return on the investment or will it simply return the capital invested in the project? Explain your answer.
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Suppose that in september 2015 a company takes a long position in a contract on May 2016 crude oil futures. it closes out its position in march 2016. when is it realized? how is it taxed if it is (a) a hedger and (b) a speculator? assume that the com..
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Draiman, Inc., has sales of $590,000, costs of $268,000, depreciation expense of $68,500, interest expense of $35,500, and a tax rate of 40 percent. The firm paid out $38,500 in cash dividends and has 45,000 shares of common stock outstanding.
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Present Value of Multiple Annuities A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $1,600 per month for the next three years and then $2,600 per month for the two years after that. If the bank i..
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