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The exercise price on one of ORNE Corporation's call options is $35 and the price of the underlying stock is $34. The option will expire in 55 days. The option is currently selling for $0.25.
a. Calculate the option's exercise value?b. Calculate the value of the premium over and above the exercise value? What does this value represent?c. Is this an out-of-the money option, at-the-money, or in-the-money? Why?d. What will happen to the value of the option if the underlying stock price changes to $34.50? Why?e. If this were a put option, would it have a greater or lesser value than the call option? Why?
Suppose you have 8 percent of the Standlee Corporation's common stock, which most recently sold for $98 before a planned two-for-one stock split announcement.
Calculate the future value of $1,000,000 when it is invested for 5 years at the interest rate of 5% under the following assumptions:
Inventory conversion period of 50 days
Baruk Industries has no cash and a debt obligation of $36 million that is now due. The market price of Baruk's assets is $81 million, and the company has no other liabilities.
Milton Corporations expects free cash flow of $5 million each year. Milton'scorporate tax rate is 35 percent, and its unlevered cost of capital is 15%. The firm also has outstanding debt of $19.05 million,
Earnings after taxes next year are forecasted to be $12 million. Next year, TTT plans to pay dividends of $1.5 million. How much external financing is required by TTT next year?
Suppose a stock had an initial price of $80 per share, paid a dividend of $1.35 per share during the year, and had an ending share price of $87. What was the capital gains yield?
Epsilon Company is evaluating an expansion of its business. The cash-flow forecasts for the project are as follows:
Elephant Company common stock has a beta of 1.2. The risk-free rate is 6% and the expected market rate of return is 12%. Determine the required rate of return on the stock.
Synthesize your position on what 3-5 specific factors you believe most likely contribute to capital project analysis failure.
A proposed nuclear power plant will cost $2.2 billion to build and then will produce cash flows of $300 million a year for fifteen years.
Computation of degree of operating leverage and the current degree of financial leverage and forecast of sales dropped
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