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1. Your company is reevaluating its existing bond because it plans to issue a new bond soon. The outstanding issue has 7 years remaining until maturity. The bonds were issued with a 6.25 percent coupon rate (paid semiannually) with a par value of $1,000. Because of increased risk the required rate has risen to 10.125 percent. What is the current price?
2. What is the cost of common stock equity of Shock Rock Stock if it is currently selling for $38. It has issuing expenses as follows: flotation costs - $2.50 and underwriting fees of $1.50. The dividends are listed below: year 2014 div-3.50 year 2013 div-3.45 year 2012 div-3.40 year 2011 div-3.35.
Calculate the standard deviation of both the pound- and dollar-denominated rates of return if each of the nine outcomes is equally likely.
What is an annuity? Discuss why it is considered a tax-sheltered investment.
A Hummer H3 sells for $92,000 tax included. GMAC lends money at the rate of 9.2 % APR. If you buy the car and borrow through GMAC, then what are the monthly? (end-of-month) payments for a 10 ?-year term? What is the amount of the monthly payment?
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments.
A firm currently has 900,000 shares of common stock outstanding. what will the long-run stock price be if the firm issues equity and invests in the machine?
Asset A has an expected return of 21% and a standard deviation of 25%. The risk-free rate is 7%. What is the reward-to-variability ratio?
New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity?
A Stock has a required return of 11%, the risk- free is 7%, and the market risk premium is 4%. What is the stock’s beta? If the market risk premium increased to 6%, what would happen to the stock’s required rate of return? What would it be? Assume th..
You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.8 million. Investment A will generate $1.84 million per year? (starting at the end of the first? year) in perpetuity. Investment ..
Japanese Motors, a major importer of foreign automobiles- Determine the annual net pretax benefits JMCC would realize by implementing a decentralized collection system.
Suppose the returns on long-term government bonds are normally distributed. Assume long-term government bonds have a mean return of 6.3 percent and a standard deviation of 9 percent.
Your firm has an average collection period of 46 days. Current practice is to factor all receivables immediately at a 2 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely.
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