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Crumpley Co. has $5 M is current assets, zero debt, in 40% tax bracket, net income of $1 M. NI is expected to grow at a constant rate of 5%/year. 200,000 shares outstanding and current WACC of 13.40%. The company is considering a recapitalizaiton where it will issue $1M in debt and use proceeds to repurchase stock. Before-tax cost of debt is 11%, equity will rise to 14.5%. What is the stock's current price/share before recapitalization and following recap (co. maintains same payout ratio)?
A mutual fund manager expects her portfolio to earn a rate of return of 11 percent this year. The beta of her portfolio is .8. should you invest in this mutual fund? Show your work and explain why or why not.
Discuss on stock market movement and market inefficiency and Assume that no other information is received and that the stock market as a whole does not move
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely.
Assume you sell for $100,000 a 10 percent ownership stake in a future payment one year from now of $1.5 million. What are you saying about the implied return for the 10 percent owner? aWhat is the present value of the entire $1.5 million, using the i..
What was your average annual capital gains yield over the past three years on this bond ('07-'10)? Note: just find the capital gains yield, not the "total" yield.
Computation of value or price of the stock thus the company will maintain that dividend growth
A company receives an average of $11,000 in checks each day. The delay in clearing is typically 4-days. The current interest rate is .016% per day.
Greg recently inherited a large, family-run farm that primarily produces grain for harvest each year. Compute the long position gain or loss in this scenario.
Computation of Value of a Bond using various required rate of return and when the interest on these bonds is paid and compounded annually.
Using the required rate of return calculated in part (a) and the Discounted Cash Flow Model, compute the intrinsic value of a share of Hewlett-Packard Stock. What assumptions, if any, was it necessary to make?
Over the last five years, the dividends of the Gamma Corporation have grown from $0.70 per share to the current level of $1.30 each share. This growth rate is expected to continue for the foreseeable future.
Discuss how to and then perform a quantitative analysis and subsequently recommend the optimal capital structure mix for Berkshire Hathaway Inc. based on a 20 percent increase in assets.
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