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RAK, Inc., has no debt outstanding and a total market value of $200,000. Earnings before interest and taxes, EBIT, are projected to be $30,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. If there is a recession, then EBIT will be 20 percent lower. RAK is considering a $75,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 8,000 shares outstanding. Ignore taxes for this problem.
b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
EPS
Recession $
Normal $
Expansion $
Currently the index is standing at 1,068. The risk-free rate is 4% per annum and the dividend yield is 1% per annum. A 6-month European put option on the index with a strike price of 1000 is trading at $46.59. What is the value of a 6-month European ..
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Suppose you have $10,000 you wish to invest. explain whether you would be better off putting your money in the foreign or domestic alternative presented.
Find the future value of the annuity due where R= $750 Is the monthly payment at 6.9% interest compounded monthly for 14 years
Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities.
Your coin collection contains 52 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.3 perce..
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