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In late 201 0, you purchased the common stock of a company that has reported signi?cant earnings increases in nearly every quarter since your purchase. The price of the stock increased from $1 2 a share at the time of the purchase to a current level of $45. Not with- standing the success of the company, competitors are gaining much strength. Further, your analysis indicates that the stock may be over- priced based on your projection of future earnings growth. Your analysis, however, was the same one year ago and the earnings have continued to increase. Actions that you might take range from an outright sale of the stock (and the payment of capital gains tax) to doing nothing and continuing to hold the shares. You reaect on these choices as well as other actions that could be taken.
Describe the various actions that you might take and their implications.
If there are 10,000 common stock shares outstanding, what is Plasti-tech's stock price per share?
Computation of cost of capital and compute the cost of capital of investing in a project with a beta of 0.8
What is your maximum profit? At what point do you reach the maximum profit? What happens as the stock increases in value? b. What is your maximum loss?
If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Cosmic issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.
Why are cash flows that are connected to common stock difficult to estimate? How does this compare to those related to bonds.
A stock has the same level of systematic risk as the market. The stock has an expected return of 14%. The risk free rate is 5%. Calculate the market risk premium.
What is the internal rate of return for an investment with the following cash flows? Remember to net the flows of each year.
Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm's FCF for the year?
Antonio's is analyzing a project with an initial cost of $32,000 and cash inflows of $27,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt a..
Company A just paid a dividend 0f $0.75 per share, and that dividend is expected to grow at a constant rate of 5.5% per year in the future. the company's beta is 1.15, the market risk premium is 5.00% and the risk-free rate is 4.00%. What is the c..
Which one of the following makes the capital structure of a firm irrelevant?
At the end of the year, net fixed assets were $21,140, current assets were $3,440, and current liabilities were $2,080. The tax rate for 2014 was 35 percent.
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