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1. Which of the following would be the best investment based on present value? Assume an annual discount rate of 16%
a. An investment that pays $5,000 at the end of each year for 6 years, assuming annual compounding.b. An investment that pays $1,225 at the end of each quarter for 6 years, assuming quarterly compoundingc. An investment that pays $1,200 at the beginning of each quarter 6 years, assuming quarterly compounding?d. $19,000 today.e. The answer cannot be determined from the information given.
Year Undiscounted free cash flows0 (380,000)1 20,0002 30,0003 200,0004 175,0005 130,0006 145,000
Required rate of return 15%
As a new analyst, you have computed the following annual rates of return for both Lauren Corporation and Kayleigh Industries. Your manager suggests that because these companies produce similar products,
A corporation's five year bonds are yielding 7.75 percent per year. Treasury bonds with the same maturity are yielding 5.2% pre year, and the real risk free rate is 2.3 percent.
Calculation of expected return, beta, coefficient of variation, standard deviation and required rate of return
Assume that River Cruises, which currently is all-equity-financed, issues $250,000 of debt and uses the proceeds to repurchase 16,667 shares. Suppose that the company pays no taxes and that debt finance has no impact on its market value.
Macho Tool Corporation is going public at $50 net per share to the company. There also are founding stockholders that are selling part of their shares at similar value.
Winslow Enterprises has total assets of $11,700, net working capital of $1,400, owner's equity of $5,000 and long-term debt of $3,500. Determine the value of the current assets?
Relaxation of credit standards Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales.
Sarah wishes to buy XYZ stock today. She estimates that it will be worth $490 per share in exactly 2-years from now, and she has a minimum return requirement of 15 percent.
Corporation, a not-for-profit acute care facility has this cost structure for its inpatient services: The hospital expects to have a patient load of 15,000 inpatient days next year.
Find out the future value of investment after one year if it earns 10% per year? What is the present value of this future value discounted at 10%?
Explain what is the lowest FC at which firm 1 does not have to engage in strategic entry deterrence in order to keep firm 2 out of the market?
Find out the cost of equity of a firm that has a beta of 1.98 and a dividend yield of 6.58%? Suppose the risk free rate is 4.43% and the return last year of the S&P500 was 12.29%.
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