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CBS bond with a par value of $1,000, an interest rate of 7.625 percent, and a maturity of 10 years The bond is selling for $986.
Alabama Power Company preferred stock with a $50 par value and a dividend of $2.8125 per 61 year. The stock is currently trading at $39 per share.
Emerson Electric common stock that is selling for $80 with a par value of $5. This stock recently paid a $2.50 dividend, and the firm's earnings per share have increased from $2.40 to $4.48 in the past 5 years. An equivalent amount of growth in the dividend is expected.
Your required rates of return for these investments are 6 percent for the bond, 7 percent for the preferred stock, and 15 percent for the common stock. Using this information, answer the following questions:
a. Calculate the value of each investment based on your required rate of return.b. Which investment would you select? Why?c. Assume Emerson Electrics managers expect an earnings downturn and a resulting decreases in growth of 3 percent. How does this affect your answers to parts 1 and 2?d. What required rates of return would make you indifferent to all three options?
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Velcro Saddles is contemplating the acquisition of Pogo Ski Sticks, Inc. The values of the two companies as separate entities are $20 million and $10 million, respectively. What is the gain from merger?
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Jordan wants to retire in fifteen years when he turns 65. Jordan wants to have enough money to replace 75 percent of his current income less what he expects to receive from Social Security at the beginning of each year.
You are given the information on the company. Total market value is= $38 million. Company's capital structure, given here, is considered to be optimal.
Calculate the discount factor for each year (use 4% discount rate @ 15 years) Calculate the annual present value cost of maintenance (15 years) Calculate the discounted benefit of rehabilitating the armory
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Computation of Degree of operating leverage and financial leverage & combined leverage and EPS if sales level declined.
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