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The Presley Corporation is about to go public. It currently has aftertax earnings of $6,200,000, and 3,600,000 shares are owned by the present stockholders (the Presley family). The new public issue will represent 500,000 new shares. The new shares will be priced to the public at $10 per share, with a 3 percent spread on the offering price. There will also be $210,000 in out-of-pocket costs to the corporation.
1. Determine what rate of return must be earned on the net proceeds to the corporation so there will not be a dilution in earnings per share during the year of going public. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
2. Determine what rate of return must be earned on the proceeds to the corporation so there will be a 5 percent increase in earnings per share during the year of going public. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Calculate the standard deviation of a portfolio that is composed of 39 percent Stock A and 61 percent Stock B when the correlation.
Assume that exchange rates given are CHF/USD and EUR/USD, rather than USD/CHF and USD/EUR, and solve the problem accordingly.
Gun manufacturer Bloodbath & Beyond expects earnings of $5 million on $20 million of equity this year, paying 60% of its earnings as dividends. It expects no changes in its ROE or dividend payout ratio in the near future. If the current dividends are..
Gamma Electronics is considering the purchase of testing equipment that will require an initial outlay (cost) of $500,000 to replace old equipment. The purchase of this new equipment will result in a positive after-tax cash benefit/in-flow of $200,00..
Lewis Industries looking at a project that will require a dollar 100,000 investments in fixed assets and another dollar 15,000 in net working capital, which will be recovered at the end of the project. The project is expected to produce sales of doll..
Lannister Manufacturing has a target debt−equity ratio of .45. Its cost of equity is 13 percent, and its cost of debt is 7 percent. If the tax rate is 34 percent, what is the company’s WACC?
Duration is important topic in fixed income securities. What happens to two or three bond portfolios that have same duration when interest rates move up-down
Determine the current yield and yield-to maturity for each bond.
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Can he safely spend interest from his investment portfolio? How much could he with draw at year-end from that portfolio if he wants to keep real value intact?
Victoria Jewelry is developing two types of bracelets, Small bracelet and Big bracelet, Using linear programming technique, state Objective Function.
The zero lower bound on short term interest rates is not a problem,
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