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Bryson? Industries's free cash flow to its equity holders? (FCFE) was ?$50 million in its most recent fiscal year that just ended.? Bryson's FCFE is expected to grow steadily at 3?% per year in perpetuity. The? 10-year T-note yield is? 2%, the expected market risk premium is 5?% and? Bryson's beta is1.5. Bryson has 20 million shares outstanding. What should be the price of each? share?
?(Hint: Step? 1: Find the discounted value of the? firm's FCFEs using the? constant-growht model and CAPM required return as the discount rate.
Step? 2: Divide the total value of equity by the total number of shares outstanding to find the price per? share).
The price of each share should be ?$___ ?(Round to the nearest? cent.)
Determine the amount of usable funds Boone can obtain by factoring its receivables. Calculate the annual financing cost of this arrangement.
Moussa Sangare is purchasing a used car and has the option of two possible paymentplans: Determine the range of interest rates for which Plan B is better for Moussa.
Electronic Timing, Inc. (ETI), is a small company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the..
Today is Jan. 1, 2016. Bonner Bank has purchased a 5 million one-year Swiss franc (Sf) security that pays 6% interest annually. It has funded the purchase of this investment by accepting a Canadian dollar (CD)-denominated deposit for the equivalent a..
A project has an initial cost of $54,000 and a four-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $2,000, $3,900, $4,500, and $4,500 a year fo..
James Fromholtz is considering whether to invest in a newly formed investment fund. The fund’s investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the fund’..
What are some indications that investors are risk averse? How would you as a portfolio manager support these investors? What kind of recommendations would you make? What would you recommend as a portfolio manager to reduce the risk for a risk adverse..
For every financing alternative, a breakeven point exists where A. the dilutive effect on EPS from issuing new shares is located B. Interest payments on new debt is found C. A equals B D. None of the above.
A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 6.5% every six months. The semi annually compounded interest rate is 5.0%. What is the present value of the bond?
Geothermal corporation issued a press release before the stock market opened announcing that its earnings are below last year’s earnings. Explain how each of the following individual scenarios could be consistent with the semi-strong form of market e..
The expected return on a portfolio: I. can never exceed the expected return of the best performing security in the portfolio. II. must be equal to or greater than the expected return of the worst performing security in the portfolio. III. is independ..
What should you consider when comparing credit cards?- Should you view credit cards as a source of funds? Why or why not? Why should you self-impose a tight credit limit?
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