ABC corp. has equity with a market value of $750 million, debt with a market value of $330 million, and future operating lease commitments with a present value of $400 million. The firm also has a Beta of 1.2, a pre-tax cost of debt of 8%, and a marginal tax rate of 38%. What is the firm’s weighted average cost of capital if the long-term treasury rate is 4.5% and the market risk premium is 4%?

What is the IRR of the above set of cash flows : Consider the following cash flows: What is the IRR of the above set of cash flows? Your coin collection contains 57 1952 silver dollars. |

Arithmetic and geometric dividend growth rate : Suppose Powers Ltd. just issued a dividend of $2.63 per share on its common stock. The company paid dividends of $2.13, $2.20, $2.37, and $2.47 per share in the last four years. If the stock currently sells for $82, what is your best estimate of the .. |

Portfolio equally invested in risk-free asset and two stocks : You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.16, and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio? |

What is the modified duration of this bond : Consider a 3-year zero coupon with a 5% yield to maturity. The bond price per $1000 of face value is $863.84. what is the modified duration of this bond? |

Equity with market value-weighted average cost of capital : ABC corp. has equity with a market value of $750 million, debt with a market value of $330 million, and future operating lease commitments with a present value of $400 million. The firm also has a Beta of 1.2, a pre-tax cost of debt of 8%, and a marg.. |

Fight a hostile acquisition bid from an unwanted suitor : What types of actions might the management of a firm NOT take to fight a hostile acquisition bid from an unwanted suitor? |

Complete the assets of the pro forma balance sheet : Provincial imports has assembled 2015 financial statement income and balance sheet and financial projections for use in preparing financial plans for the coming year 2016. Prepare a pro forma for year ended December 31 2016 using fixed cost data to i.. |

How much did you borrow for your mortgage : The monthly mortgage payment on your house is $586.81. It is a 30 year mortgage at a quoted rate of 7.8% (compounded semi-annually). Approximately how much did you borrow for your mortgage? |

Least expensive and most expensive : The Johnsons have accumulated a nest egg of $40,000 that they intend to use as a down payment toward the purchase of a new house. If local mortgage rates are 2.5%/year compounded monthly for a conventional 30-year mortgage, what is the price range o.. |

## Earnings and dividends per share-what is current stock priceACME Inc’s earnings and dividends per share are expected to grow indefinitely by 5% a year. If next year's dividend is $10 and the market capitalization rate is 8%, what is the current stock price? ACME Inc’s growth will stop after year 3. In year 4 .. |

## Return on riskier stock exceed that on less risky stockRequired Rate of Return Stock R has a beta of 2.4, Stock S has a beta of 0.65, the expected rate of return on an average stock is 13%, and the risk-free rate is 6%. By how much does the required return on the riskier stock exceed the required return .. |

## Constant growth valuation formulaWhich of the following conditions must hold true for eth constant growth valuation formula to be useful and give meaningful results? |

## Computing the firms weighted average cost of capitalIn August of 2009 the capital of the Emerson Electric Corporation (EMR) (measured in book and market values) appeared as follows: What weights should Emerson use when computing the firm’s weighted average cost of capital? |

## Deviation for comparing two risky stocks in isolationWhen would the coefficient of variation be preferred over the standard deviation for comparing two risky stocks in isolation? Fully explain your answer. |

## Calculate the firms cost of new debtRezek Razors issued a bond 5 years ago with a 5% coupon and a par value of $310 million. The bond currently yields 6% and trades at 105% of par. The company also issued a bond 3 years ago with a 6% coupon and a par value of $120 million. The bond cur.. |

## Price and yield problemAn 6% semi-annual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 6.8307%. What is the bond's price? Round your answer to the nearest cent. |

## Nature of marys gain as result of sale of the machineIn 2014, Mary sells for $15,000 a machine used in her business. The property was purchased on May 1, 2012, at a cost of $12,500. Mary has claimed depreciation on the machine of $4,750. What is the amount and nature of Mary's gain as a result of sale .. |

## Sharpe ratio and smallest expected lossYou are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 13 percent and 16 percent, respectively. The standard deviations of the assets are 39 percent and 47 percent, respectively. What is the smalle.. |

## Whats the bonds current yield and whats capital gain yieldFind the yield to maturity for a 20 year, 6% annual coupon rate, $1,000 par value bond if the bond sells for $1,185 currently? We assume that interest is paid on this bond every six months. (2) what's the bond's current yield? What’s its capital gain.. |

## Bond is premium bond making semiannual paymentsBond X is a premium bond making semiannual payments. The bond pays a 10 percent coupon, has a YTM of 8 percent, and has 20 years to maturity. Bond Y is a discount bond making semiannual payments. what do you expect the price of these bonds to be one .. |

## Common stock based on the market price of the bondWhat is the value of the common stock based on the market price of the bond? |

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