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Describe how the book value of the firm's stock is computed for a given year. You should use an equation to help explain your answer. Explain how accumulated retained earnings impact the book value of a firm's stock. Say the current market price of this firm's stock on the NYSE is $56.25 per share and the book value of the stock is $45 per share: 1. Give two reasons why the market book share prices might be different. Be specific. 2. If the market for the firm's stock is "efficient," which price (market or book) is probably a more accurate measure of the true value of the firm's stock? Explain your answer. 3. If you were to form a ratio of market price per share to book price per share for this firm, what kind of information about the firm would this ratio give you (assume you are thing about investing the firm's stock)? 4. If the firm were to buy back some of its outstanding stock, explain how this action might affect the book value and the market value of the stock. 5. If this firm's market-to-book value ratio was less that 1.00, what this would suggest about the market's assessment of the valuation of the firm going forward. Be specific in your answer.
A firm with a cost of capital of 13.5% has a contract to sell an asset for $230,000 in five years. The asset costs $111,000 to produce today (at t = 0). Find out the maximum annual carrying cost that the firm can bear and still make this an advisab..
Suppose there are two firms operating in the same industry. The two firms are almost identical. The only difference is their capital structure. Firm UU has only equity while firm LL has 30% of debt and 70 percent of equity.
A stock has an expected return of 12.4 percent, its beta is 1.17, and the risk-free rate is 4.2 percent. What must the expected return on the market be?
Explain Effective annual rate and Steaks Galore needs to arrange financing for its expansion program
Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $15 per share. Natsamâ's board has decided to payout this cash as a one-time dividend.
1. The Tip-Top Paving Co. wants to be levered at a debt to value ratio of .6. The cost of debt is 11%, the tax rate is 34%, and the cost of equity for an all equity firm is 14%. What will be Tip-Top's cost of equity?
What has been the trend in mergers and acquisitions in recent years? Up, down? What are some of the explanations? Is there evidence that the trend may change? The paper can be 800-100 words.
Suppose the total expense for your current year in college equals $20,000. Approximately how much would your parents have needed to invest 21 years ago in an account paying 8 percent compounded annually to cover this amount?
What is your effective annual interest rate on the lending arrangement if you borrow $37 million immediately and repay it in one year? (Do not round intermediate calculations.
Determine the relevant after-tax cash flows and prepare a cash flow schedule.
Warnock Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.
Determine the balance in Gale's investment in subsidiary account at the end of 2009?
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