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A corporation has a beta of 1.3. The risk free interest rate today is 8 percent and the return on a market portfolio of stocks is 14 percent. [Therefore the market risk is 6%, the difference the market return and the risk free return].
A. Find the required return (equity cost) on the company's stock?B. If the risk free rate rises to 9%, what will the required rate of return on the company's stock?C. If the beta of this company were 0.8, what would the its required rate of return?
Chandeliers Corp. has no debt but can borrow at 7.4%. The firm's WACC is currently 9.2%, and the tax rate is 35%.
Celine Dion Company issued $600,000 of 10% 20-year bonds on January 1, 2008, at 102. Prepare the journal entries to record the following.
The Landers Corporation needs to raise $1 million of debt on a 25-year issue. If it places the bonds privately, the interest rate will be 11 percent. Which plan offers the higher net present value? For each plan, compare the net amount of funds ini..
How can the free cash flow approach to valuing the company be employed to solve the valuation challenge present by firms that do not pay dividends?
In April 2005 Corporation A made (and sold) 1,200 leather collars and 2,400 nylon collars. Costs incurred in April 2005 are listed below:
Actuarial estimates project 2,500 visits per 1,000 persons per year. You have contracted with a Primary Care Medical group at dollar 45.00 per visit with a dollar 5.00 co-payment that you will receive.
What is an event study designed to test? What role does par value play in the pricing and sale of common stock by the issuing corporation? Why do most firms assign relatively low par values to their shares?
Create balance sheet for this depository financial institution. Describe fully with suitable reasons for your choice.
Computation of financial and operating and combined levarages and Fastron has 1 million shares of common stock outstanding
Calculation of net present value and adoption of project based on NPV and the firm's current cost of capital is estimated to be 11 percent.
A corporation currently pays a dividend of $2 per share, D0=$2. It is estimated that the corporation's dividend will grow at a rate of 20 percent per year for the next 2 years,
Siebling Manufacturing Corporations's common stock has a beta of .8. If the expected risk-free return is 7 percent and the market offers a premium of 8% over the risk-free rate,
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