Bond X is non callable and has 10 years to maturity, a 9% semi annual coupon, and a $1000 par value. Your required return on Bond X is 5%, and if you buy it, you plan to hold it for 3 years. You (and the market) have expectations that in 3 years, the..
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Abercrombie & Fitch's common stock pays a dividend of $0.70. It is currently selling for $34.14. If the firm's investors require a return of 10 percent on their investment from buying Abercrombie & Fitch stock, what growth would Abercrombie & Fitch h..
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Suppose that B2B, Inc., has a capital structure of 36 percent equity, 16 percent preferred stock, and 48 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 15.0 percent, 12.0 percent, and 10.0 percent, respec..
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Suppose that a young couple has just had their first baby and they wish to insure that enough money will be available to pay for their child's college education. They decide to make deposits into an educational savings account on each of their daught..
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A hypothetical stock is expected to pay a dividend of $12 per share in two months, in six months and in ten months. The stock price is $600, and the risk-free rate of interest is 0.55% per annum with continuous compounding for all maturities.
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Explain what capital structure is. Find two publicly traded companies and compare and contrast their capital structures.
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In isolation, stock A’s standard deviation ( σ ) = 10%, stock B’s σ = 15%, and stock C’s σ = 20%. In a portfolio, stock A’s beta ( β ) = 2, stock B’s β = 1.5, and stock C’s β = 1.0. Which of the following is true?
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Your firm receives 10 checks per month. Of these, 6 are for $1,000 and 4 are for $500. The delay for the $1,000 checks is 5 days, and the $500 checks are delayed 8 days. Calculate the average daily float.
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Chamberlain Corp. is evaluating a project with the following cash flows. The company uses a discount rate of 10 percent and a reinvestment rate of 7 percent on all of its projects. Year Cash Flow 0 –$ 15,400 1 6,500 2 7,700 3 7,300 4 6,100 5 – 3,500...
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What is your age today? (If you do not wish to reveal your actual age, assume that you are 25.) At the beginning of each year, starting today, you put $3,000 in an investment account earning 8% per year and you continue making $3,000 contributions ev..
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The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer, purchased just 2 years ago, is being depreciated on a straight-line basis and has 6 years of remaining life. Its curren..
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Calculate the NPV if you sell the old machine and buy new machine A. (Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $23,345.50 is entered as 23346)
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