Arvil Synchronistics will pay a dividend of 1.20 per share this year. It is expected that this dividend will grow by 3% each year in the future. What will be the current value of a single share of Avril's stock if the firm's equity cost of capital is..
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Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 95 percent of face value. The issue makes semiannual payments and has an embedded cost of 11 percent annually. Req..
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Suppose you have a semi-annual coupon paying bond that has 10 years of maturity left, has a par value of $65,100, has a coupon rate of 7.23%, and has just paid its most recent coupon payment 10 days ago. What is this bond's annual yield based on a Ti..
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Fly Away, Inc., has balance sheet equity of $5.7 million. At the same time, the income statement shows net income of $843,600. The company paid dividends of $459,762 and has 120,000 shares of stock outstanding. If the benchmark PE ratio is 21, what i..
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You plan to buy a house in 9 years. You want to save money for a down payment on the new house. You are able to place $182 every month at the end of the month into a savings account at an annual rate of 14.82 percent, compounded monthly. How much mon..
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Your wealthy uncle established a $1,000 bank account for you when you were born. For the first 8 years of your life, the interest rate earned on the account was 6.7%. Since then, rates have been only 4.7%. Now you are 22 years old and ready to cash i..
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Compute the profitability index if the company's discount rate is 10%. We-Know-Widgets, Inc. is analyzing a project that requires an initial investment of $10,000, followed by cash inflows of $1,000 in Year 1, $4,000 in Year 2, and $15,000 in Year 3...
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At year-end 2013, Wallace Landscaping’s total assets were $1.0 million and its accounts payable were $365,000. Sales, which in 2013 were $2.8 million, are expected to increase by 20% in 2014. Total assets and accounts payable are proportional to sale..
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Calculate the value of the following two firms using the appropriate methodology. Earnings for the firm with a cash flow for the next 5 years are $500, $700, $1000, $1200, and $500. The firm then dissolves (that is its cash flow after 5 years is zero..
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Walter Industries has $4 billion in sales and $1.7 billion in fixed assets. Currently, the company's fixed assets are operating at 95% of capacity. What is Walter's target fixed assets/Sales ratio? What level of sales could Walter Industries have obt..
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It is now June. A company knows that it will sell 5,000 barrels of crude oil in September. It uses the October CME Group futures contract to hedge the price it will receive. Each contract is on 1,000 barrels of "light sweet crude." What position shou..
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The CEO of Merit Corporation reviewed the company’s business records. Business had been brisk for the last two years, and the board of directors wants to dramatically expand the company's production capacity. What are the pros and cons of Option 1? W..
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