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Filer Manufacturing has 7.4 million shares of common stock outstanding. The current share price is $44, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $68.2 million and a coupon rate of 6.1 percent and sells for 109.2 percent of par. The second issue has a face value of $58.2 million and a coupon rate of 6.6 percent and sells for 107.1 percent of par. The first issue matures in 9 years, the second in 26 years.
Suppose the company’s stock has a beta of 1.3. The risk-free rate is 2.2 percent, and the market risk premium is 6.1 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company’s WACC?
Immediately after a hurricane, it is likely that the quantity demanded for tree cutting/removal services will ______ the quantity supplied, causing the price of tree cutting/removal services to ______. The question of who pays the greater amount of a..
Sioux Financial Corp. has forecasted its bond portfolio value for one year ahead to be $105 million. In one year, it expects to receive $10,000,000 in coupon payments. The bond portfolio today is worth $101 million. What is the forecasted return of t..
Explain the relationship observed between the required rate of return, growth rate and the dividend paid, and the estimated value of the stock using the Gordon Model. Explain the value and weaknesses of the Gordon model
An analyst has modeled the stock of a company using a Fama-French three-factor model. The risk-free rate is 4%, the market return is 10%, the return on the SMB portfolio (rSMB) is 3.6%, and the return on the HML portfolio (rHML) is 5.4%. If ai = 0, b..
Wonder World is considering construction of a new attraction. It will require an investment of $10 million. The expected after tax cash flows are listed below and the required rate of return is 12%.
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $27,500 per month for 25 years, with the first payment received 30 years and 1 month from now. If he ca..
A Japanese company has a bond outstanding that sells for 94 percent of its ¥100,000 par value. The bond has a coupon rate of 6.10 percent paid annually and matures in 17 years. What is the yield to maturity of this bond?
foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is
Stock Y has a beta of 1.3 and an expected return of 15 percent. Stock Z has a beta of 0.75 and an expected return of 11.4 percent. Required: If the risk-free rate is 5.25 percent and the market risk premium is 7.75 percent, are these stocks correctly..
A company's common stock has a beta of 2.1. If the risk-return is 2.43%, and the market risk premium is 7.79%, calculate the required return on the company's common stock.
What do you think can lean thinking be used to improve performance of the supply chain in meeting end customer demand by cutting out waste?
You will analyze three different stocks, all of which have a required return of 20% and a most recent dividend of $3.50 per share. Stocks A, B, and C are expected to maintain constant growth rates in dividends for the foreseeable future of 12%, 0%, a..
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