The Absolute Zero Co. just issued a dividend of $3.05 per share on its common stock. The company is expected to maintain a constant 6.3 percent growth rate in its dividends indefinitely.

If the stock sells for $61 a share, what is the company’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity %

What will be an investor taxable income from the bond : A newly issued 10-year maturity, 4% coupon bond making annual coupon payments is sold to the public at a price of $780. The bond will not be sold at the end of the year. The bond is treated as an original-issue discount bond. Calculate the constant y.. |

Using put-call parity and a call premium : Using put-call parity and a call premium of $13.70, please find the value of the put option on the stock given with a strike price of ($95) and a time to expiration of (3-month). |

More relevant the pretax or the aftertax cost of debt : Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 10 percent 2 years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt? Wh.. |

Calculate the firm operating cycle and cash conversion cycle : Camp Manufacturing turns over its inventory five times each year, has an average payment period of 35 days and has an average collection period of 60 days. The firm has annual sales of $3.5 million and cost of goods sold of $2.4 million. Calculate th.. |

What is the company cost of equity : The Absolute Zero Co. just issued a dividend of $3.05 per share on its common stock. The company is expected to maintain a constant 6.3 percent growth rate in its dividends indefinitely. If the stock sells for $61 a share, what is the company’s cost .. |

Expiration date payoffs to this position for stock prices : You simultaneously write a put and buy a call, both with strike prices of $70, naked, i.e., without any position in the underlying stock. What are the expiration date payoffs to this position for stock prices of $60, $65, $70, $75, and $80? |

Expiration date profits to this position for stock prices : You buy a call with a strike price of $70 on stock that you have shorted at $70 (this is a ‘protective call’). What are the expiration date profits to this position for stock prices of $60, $65, $70, $75, and $80 if the call premium is $4? |

Evaluate potential gains and losses at option expiration : Suppose you write 20 call option contracts with a $40 strike. The premium is $2.50. Evaluate your potential gains and losses at option expiration for stock prices of $30, $40, and $50. |

What must expected return on this stock be : A stock has a beta of 1.24, the expected return on the market is 10 percent, and the risk-free rate is 4.5 percent. What must the expected return on this stock be? |

## Estimate current value of firm using terminal valueFirm B is considering the acquisition of Firm Y. Firm B has estimated the cash flows, cost of capital, and growth rate for firm Y shown below. Using these estimates, estimate the current value of firm Y using the terminal value technique. |

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## What is the percentage change in the price of bondBoth Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 18 years to maturity. what is the percentage change in the price of Bond Sam and Bon.. |

## Estimated floor price of the convertibleThe bonds would have an 8.00% annual coupon, and each bond could be converted into 20 shares of common stock. The required rate of return on an otherwise similar nonconvertible bond is 10.00%. What is the estimated floor price of the convertible a.. |

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## Estimating cost of capital measures-applying the ddm modelProcter and Gamble Co. (PG) has a June fiscal year-end. On June 30, 2006, analysts expected the company to pay $1.41 dividends per share in fiscal year 2007. The company's market beta is estimated to be 0.7. Estimate P&G's cost of equity capital usi.. |

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