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You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.40 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $72 per share. The required return on Avondale stock is 20 percent.
Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Share price $
If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Number of shares $
What would your cash flow be for each year for the next two years? Hint: Dividends will be in the form of an annuity. (Do not round intermediate calculations.) Cash flow $
Suppose your firm earns $4 million in taxable income. What is the firm’s tax liability? What is the average tax rate? What is the marginal tax rate?
Romo Enterprises needs someone to supply it with 121,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $880,000 to install the equipment nec..
The common stock of Eddie's Engines, Inc. sells for $36.83 a share. The stock is expected to pay $2.80 per share next year. Eddie's has established a pattern of increasing their dividends by 4.9 percent annually and expects to continue doing so. What..
Assume that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 6%. Your company is about as risky as the average firm in the industry, what is the value per share of your firm's sto..
Understand the foreign investments of a company's financial goals and the risks. What we are doing to allow our government a chance
Compute the cost of capital for the firm for the following: Currently bonds with a similar credit rating and maturity as the firms outstanding debt are selling to yield 8% while the borrowing firms corporate tax rate is 34%. Common stock for a firm t..
Dye Trucking raised $260 million in new debt and used this to buy back stock. After the recap, Dye's stock price is $7.5. If Dye had 80 million shares of stock before the recap, how many shares does it have after the recap? Enter your answer in milli..
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $11 per share dividend in 10 years and will..
Solar Inc. pays a current dividend of $2.50 per share annually. This dividend is expected to grow at the rate of 3.25% per year for the foreseeable future. Rating LLC has given Solar Inc. a beta score of 1.05.The risk-free rate of return is currently..
Lakeside Grapes is considering expanding its wine-making operations. They would need new equipment that costs $390,000 that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project. The estimated salvage val..
An investment project costs $10,000 and has annual cash flows of $2,970 for six years. What is the discounted payback period if the discount rate is zero percent? What is the discounted payback period if the discount rate is 6 percent?
Bonds payable are dated January 1, 2014, and are issued on that date. The face value of the bonds is $150,000, and the face rate of interest is 14%. The bonds pay interest semiannually. Calculate the gain or loss on bond redemption. Round answer to t..
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