Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Caledonia Minerals has an estimated beta of 1.6. The company is considering the acquisition of another firm that has a beta of 1.2. Both companies are exactly the same size.
a. What is the expected new beta value for the combined firm?
b. The risk-free rate of return is estimated at 7 percent and the market return is estimated as 12 percent. What is your estimate of the required return of investors in Caledonia before and after the merger?
Caledonia Minerals is expected to pay a $1 dividend next year (D1 = $1). This dividend is expected to grow at a rate of 6 percent per year for the foreseeable future if the merger is not completed. The merger is not expected to change the current dividend rate, but future dividends are expected to grow at a 7 percent rate as a result of the merger.
c. What is the value of a share of stock in Caledonia Minerals prior to the merger?
d. What is the new value of a share of stock, assuming that the merger is completed?
e. Would you recommend that Caledonia go ahead with the merger?
In October 2012, the average house price in the United States was $208,600. In October 2004, the average price was $282,300. Required: What was the annual change in the average selling price?
A bakery enters into 50 long wheat futures contracts (each contract is for 50,000 bushels) on the CBoT (Chicago Board of Trade) at a futures price of $3.52/bushel. It closes out the contracts at maturity. The spot price at this time is $3.59/ bushel...
You are shopping for a car and read the following advertisement in the news- paper: Own a new Tesla! No money down. Five annual payments of just $20,000.You have shopped around and know that you can buy a Tesla for cash for $85,000. What interest rat..
Your portfolio allocates equal funds to the DW Co. and Woodpecker, Inc. DW Co. stock has an annual return mean and standard deviation of 10.5 percent and 45 percent, respectively. Woodpecker, Inc., stock has an annual return mean and standard deviati..
What impact does asymmetric information have on the optimal level of leverage? In your answer, be sure to describe the implications of adverse selection and the lemons principle for equity issuance, as well as the empirical implications.
Over the years, Janjigian Corporation's stockholders have provided $15,250 of capital, part when they purchased new issues of stock and part when they allowed management to retain some of the firm's earnings. The firm now has 1,000 shares of commons ..
A loan commitment of $4.32 million has an upfront fee of 80 basis points and a back end fee of 50 basis points. The take down on the loan is 60%. Calculate the total fees you will pay on this loan commitment.
Assume both portfolios A and B are well diversified, that E(rA) = 13.6% and E(rB) = 14.4%. If the economy has only one risk factor, and βA = 1 while βB = 1.1, what must be the risk-free rate?
Sextet Corporation is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million. The fixed asset is classified as a five-year asset under MACRS and will be depreciated straight-line to zero over t..
Mary White would like to make a single investment and have $2 million at the time of her retirement in 35 years. She has found an investment fund that will pay interest at 4% annually. How much will Mary need to invest today? What if Mary were studyi..
(Yield to maturity) The market price is $1,175 for a 16-year bond ($1,000 par value) that pays 9% annual interest, but makes interest payments on a semiannual basis (4.5 % semiannually). What is the bond’s yield to maturity? (Round to 2 decimal place..
You are trying to figure out how you can pay for your two children’s college education. The older one will start college in 8 years (assume the beginning of the eight year for payment purposes) and the younger on in 10 years. You estimate that the ol..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd