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A. The real risk-free rate is 3%, and inflation is expected to be 2.5% for the next 2 years. A 2-year Treasury security yields 8.75%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places.
%_______
B. A treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 8.5%. Assume that the liquidity premium on the corporate bond is 0.3%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.
%________
Describe what working capital practices, including methods of capital budgeting analysis techniques. Analyze the potential pitfalls in capital budgeting practices that a business should be aware of. Develop a simple statement of cash flows for the bu..
Lucky Dog Inc currently has $95,000 cash on hand and no other assets. It has 1000 shares outstanding. What should be its current share price? What is the NPV of this investment project? What should happen to the price of the company’s stock upon anno..
everest has also found that after only two years of using a machine for a semi-automatic process a more advanced model
The following are annual account balances as of September 30, 2OX1, for Downtown Hospital. Prepare a statement of operations for the 12-month period ending September 30, 2OX1. Givens (in thousands) Net patient revenues $750,000 Supply expense $145,00..
What is the value of a call option with a strike price of $0 and 6 months to expiration? Use the parameters of the example: S0 = $80.50, rF = 1.77%, and σ = 50%.
The next dividend payment by Halestorm, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. The stock currently sells for $43 per share. What is the dividend yield? What is the expected capital..
A friend of yours just bought a new sports car with a $5,000 down payment, and her $30,000 car loan has an interest rate of .75% per month for 48 months. After 2 years, the "Blue Book" value of her vehicle in the marketplace is $15,000. How much does..
The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested i..
Your company will generate $67,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.75 percent, what is the present value of the savings?
First National Bank charges 12 percent compounded monthly on its business loans. First United Bank charges 12.2 percent compounded semiannually. Calculate the EAR for each bank. (Enter rounded answers as directed, but do not use rounded numbers in in..
E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a 9.25 percent return on this stock, how much should..
The market capitalization rate for Admiral Motors Company is 10%. Its expected ROE is 15% and its expected EPS is $7. If the firm’s plowback ratio is 50%. Calculate the growth rate. What will be its P/E ratio?
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