FIN510 - Aspects of Corporate Finance - What is the risk premium of a zero beta stock? Does that mean you can lower the volatility of a portfolio without changing the expected return by substituting out any zero-beta stock in a portfolio & replacin..
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The Wrangler Co. has expected EBIT = $9,250, debt with a face and market value of $14,000 paying a 9% annual coupon, and an unlevered cost of capital of 12%. If the tax rate is 39%, what is the value of Wrangler's equity?
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The current value of a pass-through security is $800.00. If interest rates move 100bps up, the price is estimated to be $700.00 and if the rates go down 100bps, the price is calculated to be $850.00. These prices include both interest rate change imp..
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B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 60 percent change of success. However, the firm can conduct customer segment research, which will take a year and cost $600,000. By g..
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What is the required rate of return on a preferred stock with a $50 par value, a stated dividend of 10% of par, and a current market price of (a) $51, (b) $83, (c) $119, and (d) $148 (assume the market is in equilibrium with the required return equal..
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Refer to Exhibit 18.1 start data below. What is the required after-tax refunding investment outlay, i.e., the cash outlay at the time of the refunding? a. $5,049,939 b. $5,315,725 c. $5,595,500 d. $5,890,000 e. $6,200,000. After tax cost of call prem..
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Assume that your organization's chief financial officer (CFO) has just completed a presentation to the board of trustees concerning the analysis of a proposed ambulatory surgery center costing $2 million. During the presentation, the CFO indicated th..
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An investor holds two bonds, one with 5 years until maturity and the other with 20 years until maturity. Which of the following is more likely if interest rates suddenly increase by 2%? A treasury manager is in the process of developing cash transfer..
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Weston Corporation had earnings per share of $1.41, depreciation expense of $592,800, and 240,000 shares outstanding. What was the operating cash flow per share? If the share price was $51, what was the price-cash flow ratio?
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Nelson's Lamps is considering the acquisition of some new store fixtures. These fixtures will cost $189,000 and generate the following cash flows over its 5-year life: $65,700, $69,800, $57,600, $54,200 and $11,500. Should this project be accepted ba..
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A new machine can be purchased today for $100,000. The annual extra revenue from the machine is calculated to be $30,000, and the equipment will last 10 years. Expect the maintenance and operating costs to be $2,000 in Year 1 and to increase $500 per..
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Has the inflation rate in the US increased or decreased in the past 5 years? Why? Have interest rates increased or decreased over that same period? Why? What can we likely expect of both in the near future?
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