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Nick's Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $55 a share. What is the stock's required rate of return (assume the market is in equilibrium with the required return equal to the expected return)? Round the answer to two decimal places.
The real risk-free rate is 3%, and inflation is expected to be 2% for the next 2 years. A 2-year Treasury security yields 7.9%. What is the maturity risk premium for the 2-year security?
Liberty Services is now at the end of final year of a project. The equipment originally cost $22,500, of which 75 percent has been depreciated. The company can sell the used equipment today for $6,000, and its tax rate is 40 percent.
If the only violation of the M&M assumptions is that investors face one tax rate for interest income and another tax rate for equity income, what is the implication for the optimal capital structure of a corporation?
Supposing a 40% tax rate, compute the earnings per share data which should appear on the financial statements of Bio Industries as of December 31, 2010.
what is financial analysis?
The Peace River Corporation has 62,000 shares of stock outstanding at a market price of $48 a share. The company has just announced a 3-for-2 stock split. How many shares of stock will be outstanding after the split?
What is Stock valuation under equilibrium situation and Assuming the stock market is efficient and the stocks are in equilibrium
Next year dividend for ERT stock is expected to be $4. You expect it to be $4 in next two years, also, but then you expect it to increase at an 8% yearly rate forever.
Devlin Corporation has two divisions, C and D. The overall corporation contribution margin ration is 30% with sales in the two divisions totaling $500,000.
The security's price will change (up or down) by 10% during the year, and the risk-free annual effective interest rate is 5%. The no-arbitrage price of the option is $100. Use risk-neutral probabilities to find the exercise price for the option.
Select the best answer for each of the following:
This investment will cost the company $1,000,000 today (initial outlay). We assume that the firm's cost of capital is 7.8%.
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