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Solomon, Inc. is planning to issue 20-year bonds which carry an interest rate of 6.00%, paid semi-annually. The bonds will sell for $1,000.00. There will be 15 warrants attached to each bond; otherwise the bonds would need to carry a coupon interest rate of 7.75%. The warrants will have an exercise price of $98.00 and they will expire in 10 years. The firm's common stock is presently selling for $75.00 par per share and it pays a dividend of $3.50. The firm is growing at a constant rate of 8.00%.
What is the straight-debt value of each bond?
The common stock of Winsson, Inc. is currently priced at $52.50 a share. One year from now, the stock price is expected to be either $54 or $60 a share. The risk-free rate of return is 4%. What is the value of one call option on Winsson stock with..
If the assets are tangible and the market can supply meaningful valuations then you could say that the value of the company is the assets-in a perfect world.
Why might a firm use a "local" capital structure at the particular subsidiary which differs substantially from its "global" capital structure?
According to the expectations theory, what should be the interest rate on 3-year, risk free securities?
Kiwi Corporation has $3,550 in sales, $1,200 in CGS, $250 in Depreciation. The firm marketing effort totaled $500 and Kiwi's interest expense is $70. Assume a 30% tax liability, what is Kiwi's net income?
Investment Portfolio Project: Relative Performance Analysis Paper for these five securities: PIMCO Total Return A, Procter & Gamble, United Parcel Service, Citigroup, Lockheed Martin, Walt Disney
The Best Manufacturing Corporation is planning a new investment. Financial projections for the investment are tabulated below. Cash flows are in $ thousands, and corporate tax rate is 34%.
Stock Y has a beta of 1.25 and an expected return of 12.6 percent. Stock Z has a beta of .8 and an expected return of 9.9 percent. Required: What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?
You own a stock portfolio invested 35 percent in Stock Q, 20 percent in Stock R, 30 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are 0.77, 1.15, 1.16, and 1.33, respectively. What is the portfolio beta?
Magic City Steel Enterprises has current assets of $160,000, total assets of $200,000, current liabilities of $85,000, and total liabilities of $100,000.
"SRK Airport" authority issued a series of 3.4% 30 year bonds in February 2012. Interest rates rose substantially in the given years of the issue and made value of the bond decline.
What should the firm set as the required rate of return for the project?
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