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A stock is currently quoted at 53 on NASDAQ. A Rights Offering has been declared with an exercise price of 48, and 4.92 rights are needed to buy a new share of stock. If you own 10 round lots of this company, answer the following:
1.What is the value of a Right, Rights-On?
2. What is the value of a Right, Rights-Off?
3. What is the Ex-rights price of the stock?
4. How many new shares of stock can you buy?
5. What action do you take to get the new shares sent to you?
6. Assume an investor owns a round lot. Show how the total value of his investment is affected if he fails to exercise his option.
Your company has 14 million shares of common stock outstanding. The common stock currently sells for $34 per share and has a beta of 1.2. The market risk premium is 10.5 percent and T-bills are yielding 2.0 percent.
A)calculate the future value of $6,000, given that it will be invested for 5 years at an annual interest rate of 6 percent. B) recalculate part (a) using a compounding period that is semiannual (every 6 months).
Suppose a risk averse investor can choose a portfolio consisting of 2 assets with independently distributed returns, both of which have identical means (r1=r2) and identical variances.
You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%
You can buy commercial paper of a major U.S. corporation for $975,000. The commercial paper has a face value of $1,000,000 and is 107 days from maturity. What is the discount yield on the commercial paper
On the basis of the raw facts and figures such as the standard price of material specified is 40 $ and its standard quantity of the specified material which is to be per unit of product is 80 kg
Both Bond Bill and Bond Ted have 10 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity.
The equipment originally cost $28 million, of which 80% has been depreciated. Kennedy can sell the used equipment today for $7 million, and its tax rate is 40%. What is the equipment's after-tax salvage value
The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worthless. The project is estimated to generate $1,152,000 in annual sales, with costs of $460,800.
A company is 46% financed by risk free debt. The interest rate is 11%, the expected market risk premium is 9%, and the beta of the company's common stock is 0.56.
Assume that you contribute $240 per month to a retirement plan for 15 years. Then you are able to increase the contribution to $480 per month for another 25 years.
A firm with $49,000 in fixed costs breaks even on unit sales of 7,000, how many units must the firm sell to earn $30,000 in operating profit
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