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A share of stock with a beta of .81 now sells for $56. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 4%, and the market risk premium is 7%. If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Essence of Skunk Fragrances, Ltd., sells 5,800 units of its perfume collection each year at a price per unit of $388. All sales are on credit with terms of 3/10, net 50. The discount is taken by 35 percent of the customers. What is the amount of the ..
Your bank owns adjustable rate mortgages (ARMs) that are priced at three month LIBOR plus 1 percent. There is an annual cap on the allowable rate increase equal to a maximum of 1 percent a year. Thus, if LIBOR rises by 3 percent, the bank can raise t..
Webster Industrial Products just signed a sales contract with a new customer. What is this contract worth as of the end of year 4 if the following payments will be received and the firm earns 5 percent on its savings? Year 1 84,000, year 2 113,000, y..
You want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $3,500 per year, starting one year from now. You will make 4 deposits in an account that pays 5.7% interest. Under these assumptions, how much wil..
A company has $317,000 in credit sales. The company uses the allowance method to account for uncollectible accounts, and the Allowance for Doubtful Accounts now was an $8,150 debit balance. If the company estimates 6% of credit sales will be uncollec..
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 6% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 8% coupo..
According to the MM extension with growth, what is Kitto's value of equity?
Assume that you are an intern with the Brayton Company, and you have collected the following data: The yield on the company's outstanding bonds is 7.75%; its tax rate is 40%; the next expected dividend is $0.65 a share; the dividend is expected to gr..
Consider dividend policy, stock repurchases, and stock splits. Discuss how investors may react differently if their company issues dividends or announces a stock split or stock repurchase. Feel free to include examples to illustrate your point.
A STRIPS traded on May 1 2013, matures in 18 years on May 1 2031. Assuming a 6.1 percent yield to maturity, what is the STRIPS price?
Using the Yahoo Finance site or other site with stock information, choose six firms: two each from three different industries. Gather the following information for each stock: 1) beta for each of these firms; and 2) the total return for the previous ..
ABC Corp needs to raise capital to initiate a new 5 year product expansion with the following parameters: • Initial Cost = $28.5 million • Expected after tax Annual Cash Flow = $8.95 million • Cost of Capital = 15% What is maximum Flotation Cost Perc..
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