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Refinancing. If the cost of refinancing their house is $3,860, how long would Doug and Lynn (from problem 9) have to remain in their home in order to recover the cost? (Ignore any interest on the savings in answering this question.)
Problem 9Refinancing. Doug and Lynn bought their home three years ago. They have a mortgage payment of $601.69. Interest rates have recently fallen, and they can lower their mortgage payments to $491.31 if they refinance.
What would their annual savings be if they refinance? They are in a 15% marginal tax rate bracket. (Hint: Consider the reduction in tax savings.)
Suppose you currently have a mortgage with 10 years remaining with annual payments (the next one coming in exactly one year) at a rate of 6%. The original mortgage amount was a 20-year mortgage for $1 million. What is your current mortgage balance ou..
Stock in Daenerys Industries has a beta of 1.3. The market risk premium is 8 percent, and T-bills are currently yielding 4.5 percent. The company’s most recent dividend was $1.70 per share, and dividends are expected to grow at an annual rate of 7 pe..
Assuming the expected cash flows and cost of capital you use in arriving at your estimate of the maximum value of the company is accurate, do you think a foreign investor should use the same cash flows and cost of capital?
Assume that Valley Forge Hospital has only the following three payer groups: Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,..
Using any Internet source, find the annual value (current dollars) of Total Construction Put in Place in the United States for the three most recent years as reported by the U.S. Census Bureau.
AOL is considering two proposals to overhaul its network infrastructure. They have received two bids. The first bid from Huawei will require a $22 million upfront investment and will generate $20 million in savings for AOL each year for the next 33 y..
Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .95. Calculate Jensen’s alpha for the fund, as well as its information ratio.
If the expansion was going to be financed partially with debt, would it still make sense to use the firm's existing cost of debt, or should you compute a new rate of return for debt based on the new line of business.
Stop and Shop Supermarkets has a 4.5% profit margin and a 15% dividend payout ratio. The total asset turnover is 1.6 and its debt-equity ratio is 0.6. What is its sustainable rate of growth?
Gardial GreenLights, a manufacturer of energy efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a $15 million investment in new machinery. How much ext..
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has four years to maturity, whereas Bond Dave has 19 years to maturity. If interest rates suddenly rise by 2 percent, what is the perc..
What is the dividend yield on Watson's common stock?
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