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Stephens Security has two financing alternatives: (1) A publicly placed $50 million bond issue. Issuance costs are $1 million, the bond has a 9% coupon paid semiannually, and the bond has a 20-year life. (2) A $50 million private placement with a large pension fund. Issuance costs are $500,000, the bond has a 9.25% annual coupon, and the bond has a 20-year life. Which alternative has the lower cost (annual percentage yield)?
The Mann Corporation belongs to a risk class for which the appropriate discount rate is 10%. Mann currently has 100,000 outstanding shares selling at $100 each.
Explain what is the difference in current market prices of the two bonds and the Burger King bond has an annual coupon rate of 8 percent and matures 20 years from today
Elephant Company common stock has a beta of 1.2. The risk-free rate is 6% and the expected market rate of return is 12%. Determine the required rate of return on the stock.
Stock A has an expected return of 10 percent and a beta of 1.0. Stock B has a beta of 2. Portfolio P is a two-stock portfolio, where part of the portfolio is invested in Stock A and the other part is invested in Stock B.
Wrenn Corp. has 5.6 million shares outstanding, interest expenses of $4.4 million, and depreciation expenses of $3.7 million. What is Wrenn's operating income if the dividend per share is $0.80 and the dividend payout ratio is 35%?
On January 1, 2006, Miller Corporation borrowed cash from First City bank by issuing a $60,000 face value, three-year installment note that had a 7% yearly interest rate.
Both companies have an operating tax rate of 25 percent and a cost of capital of 10 percent. What are the etnerprise-value-to-EBITA multiples for both companies? Does higher growth lead to a higher multiple in this case?
write down the name of methods which ignores the time value of money.
Its cost of equity is 19 percent, the cost of preferred stock is 6.5 percent, and the pre-tax cost of debt is 7.5 percent. What is the firm's WACC given a tax rate of 34 percent?
Computation of Base Case NPV and abandonment option of a Project
If the firm goes with a short-term financing plan, their rate will be 8 percent, and with a long-term financing plan their rate will be 9 percent. What much more or less will their initial annual earnings after taxes be if they choose the most con..
A bond with an yearly coupon of $100 originally sold at par for $1,000. The current market interest rate on this bond is 9 percent.
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