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1.The Christopher Cabinet Company has a $1,000 par value bond outstanding that pays annual coupon interest of $80 semi-annually. If the current yield to maturity on this bond is 10 percent, compute the current value of the bond if the maturity date is 20 years.
2.ABC Inc. just paid an annual dividend of $2.00 per share on its common stock. The investor's required rate of return on ABC's Common Stock is 13 percent. The firm expects dividends to grow at a constant rate of 5 percent (g). Evaluate the firm's current stock price (P0).
3. Consider that Camille's Jewelry Corporation recently paid an annual dividend of $4.00 per share on its common stock. Because of exceptionally positive operating results, the firm expects dividends to grow at a supernormal growth rate of 20% over the next four years. After the end of the four year supernormal growth period, dividend growth is expected to return to the firm's normal rate of 6%. The investors' required return for Camille's Jewelry Corporation common stock is 12%. Using the two-stage growth model solve for the firm's current stock price.
The company's beta is 1.25, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's theoretical stock price? (HINT: see text for calculations that require both CAPM and DDM).
The firm has a tax rate of 40%. If the machine is sold at the end of two years for $50,000, what is the cash flow from disposal?
Provide a detailed overview of the U.S. publicly traded company, Priceline. This should be 3 pages. Evaluate the company's vulnerability to current financial threats, such as a recession, higher interest rates, and global competition.
Make sure that you show your work on each circumstance and the overall benefit of the method you determined to be best.
Consider a long-term debt you currently own (e.g., a mortgage or student loan) and discuss how you would take present value into account when deciding whether you should retire that debt ahead of schedule. Explain your rationale.
Compare and contrast the Weaknesses of each approach & Opportunities of each approach?
Prepare a model to evaluate and amortize a structured loan at a rate of 10 per cent.
Sammy is endowed with $10,000,000 and is considering whether to invest in a business venture. Perfect capital markets, interest rate of 6%.
Acme plans to construct a new manufacturing facility in 14 years. If Acme estimates that today's cost of the new plant is $975318642 and annual inflation is A% (A = 9),
Identify some problem areas in the cost of capital analysis. Do these problems invalidate the cost of capital procedures we have discussed?
Consider an asset that costs $640,000 and is depreciated straight-line to zero over its eight-year tax life.
Compute the marginal cost of capital on the additional $150 million assuming the cost of debt stays the same.
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