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Jose is 25 years old today and has a retirement plan that permits him to place monthly amounts of $150 into a retirement vehicle, beginning one month from now, for 30 consecutive years. When Jose reaches retirement at age 55, he expects to live for 40 more years. What is the most he can spend, per month, throughout all of his retirement years? Assume that his retirement benefits begin one month after his 55th birthday and an interest rate of 5%?
a. $ 435
b. $ 602
c. $ 829
d. $ 1,137
e. $ 313
2. You are trying to price two bonds that have the same maturity and par value but different coupon rates. Both bonds mature in 8 years and at maturity both bonds return the par value of $1,000. One bond has a coupon rate of 3% and a yield to maturity of 3%. The other bond has a coupon rate of 5% and a yield to maturity of 5%. What is the absolute value of the difference between the prices of these two bonds?
a. $ 140.39
b. $ 67.33
c. $ 62.10
d. $ 0
e. $ 119.43
A stock with a beta of 1.4 will pay a dividend of $2 next year that is expected to grow at 7%. If the risk-free rate is 2% and the market risk premium is 5.5%, what is the most you would be willing to pay for the stock today?
Warren Enterprises expects 20,000 unit sales, has ordering costs of $20 per order, carrying costs of $1.00 per unit, and desires to keep 100 units in safety stock. Assuming level production, what should be their average inventory?
Cost of common equity) Falon Corporation is issuing new common stock at a market price of $27.32. Dividends last year were $1.39 and are expected to grow at an annual rate of 7.4 percent forever. What is Falon's cost of common equity capital?
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A cost center can be asked to achieve one of two typical objectives. A cost center can either minimize costs for a given output or it can:
After you have selected a company, put yourself in the place of an analyst who has been asked to perform an analysis of the company and provide a recommendation to management.
The following annual inflation rates have been forecast for the next 4 years Year 1, 3% inflation, Year 2, 4% inflation, Year 3. 6% inflation, Year 4. 8%, Use the average annual inflation rate and 3 percent real rate to calculate the appropriate cont..
Select two publicly traded companies in different industries/sectors, then compose a comparison of the capital structure for each. Explain your conclusions on the similarities and differences. What factors can you suggest for why each company adheres..
Project K costs $48,152.88, its expected cash inflows are $10,000 per year for 10 years, and its WACC is 9%. What is the project's IRR? Project K costs $35,000, its expected cash inflows are $10,000 per year for 8 years, and its WACC is 9%. What is t..
The Evanec Company's next expected dividend, D1, is $2.97; its growth rate is 4%; and its common stock now sells for $32. New stock (external equity) can be sold to net $28.80 per share. What is Evanec's cost of retained earnings, rs? What is Evanec'..
Miyagi Data, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 1/30, net 40. Based on experience, 65 percent of all customers will take the discount. What is the average collection period? If the company sells 1,350 forecas..
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