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1. Orca, Inc. announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $1.85 a share. The following dividends will be $1.5, $1.45, and $2.53 a share annually for the following three years, respectively. After that, dividends are projected to increase by 4.2 percent per year. How much are you willing to pay today to buy one share of this stock if your required rate of return is 12.6 percent?
2. You anticipate that XSensors Co. will pay a constant dividend of $2.75 each year for the next 10 years. After that, the dividend will increase to $4.89 and hold steady for another 10 years. After that, you expect the dividend will start increasing every year at a constant rate of 2.6 percent per year, forever. Your discount rate for this stock is 13.3 percent. How much are you willing to pay for this stock today?
Assume that HOS could issue a zero coupon bond at an annual interest rate of 4 percent with semi annual compounding for 20 years. If HOS receives $2,264.45 for the bond, how much would it have to pay at the maturity date?
Consider the following three bond quotes: a Treasury bond quoted at 103:29, a corporate bond quoted at 96.30, and a municipal bond quoted at 100.70. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value..
Money Market Versus Call Option Hedging. You expect that inflation in the United States will be 3%, versus 5% in the United Kingdom. The expected spot rate in one year is $1.8756. The spot rate of the pound as of today is $1.8000.
Allied Products, Inc., is considering a new product launch. The firm expects to have annual operating cash flow of $8.5 million for the next 9 years. Allied Products uses a discount rate of 14 percent for new product launches. calculate the equivalen..
Suppose that a US interest rate is 4% and the forward rate for the Korean won is 1 won = $0.001 and the spot rate is 1 won = $0.0011. What is the interest rate in the Korean market? (Assume that the US is home and the interest rate parity holds.) Ple..
Suppose that there are no dividends paid by Google and the interest rate for borrowing or lending is 5% per annum. How could you make money if the June and December futures contracts for a particular year trade at $530 and $550, respectively? When wo..
B&B Inc. has a book value of debt of $500,000. The market value of debt is $550,000. Its pre-tax cost of debt is 10%, and its beta is equal to 2. The tax rate is 40%. The firm has an annual EBIT of $200,000. What is B&B’s weighted average cost of cap..
Explain the meaning of the debt capacity calculation at row 62 and explain how the EBIT Chart works (inputs determining the outputs-the two lines on the chart and the indifference point.
The stockholder's equity accounts of a corporation on January 1, 2015, were as follows: As of Dec.31, 2015, what is the average selling price of the preferred stock? How many shares of common stock are outstanding as of December 31, 2015? What is tot..
Briefly list and describe capital market listing requirements for corporations that who wish to trade on the NYSE?
Winnebagel Corp. currently sells 29,700 motor homes per year at $81,500 each and 8,700 luxury motor coaches per year at $123,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 24,700 of these..
Why were commercial banks prohibited from underwriting corporate securities within the United States but not abroad? How can a depository institution engage in underwriting corporate securities today?
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