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Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $77, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 97 percent of par. The second issue has a face value of $30 million, a coupon rate of 7 percent, and sells for 105 percent of par. The first issue matures in 21 years, the second in 4 years. Suppose the most recent dividend was $4.90 and the dividend growth rate is 6 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company’s WACC?
The current price of a non-dividend paying stock is $50. Use a two-step tree to value a European call option on the stock with a strike price of $48 that expires in 6 months. Each step is 3 months, the risk free rate is 5% per annum, and the volatili..
Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?
JJ Industries will pay a regular dividend of $3.15 per share for each of the next four years. At the end of the four years, the company will also pay out a $83 per share liquidating dividend, and the company will cease operations. If the discount rat..
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Contributing $2,000 per year into a tax deferred retirement plan will save how much in income taxes per year for a person in the 35% marginal income tax rate including federal and state income taxes
BOND VALUATION Callaghan Motors' bonds have 13 years remaining to maturity. Interest is paid semi annually, they have a $1,000 par value, the coupon interest rate is 5%, and the yield to maturity is 6%. What is the bond's current market price?
Complete a preliminary analysis of the financial information. Evaluate materiality based on the information you've been given and justify your calculation.
You are a manager in a fictitious company of your choice. Your director has asked you to explain to the department staff the different types of budgets and techniques in order to provide an overall understanding. What are the various kinds of budgets..
Facebook went public in 2012. Was there any agency conflict prior to that time? Is there a conflict now? How has the agency relationship changed since the IPO?
Valence Electronics has 217 million shares outstanding. It expects earnings at the end of the year of $760 million. Valence pays out 40% of its earnings in total 15% paid out as dividends and 25% used to repurchase shares. If Valence's earnings are e..
a company buys 1 00000 units of material called m every month. order costs are rs. 200 per order and carrying costs are
Consider the impact of external financing on the additional funds needed (AFN) to determine how much additional interest or dividends must be paid to support expected growth?that is, consider financing feedbacks.
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