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Axel Rose Inc. (ARI) has a 15 year, 12% semi-annual coupon bond that is currently selling for $1,153.72. ARI’s current stock price is $25.00 and the company expects its next dividend to be $2.50 with a constant growth rate of 5%. ARI’s preferred stock has a par value of $100.00, a $7.50 dividend and is selling for $60.00 per share. ARI has a capital structure of 50% debt, 20% preferred stock, and 30% equity. ARI’s tax rate is 40%. Calculate the costs of equity, debt and preferred stock and the WACC.
Note: Include a link to this BSC if available.Explain how useful you think the BSC is as a form of performance measurement and management for this particular organisation.
The Digby's balance sheet has $119,413,000 in equity. Further, the company is expecting $3,000,000 in net income next year. Assuming no dividends are paid and no stock is issued, what would their Book Value be next year?
Joe’s starting salary as a mechanical engineer is around $60,000. Joe is planning to place a total of 10% of his salary each year in the mutual fund. Joe expects a 5% salary increase each year for the next 30 years of employment. If the mutual fund w..
What is the present value of a $1,000 par corporate bond from the Burns Corp. with an annual coupon rate of 10% and 30 years to maturity when market rates on similar bonds are 8%? Assume annual coupons.
Consider the following capital market: a risk-free asset yielding 1.00% per year and a mutual fund consisting of 65% stocks and 35% bonds. The expected return on stocks is 11.75% per year and the expected return on bonds is 4.25% per year. What is th..
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..
Calculate the present value of the following cash flows discounted at 10 percent.
Many corporations now include “clawback” provisions in their executive compensation packages. These provisions allow them to reclaim the profits obtained by departed executives’ exercise of stock options for five years or more. What is the purpose of..
Rocking house Corp. Management plans to issue seven-year zero coupon bonds. It has learned that these bonds will sell today at a price of $445.16. Assuming annual coupon payments, what is the yield to maturity on these bonds?
Sessler Manufacturers made two announcements concerning its common stock today. First, the company announced that the next annual dividend will be $1.75 a share. Secondly, all dividends after that will decrease by 1.5 percent annually. What is the ma..
What is the Residual Distribution Model? What are Treasury Stocks? What are stock splits? What are Dividend Reinvestment Plans? What is Operating Leverage?
A fixed asset has an original cost of $32,000 and is three-fourths depreciated. The asset is sold for $10,000 – show how you derived your answer. What is the gain (+) or loss (-) on the sale of the asset. What amount is recorded in the CFO section of..
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