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You’re starting an athletic clothing chain and have chosen Eastern Mountain Sports as your comparable. EMS has an project/asset beta of 1.40 and an equity beta of 1.80. EMS also has $80M in equity and $40M in debt. The expected return of the market is 7% and the risk-free rate is 2%. What is the appropriate discount rate to use for your division’s assets/projects? You are valuing a project for the clothing chain described in the previous problem. The project has expected revenues of $200k per year, for the next 5 years. The project has fixed costs of $50k per year. The project will require an initial investment of $300k. Your firm has $20M in equity and $5M in debt, which is risk-free. The tax rate is 0%. What is the NPV of the project? Please list the equations used to find the solution.
E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $15 in perpetuity, beginning 20 years from now. If the market requires a return of 4.5 percent on this investment, how much does a share of preferred stock cost..
What capital investment decisions do you see evidence of at this company? How might this company make capital investment decisions?
What is the duration of a two-year bond that pays an annual coupon of 11.9 percent and has a current yield to maturity of 13.9 percent? Use $1,000 as the face value. What is the duration of a two-year zero-coupon bond that is yielding 11.5 percent?
Let's do something boring just to drive home a point: Count up the number of years in Figure in which more than half of the mutual funds managed.
Calculate the external funds needed (EFN) by Edgefield. What would Edgefield's payout ration have to be in order for the company's EFN to equal Zero?
Jones Corporation has 500,000 shares of common stock outstanding, its net income is $1,750,000, and its P/E ratio is 2.5. What is the company's stock price?
Peter owns investment alpha and 1 share of stock bravo. What is X, the expected return for investment Alpha?
The MoMi Corporation’s income before interest, depreciation and taxes, was $2.5 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 19% of pre..
What is the net present value of the following cash flows if the relevant discount rate is 8.8 percent?
Champ Ltd. amortizes bond discount by the effective-interest method.
What is the yield to maturity and yield to call on this bond?
If the variable cost of each product is 70 percent of sales, what is the firm's average investment in accounts receivable?
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