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Suppose that S(0) = $100 and that the annual rate of interest with continuous compounding is r = 8%. We also know that a dividend of $6 will be paid at times t = 1/2 and t = 3/2.
Consider a long forward position at time t = 0 for delivery at time T = 2 years.
(a) Compute the total present value at time 0 of all of the dividend payments.
(b) What is the value of the long forward position at time 0. (c) What is the forward price at time 0.
(d) Suppose the stock price at time 1 is $105. Compute the value of the long forward position at time 1.
What interest rate would make it worthwhile to incur a compensating balance of $22,000 in order to get a 1 percent lower interest rate on a 1 year,
What will the company’s EPS and PE ratio be under the two different scenarios?
What are the expected annual incremental after-tax free cash flows from the new fragrance?
The treasurer for Chic Man Clothing must decide how much money the company needs to borrow in July. The balance sheet for June 30, 2010 is presented below: Chic Man Clothing Balance Sheet June 30, 2010 Cash $87,000 Accounts payable $550,000 Marketabl..
Calculate all four terms of the DuPont identity, and present the results but do not analyze them.
what is the expected NPV of this project? Would Winston Clinic still accept this project?
Show the comparisons and internal rates of return used to make your decision
If your required rate of return is 15%, how much are you willing to pay for the stock?
You are given the following information for Watson Power Co. Assume the company’s tax rate is 38 percent. Debt: 10,000 6.5 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 108 percent of par; the bonds make semian..
Assume Coleco pays an annual dividend of $1.48 and has a share price of $37.14. It announces that its annual dividend will increase to $1.76. If its dividend yield stays the same, what should be its new share price?
Now, suppose that two companies are looking at the same project. Company "A" has a beta of 1.5 and a cost of capital of 25%. Company "B" has a beta of 0.8 and a cost of capital of 15%. When evaluated at a rate of 15%, the project shows an NPV of +$5 ..
Suppose that OIS zero rates with annual compounding are as follow with maturity of 1, 2, 3, 4 years: find the LIBOR forward rate for 2- to 3- year period.
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