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The Tillamook County Creamery Association manufactures Tillamook Cheddar Cheese. It sells the cheese in four varieties: aged 2 months, 9 months, 15 months, and 2 years. At the shop in the dairy, it sells 2 pounds of each variety for the following prices: $8.00, $9.50, $11.50, and $12.50, respectively. Consider the cheese maker's decision whether to continue to age a particular 2-pound block of cheese. At 2 months, he can either sell the cheese immediately or let it age further. If he sells it now, he will receive $8.00 immediately. If he ages the cheese, he must give up the $8.00 today to receive a higher amount in the future. What is the IRR? (expressed in percent per month) of the investment of giving up $ 80.00 today by choosing to store 20 pounds of cheese that is currently 2 months old and instead selling 10 pounds of this cheese when it has aged 9 months, 6 pounds when it has aged 15 months, and the remaining 4 pounds when it has aged 2 years?
The IRR is __% per month.
What is the nominal interest rate on a 7-year Treasury security?
Explain the meaning of a residual dividend policy and comment on the benefits/drawbacks for the company and the stockholders.
Weight of Equity FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $27 per share, the ..
A U.S. based company borrowed £10 Million from the only willing lender: a British bank. The loan will be repaid in £ in one year, with 19% interest. The exchange rate at the time the loan was made was 0.64 £ per $. What is the dollar-cost of debt? (t..
The expected return for the general market is 10 percent, and the risk premium in the market is 5.2 percent. Tasaco, LBM, and Exxos have betas of 0.886, 0.672, and 0.567, respectively. What are the appropriate expected rates of return for the three s..
All else equal, if a bonds yield to maturity increases, it's price will fall. A zero coupon bond pays no interest. It is offered at par value, which is where it sells initially. If the appropriate rate of interest on a bond is greater than its coupon..
The bond pays interest semi-annually, has a yield-to-maturity of 7.47 percent, and matures in 10 years. What is the current yield?
Assume that the risk-free rate of interest is 4% and the expected rate of return on the market is 14%. A share of stock sells for $68 today. It will pay a dividend of $3 per share at the end of the year. Its beta is 1.2. What do investors expect the ..
You own a bond that pays $64 in interest annually. The face value is $1,000 and the current market price is $1,062.50. What is the yield to call?
An umbrella liability policy:
Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. The current cash flow from assets for Arras is $7.3 milli..
From the second case study, analyze the major advantages and disadvantages associated with a floating exchange rate system in Thailand.
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