The warrants of Dragon Pet Co. allow the holder to buy a share of stock at $28.00 and are selling for $16.50. The stock price is currently $25.00. To what price must the stock go for the warrant purchaser to at least be assured of breaking even?
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You own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 35 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are .90, 1.23, 1.07, and 1.25, respectively. What is the portfolio beta?
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ABC Corp. issued a 12 percent, 20 year coupon rate bond 5 years ago. Interest rates are now 8 percent. The par value of the bond is $1,000. Based on semi-annual analysis, what is the current price of the bond?
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The balance sheet for Ferguson Corp. is shown here in market value terms. There are 5,000 shares of stock outstanding. Market Value Balance Sheet Cash $ 43,900 Equity $ 373,900 Fixed assets 330,000 Total $ 373,900 Total $ 373,900 The company has decl..
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Dewey Cheetham & Howe accounting firm is considering the purchase of a $1000 New Haven Municipal Bond. The stated coupon rate is 5% paid quarterly. The bond will mature in 22 years. The YTM for similar bonds is 4%. What should the market price of the..
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Of the 4 cash flow reporting methods provided, which method is used in the following scenario? Scenario: Assumptions • Item: The proposal is for the purchase of a new MRI machine • Cost: The machine costs $1,500,000.
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DEGREE OF FINANCIAL LEVERAGE Arthur Johnson Inc.’s operating income is $500,000, the company’s interest expense is $200,000, and its tax rate is 40%. What is the company’s degree of financial leverage? If the company were able to double its operating..
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An investor has put money in four stocks in the dollar amounts indicated and with betas specified. What is the portfolio beta? Stock A $3,708 with a beta of 1.28; stock B $6,468 with a beta of 1.07; stock C $4,320 with a beta of 1.14; and stock D $5,..
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Finding the required interest rate Your parents will retire in 28 years. They currently have $280,000, and they think they will need $2,150,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any ..
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Assume that a firm's manager decides to fund its entire investment need this year by issuing $500 million in bonds. After-tax cost of these bonds is 6%. The firm’s optimal capital structure calls for 40% debt and 60% equity. The cost of equity is 16%..
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Five years ago you took out a 15-year mortgage with biweekly payments (you make a payment every two weeks) to purchase your home. The interest rate is 7% per year and the biweekly payment is $800. What is the outstanding balance on the mortgage if th..
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The most recent financial statements for Xporter, Inc., are shown here: Income Statement Balance Sheet Sales $ 6,200 Current assets $ 2,900 Current liabilities $ 2,200 Costs 5,050 Fixed assets 9,300 Long-term debt 3,750 Taxable income $ 1,150 Equity ..
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