Expected Return Circuit City Stores (CC) recently paid a $.21 dividend. The dividend is expected to grow at a 23.50 percent rate. At the current stock price of $8.46, what is the return shareholders are expecting?
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David Rose Inc. forecasts a capital budget of $300,000 next year with forecasted net income of $250,000. The company wants to maintain a target capital structure of 30% debt and 70% equity. If the company follows the residual dividend policy, how muc..
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You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $70,000, has a 5-year life, and has an annual OCF (after tax) of –$11,300 per year. The Keebler CookieMunster costs $96,500, has a 7-year life, and has an annual OCF (after..
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A prospective MBA student earns $50,000 per year in her current job and expects that amount to increase by 12% per year. She is considering leaving her job to attend business school for two years at a cost of $45,000 per year. What is the net present..
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You are considering a property that is leased for 4 years. As the lessor you would recieve the following cash flows (at the end of each year): $17,800 in Year 1, $19,000 in Year 2, $12,500 in Year 3, and $10,000 in Year 4. At the end of the period yo..
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Find the amount Ashkin should deposit today if he needs $3,750 in his account in 5 months. Assume his account pays 4% simple interest. A new computer costs $2,100. If the price of computers has increased by 1% in the past 6 months, how much did the c..
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A project is expected to produce cash flows of $5,000, $8,000, and $16,000 over the next three years, respectively. After three years, the project will be discontinued. What is this project worth today at a discount rate of 15 percent?
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Assume you have a one-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. If you expect their yields to mat..
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Larkin could wait until the sales proceeds were received in August and November, hope the recent strengthening of the euro would continue, and sell the euros received for dollars in the spot market. Larkin estimates the cost of equity capital to be 1..
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James Street's son, Harold, is 10 years old today. Harold is already making plans to go to college on his 18th birthday, and his father wants to start putting money away now for that purpose. Any balance remaining in the account will continue to earn..
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The returm an investor earns in a bond over a period of time is known as the bolding period return, definednas interest income plus or minus the change in the bonds price, all diveded by the beginning bond price a) what is the holding period return o..
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Company A has assets worth $100,000,000. The company has a 0.2 debt-to-value ratio and keeps a constant-debt policy. Company A decides to unexpectedly reduce its debt by half, replaces it with equity and keeps it constant after then. The interest rat..
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