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Aubey Inc. is considering two projects that have the following cash flows:
Project 1 Project 2Year Cash Flow Cash Flow0 -$2,000 -$1,9001 500 1,1002 700 9003 800 8004 1,000 6005 1,100 400
At what cost of capital would the two projects have the same net present value?
a. 4.73%b. 5.85%c. 6.70%d. 7.50%e. 8.20%
ABC Corp. entered in a currency swap with its bank, providing that ABC borrows $5 million at 10% and swaps for a 12% yen loan.
Nissan Company has a $1,000 par value bond outstanding paying annual interest of 7 percent. The bond matures in 20 years. The going rate of interest is 9 percent for this bond.
The ABC Company is planning a project which has an up-front cost paid today at t = 0. The project will create positive cash flows of $70,000 a year at the end of each of the next 5 years.
Computation of project's APV with principal repaid in a lump sum at the end of the fifth year
Assume that the Treasury bill rate were 6 percent rather than 4 percent. Suppose that the expected return on the market stays at 10%. Use the betas in Table 8.2 .
A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. What is the current selling price for a) and b)?
Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35 percent, and its unlevered cost of captial is 15 percent. The firm also has outstanding debt of $19.05 million,
In 2010, Grace loaned her friend Paula $12,000 to invest in various stocks. Paula signed a note to repay the principal with interest.
Assume the market portfolio is equally likely to increase by 30 percent or decrease by 10%. Compute the beta of a firm that goes up on average by 43 percent when the market goes up and goes down by 17% when the market goes down?
A tax-exempt bond was recently issued at an annual 12% coupon rate and matures twenty years from today. The par value of the bond is $1,000.
Calculation of yield to maturity on bond with given data and The bonds had a coupon rate of 4.5%
If market interest rates are currently 15 percent and your investment provides you this 15 percent return, does that imply that you are 15% more wealthy.
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