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AAA has only stock and bonds in its capital structure. Balance sheet information: Long term debt (par value--NOT number of bonds) = $20,000,000, Common equity and retained earings = $17,000,000, and Shares of stock outstanding = 1,000,000. Bond information: Bond price ($1,000 par value per bond) = $1,150.00, bond annual coupon rate with semiannual payments = 6.0%, and bond maturity = 10 years. Stock information: Stock price = $40.00, beta = 1.25, recent dividend (D0) = $3.00, dividend growth rate = 4.00%. Other information: risk free rate = 4.0%, the market risk premium = 6.5%, tax rate = 40.0%. Using the average of the CAPM and DCF estimates, find the required return on equity.
If the investment needs the outlay of $400 today,what compound percentage return would you earn if you made investment.
How might (a) seasonal factors and (b) different growth rates distort a comparative ratio analysis? Give some examples. How might these problems be alleviated?
200,000 in assets to get into operation with only two financing alternatives 1. 2.50 percent equity and 50% debt. you will put the entire 200,000 required to purchase the assets
A firm's preferred stock pays an annual dividend of $2, and the stock sells for $65. Flotation costs for new issuances of preferred stock are 5% of the stock value. What is the after-tax cost of preffered stock if the firm's tax rate is 30%?
Wyden Brothers uses the CAPM to calculate the cost of equity capital. The company's capital structure consists of common stock, preferred stock, and debt.
The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
Salt and Pepper incurred $14.9 million in depreciation expense and paid $25.5 million in taxes on EBIT in 2012. Calculate Salt and Pepper's 2011 EBIT.
Describe the main factors in the RTC securitization flow of funds process AND explain how the securitization of receivables benefits the issuer. Does the existence of prepayments on mortgaged backed securities make them more or less risky to the i..
Compare and contrast the potential benefits of the domestic securities market to those investing in the foreign securities markets.
What does the historical record of interest rates and inflation in the United States look like? Explain in details with references to text book.
Compare and contrast the potential benefits of the domestic securities market to those investing in the foreign securities markets. Provide specific examples to support your response.
Define a swap, in the context of financial instruments. b) Describe the how the pricing of a swap will be done. c) Describe the risks faced by the parties involved in a swap.
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