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1. Explain how valuing preferred stock with a stated maturity differs from valuing preferred stock with no maturity and calculate the price of a share of preferred stock under both condition
2. Describe how distinguishing between variable and fixed costs can be useful in forecasting operating expenses.
3. What is the effective annual yield of a bond that promised an annual yield of 7.5% if this bond pays coupons twice a year?
4. What is the EAC of two projects: project A, which costs $230 and is expected to last two years, and project B, which costs $300 and is expected to last three years? The cost of capital is 12%.
Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 9 percent, and T-bills are currently yielding 4.6 percent. The company’s most recent dividend was $1.80 per share, and dividends are expected to grow at an annual rate of 8 pe..
The outstanding bonds of Winter Time Products provide a real rate of return of 3.70 percent. The current rate of inflation is 2.20 percent. What is the nominal rate of return on these bonds?
Stocks A and B each have an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns on the two stocks have a correlation of 0.6.
You have been hired to value a new 20-year callable, convertible bond. What value would you assign to this bond?
Your firm needs a machine which costs $130,000, and requires $28,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% ..
What are Vandell’s cost of equity and weighted average cost of capital? What is Vandell's intrinsic value of operations?
Empire Electric Company (EEC) uses only debt and common equity. What is its cost of common equity?
Kim Hotels is interested in developing a new hotel in Seoul What is the project's net present value?
Suppose Stark Ltd. just issued a dividend of $2.24 per share on its common stock. The company paid dividends of $1.80, $1.98, $2.05, and $2.16 per share in the last four years. If the stock currently sells for $45, what is your best estimate of the c..
Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1. Ethier is financed with 55% debt and has a levered beta of 1.5. If the risk free rate is 6% and the market risk premium is 6%, how much is the additional premium that Ethier's s..
What was Wallace's total long-term debt in 2016? What were Wallace's total liabilities in 2016?
Cavo Corporation expects an EBIT of $26,550 every year forever. The company currently has no debt, and its cost of equity is 14 percent. The corporate tax rate is 35 percent. A What is the current value of the company? What will the value of the firm..
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