How much money were they able to raise

Assignment Help Financial Management

Reference no: EM132017537

1. Mike Whizowski Motors issued one million shares of preferred stock that pays a dividend of $2.00 per year. If the required rate of return on their stock is 8%, how much money were they able to raise?

2. Suppose that currently the annual effective rates for are: 8% for one year, 10% for two years and 11% for 3 years.

a) For a 3-year interest-only, floating-rate loan, find the swap rate for a fixed interest rate loan that would be equivalent to the interest rates given above.

b) Suppose Company A borrows $40,000 for 3 years. Assume the loan is interest only and variable rate. Company A wants a fixed rate and enters into an interest rate swap with Company B. What is the net amount that Company B will pay in the second year assuming interest rates do not change?

c) For the swap in part b), what is the value to Company B at the end of year 2, if at year 2 the spot rate for 1 year is 9%.

Reference no: EM132017537

Questions Cloud

Bank for use toward his college expenses : Joe secured a loan of $11,000 five years ago from a bank for use toward his college expenses.

Identifies lack of access to exercise modalities : Suppose a community team identifies lack of access to exercise modalities as a public health issue. If the team were to determine that pedestrian walkways.

Find the swap rate for fixed interest rate loan : Find the swap rate for a fixed interest rate loan that would be equivalent to the interest rates given above.

Evaluate the meaning and difference of entrepreneurship : Examine the development and growth of an entrepreneurial venture with relevant example of one or more companies.

How much money were they able to raise : If the required rate of return on their stock is 8%, how much money were they able to raise?

What is the required return on this stock based on its risk : Your stock has a beta of .65, so what is the required return on this stock based on its risk?

Define natural and man-made disaster : Define natural and man-made disaster and mention at least one type of each one in your community. Based on the information provided in the response.

Identify how 3m utilizes long-term thinking : Identify three specific accomplishments/goals this company has set that will benefit the environment. How do these affect the public opinion

Explain what recruiting is and why it is important : Write an introduction including the selected position, a preview of your paper, and a succinct thesis statement.

User Account

All Pages