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In August, 2011, Warren Buffett decided to make an investment in Bank of America by purchasing a large amount of preferred stock. The terms of the investment were that Bank of America would pay Buffett a fixed dividend of $300 million every year and that the investment would last indefinitely. (Because the transaction had no maturity or end date, it can be considered a perpetuity.) In prior deals with General Electric and Goldman Sachs, Buffett had demanded a 10% rate of return. If he had wanted to achieve a 10% rate of return on his Bank of America investment, how much would he have paid for the Bank of America preferred stock? (Note that 10% was not the actual rate Buffett used for this transaction; we'll compare the answer we get for this problem to the transaction's actual terms in class on Friday.)
A company receives an average of $11,000 in checks each day. The delay in clearing is typically 4-days. The current interest rate is .016% per day.
Compute of value of the stock and What would be the value of the stock if the dividend payout ratio
The events in the financial markets during the past few years have been sweeping and historic, and they have resulted in the biggest federal bailout efforts in history.
SGP's pre-merger beta is 2.0, and its post-merger tax rate would be 34%. The risk-free rate is 8% and the market risk premium is 4%. What is the value of SGP to Raymond?
The People Power Corporation currently has a common stock selling for $15 per share. Warrants are also available. Three warrants entitle the holder to buy one share of common stock for $9.
A group of concerned citizens has established a trust fund that pays 6% interest , compounded monthly, to preseerve a historical building by providing annual maintenance funds of $30,000 forever. Compute the capitalized equivalent amount for these..
Computation of Weights of the individual stocks, Expected returns, Variance-covariance matrix and volatilities
Weisbro and Sons common stock sells for $51 a share and pays an annual dividend that increases by 4.0 percent annually. The market rate of return on this stock is 9.70 percent. What is the amount of the last dividend paid by Weisbro and Sons?
Providing recommendation based on capital budgeting requires calculation of NPV, IRR, payback period
How do multilateral and regional financial institutions promote global business? How do global companies protect themselves against foreign exchange risk and other financial risks?
Describe the conflict between safeguarding the prisoner has constitutionally protected rights and state's authority to reduce those rights in order to protect its own interests and interest of its citizens.
The Great Computer Corporation, a United State company, has a subsidiary in the Netherlands. It is deciding whether to invest $2 million of its funds in a three year project in the Netherlands.
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