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Question 1: You need a 30-year, fixed-rate mortgage to buy a new home for $400,000. Your mortgage bank will lend you the money at a 6 percent APR for a 360 month loan. You can only afford a monthly payment of $1000. How much downpayment should you put at the time of purchase? Plese show your work.
Question 2. Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It pays annual coupon payments and has a coupon rate of 3%. The bonds will mature in 20 years. Stock price of Firm Z is $10, and there are 50 million shares outstanding. There are 2 million shares of preferred stock, which offers $2 dividend and is priced at $40. Equity beta of Firm Z is 1.5 and current market portffolio yields 8% and the risk free rate is 2%. Corproate tax rate is 30%. Find the costs of debt, equity, preferred stock and WACC. Please show your work.
Firm Z has invested $4 million in marketing campaign to assess the demand for the product Minish. This product will be in the market next year and will last five years. Revenues are projected to be $50 million per year along with expenses of $20 million. The firm spends $15 million immediately on equipment that will be depreciated using MACRS depreciation to zero.? Additionally, it will use some fully depreciated existing equipment that has a market value of $4 million. Finally, Minish will have no incremental cash or inventory requirements (products will be shipped directly from the contract manufacturer to customers). But, receivables are expected to account for 15% of annual sales. Payables are expected to be 15% of the annual cost of goods sold (COGS) between year 1 and year 4. All accounts payables and receivables will be settled at the end of year 5. Based on this information and WACC in the first part of the question, find the NPV of the project. Identify the IRR of the project. Draw NPV vs r graph of the project. Will you accpet this project? Why? Please show your work.
The preferred stock is selling at $90 per share and pays a dividend of $8.50 per share. The corporate tax rate is 20 percent. The flotation cost is 2 percent of
Please respond to the following: After reviewing the scenario, discuss at least three (3) pros and three (3) cons for converting personal property to business use, and recommend at least two (2) implementation strategies that would increase the de..
Computation of after-tax cost of preferred stock and which is planning to sell $10 million of $4.50 cumulative preferred stock to the public at a price of $48 a share
Bond valuation of case 3: r d has increased from 10% to 12% at period 1. The initial who time to maturity was 15 year. INT=$100 and M=$1000. Compute the PV of the bond at period 1.
Within the first hour of trading, the stock was selling for $23.20 a share. What was the flotation cost as a percentage of the funds raised?
quiver archerys bond currently is selling for 1005 its value one year ago was 990. the bond has a 1000 maturity value
firm x has a tax rate of 30. the price of its new preferred stock is 63 and its flotation cost is 3.15. the cost of new
The price of a stock is $40. The price of a oneiyear European put option on the stock with a strike price of $30 is quoted as $7 and the price of a one-year Eur
What are the advantages and disadvantages of a hierarchical organizational design in the context of the Johns Hopkins Hospital Case.
Quint Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million.
2. A stock's next expected dividend divided by the current stock price is the:
Why did Amazon decide to get into cloud computing? This business is radically different from shipping books and other physical products.
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