Long forward contract on non-dividend-paying stock

Assignment Help Financial Management
Reference no: EM131556041

A long forward contract on a non-dividend-paying stock was entered into some time ago. It currently has 7 months to maturity. The risk-free rate with continuous compounding is 7.2% per annum, the stock price is $36.7 and the delivery price is $30. Calculate the value of the forward contract?

Please show each step

Reference no: EM131556041

Questions Cloud

Weighted-average cost of capital at new capital structure : What will be the company’s weighted-average cost of capital at the new capital structure?
Assume debt tax shields have net value of dollar of interest : Assume debt tax shields have a net value of $.40 per dollar of interest paid.
What would the after-tax cash flow be from the equipment : What would the after-tax cash flow be from the equipment the equipment is sold in 8 years for 95,000 dollars and the tax rate is 25 percent?
What is the break-even quantity and cost : What is the break-even quantity and cost?
Long forward contract on non-dividend-paying stock : A long forward contract on a non-dividend-paying stock was entered into some time ago. Calculate the value of the forward contract?
Value of your equity position after stock dividend is paid : What will be the total value of your equity position after the stock dividend is paid?
The assets of firm follow two-state binomial model : Suppose that the assets of a firm follow a two-state binomial model and are currently market valued at 100mil.
Portfolio analyst wants to include one of his stocks : A portfolio analyst wants to include one of his stocks, x,y into his portfolio. His forecast is that inflation is less than 2% with 80% probability.
What is holding period yield : If the bond's holder reinvested the call price at 6 percent for 9 years, what is his 20-year holding period yield?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the irr for this project

Your firm is contemplating the purchase of a new $636,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $43,000 at the end of that time. If the tax rate is 30 percent,..

  The firm needs to plow back its earnings to fuel growth

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next eight years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $15.25 per share 9 years..

  Domestic corporation-manufactures and sells widgets

USAco, a domestic corporation, manufactures and sells widgets in the U.S. and worldwide through its two wholly-owned foreign subsidiaries. USAco’s Hong Kong subsidiary, HKco, earns $100,000 of foreign-source income from sales in Hong Kong and pays $2..

  Operating at capacity and expects to able to handle increase

The Webster Wonders Corporation (WWC) has begun selling a new product and they want you to help them determine if they need additional funding (AFN) next year. Using the AFN formula method, calculate WWC’s AFN for next year (if any). Sales growth nex..

  What is the present value of the savings

Your company will generate $66,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.50 percent, what is the present value of the savings? (Do not round intermediate calculatio..

  Industrial engineering company bought new machine

An industrial engineering company bought a new machine that can generate equivalent money of $ 90,000 after 7 years.

  Prepare projected financial statements for nestle sa

Purpose: This exercise is designed to give you experience preparing projected financial statements. Pro forma analysis is a central strategy-implementation.

  Rabbit transportation inc is considering project

Suppose Green Rabbit Transportation Inc. is considering a project that will require $350,000 in assets. The company incurs a tax rate of 30%.

  In the report center under customers and receivables

In the report center under customers & receivables all of the following sections are included except:

  What is the total interest paid

Suppose that a debt of $2200 with interest at i^(4) = 0.10 is amortized by payments of $500 at the end of each quarter for as long as possible. How many payments are made? What is the last payment? What is the total interest paid?

  What is the bonds value

A US Industries bond has an 8 percent coupon rate and a $1,000 face value. Interest is paid semi-annually, and the bond has 20 years to maturity. If investors require a 10 percent yield to maturity, what is the bond’s value?

  Should charge just to break even on the special order

What is the minimum price GTO Mfg. should charge just to break even on the special order?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd