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The Saunders Investment bank has the following financing outstanding. Debt: 70,000 bonds with a coupon rate of 10 percent and a current price quote of 110; the bonds have 20 years to maturity. 240,000 zero coupon bonds with a price quote of 20 and 30 years until maturity. Assume semiannual compounding. Preferred stock: 160,000 shares of 8 percent preferred stock with a current price of $75, and a par value of $100. Common stock: 2,700,000 shares of common stock; the current price is $61, and the beta of the stock is 1.3. Market: The corporate tax rate is 25 percent, the market risk premium is 8 percent, and the risk-free rate is 5 percent. What is the WACC for the company?
Considering investing in a store with a 10 year lease and it will be in business for the next 10 years. It produces annual cash flows of $400,000. Discount rate 10%. Cash flows will grow at 5%. Therefore, expected annual cash flow for next year is 42..
Patricia Zell, a dollmaker is interested in the mass marketing and production of a ceramic doll. The initial investment required for plan and equipment is $25,000. Labor and material costs are $10 per doll. If the dolls can be sold for $50 each, what..
A company is considering buying a new piece of equipment for $40,000. It is expected to save $12,000 per year for the next 10 years and have a salvage value of $2,000 at the end of 10 years. The machine will require a one-time rehab for $10,000 after..
Cheadle Ltd and Heath Ltd are both public companies whose shares are quoted on the Stock Exchange. Both earn an annual profit, before charging debenture interest, of £3 million, and it is generally expected that they will continue to do so indefin..
A share of common stock just paid a dividend of $1.51. If the expected long-run growth rate for this stock is 2.5%, and if investors' required rate of return is 7.4%, what is the stock price?
Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 40 percent. What is the company’s total book val..
Calculate the company's earnings per share. Calculate the company's dividend payout ratio. Calculate the company's dividend yield.
Consider a one-step binomial model for a stock. Now, the stock is worth S0, but will be worth either S0u or S0d at time T where d
Water and Power Co. (W&P) currently has $540,000 in total assets and sales of $1,820,000. Half of W&P’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 21% in the next year. According to the..
Skateboard sales are expected to increase by 15% from $8million un 2013 to 9.2million in 2014. It assets totaled $5million at the end of 2013. We are already at full capacity, so the assets must grow at the same rate as projected sales. Use the AFN e..
Night Hawk Co. issued 17-year bonds two years ago at a coupon rate of 10.1 percent. The bonds make semiannual payments. If these bonds currently sell for 97 percent of par value, what is the YTM? (Do not include the percent sign (%). Enter rounded an..
Find the information of your given countries and discuss macro-economy of the given countries and describe the situations of financial markets in the given countries.
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