Concentric Corporation has 10 million shares of stock outstanding. Concentric's after tax profits are$140 million and the corporation's stock is selling at a price-earning multiple of 18, for a stock price of$252 per share. What is the effect on an i..
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Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,300,000. Also, at year-end 2015, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..
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We use no arbitrage to calculate implied forward rates from the spot curve. What does mean when we say that implied forward rates are breakeven rates? What do we use implied forward rates for? Are expectations of future interest rates the only factor..
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Manny and Irene will be retiring in fifteen years and would like to buy a Mexican villa. The villa costs $500,000 today, and housing prices in Mexico are expected to increase by 6% per year. If the account earns 10% per year, what is the amount of ea..
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A retail property was purchased for $1,000,000. An appraiser valued the land portion at $100,000 and the building portion at $900,000. Assume straight-line depreciation over 39 years. The investor secured a $700,000 loan at 7% interest for ten years ..
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The Black Bird Company plans an expansion. The expansion is to be financed by selling $87 million in new debt and $5 million in new common stock. The before-tax required rate of return on debt is 11.39% percent and the required rate of return on equi..
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Suppose dell has no debt and a wacc of 9.3%. The average debt to value ratio for the software industry is 9.3%. What would be its cost of equity if it took on the average amount of debt for its industry at a cost of debt of 6.5%?
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ou buy a share of The Ludwig Corporation stock for $23.80. You expect it to pay dividends of $1.08, $1.17, and $1.2675 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $30.64 at the end of 3 years. Calculate the growth rate..
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DMA Corporation has bonds on the market with 14.5 years to maturity, a YTM of 7.5 percent, and a current price of $1,061. The bonds make semiannual payments and have a par value of $1,000. What must the coupon rate be on these bonds?
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Victoria Adeleye Co. has the following data for the year ending 12/31/10: Net income = $600; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and ..
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The Dunning Co. needs to raise $66.4 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $64 per share and the company’s underwriters ..
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Your firm is contemplating the purchase of a new $642,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. Suppose your required return on the project is 8 percent and your pretax cost sa..
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