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ABC Inc. currently (at =0) has an outstanding debt of $120 million, which is scheduled to be paid in four equal annual instalments of $30 million each, with the first annual instalment to be paid at t=1. Assume that interest on the outstanding amount at the end of the year will be paid at the end of the year +1 and will be deducted from the income for the year between time and time +1 before corporate tax is computed. Given that , the cost of debt capital for this firm, is 6.75% and that corporate profits are taxed at 21%, work out the present value of the tax shield on account of this issue of debt.
Assume Bill purchased the bond for $450. After one year, Bill collects his first coupon payment of $20, but then sells the bond for $440.
Discuss the relative riskiness of the three firms' earnings using their respective coefficients of variation. Round your answer to two decimal places.
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset:
1. If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will:
Electro Motors (Electro) is considering a new project to produce electric vehicles for the Australian domestic market and international markets.
It expects the euro to depreciate 6% against the $ annually, and the yen to appreciate 2% against the $. Find the effective cost of the euro and the yen loans. Where should the ABC firm borrow, and explain why?
FIN60003 - Directors of companies have an obligation to act in the best interests of the company. Elaborate on how the court approach this duty and explain whether the corporations law in Australia has made this duty onerous.
Determine how much the FRA is worth and who pays who- the buyer pays the seller or the seller pays the buyer. Should the bank buy or sell the FRA?
In what ways are insurance companies financial intermediaries? What is the difference between a life insurance company and a property and casualty insurance company?
what is the unemployment gap? What is the relationship between the unemployment gap and the output gap?
Put option has a premium of $3.50 with a strike of $52. The stock currently is priced at $50. What is the intrinsic value of the put option? What is the time value of the put option?
How much were miscellaneous and administrative expenses during the year?
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