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A new floating-rate debt issue pays interest annually based on the one-year Treasury bill rate. Assume zero issuance cost. The issue matures in five years. The current one-year Treasury bill rate is 9%, and the forecast one-year rates over the next four years are 9.25%, 9.5%, 9.75%, and 10%. The coupon equals the beginning-of-period Treasury rate plus 100 basis points. There is no sinking fund.
a. Project the debt service payment stream.
b. Calculate the pretax cost of debt.
c. Calculate the after-tax cost of debt, assuming a 34% tax rate.
Are the required return of ordinary share in its equation after corporate tax and personal income tax?
4. Planet & Son (PS) is expected to earn $7.87 per share next year. If the average P/E ratio of firms in PS's industry is 17.5 based on forecast earnings, what market price should we expect for PS? Show Work
Assume the consumption of electricity is increasing at 4% per year. If it continues to increase at this rate indefinitely, find the number of years before.
Embassy Publishing Company received a six-chapter manuscript for a new college textbook. The editor of the college division is familiar with the manuscript.
which are currently earning 6% after taxes. Identify the cash flows, their timing, and the required return applicable to valuing the car. What is the maximum price you would be willing to pay to acquire the car? Explain.
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting.
As a retirement plan specialist in a financial planning firm you are approached by companies (or business owners) for recommendations in selecting a retirement.
Suppose that the CAPM is a good description of stock price returns. The market expected return is 7% with 10% volatility and the risk-free rate is 3 percent.
What steps can be taken to force a party to respond to interrogatories?
Why is it useful to transform the counts in a crosstabs to percentages of row or column totals? Once you do this, how can you tell if the variables are related?
Calculate the NPV and the IRR for Project X using a 12% cost of capital and show your work by using TWO of the methods
You decide to deposit 1,981.94 dollars in an account that earns 3 percent annual interest (compounded annually). How much is in the account 35 years from now?
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