Qsimple inc has one real asset valued at 300 million and

Assignment Help Business Economics

Reference no: EM13355264

Q. Simple, Inc. has one real asset, valued at $300 million, and one outstanding bond issue, having a total face value of $100 million and a coupon rate of 5%. Interest is paid annually, and the bond issue matures in six years. Simple will issue no new bonds after the issue matures. Simple stock currently trades at $20 per share and it will pay a dividend of $1.15 per share in the coming year. Simple faces a tax rate of 35%.

a. Assume the bond issue currently trades at $95 million. Compute the yield to maturity to the nearest percentage point.

b. Assume the risk free rate is 3%, the market risk premium is 7% and the beta of Simple's real asset is 1.2. Use CAPM to approximate the OCC of Simple's real assets.

c. Compute Simple's market value, return on equity and CCC.

d. Approximate Simple's share price one year from now.

Reference no: EM13355264

Questions Cloud

Question 1 -nbspblueberry corp used to be a leading : question 1 -nbspblueberry corp used to be a leading smartphones maker it is not the leader anymore. in recent years is

Qsuppose if the spot rate for won is 800 won equals 1 us : q. suppose if the spot rate for won is 800 won equals 1 us also yearly interest rate on fixed rate 1 year deposits of

Q1 as the ending of month approaches you realize that you : q1. as the ending of month approaches you realize that you perhaps will not be able to pay the next months rent.

Qqhere is my question i need help with monopoly in the : qq.here is my question i need help with monopoly in the market for news. the cnn is considering offering articles to

Qsimple inc has one real asset valued at 300 million and : q.simple inc. has one real asset valued at 300 million and one outstanding bond issue having a total face value of 100

Q1 1 at point e in figure 84b is mp kr greater or less than : q1. 1. at point e in figure 8.4b is mp kr greater or less than mp lw? 2. explain how do you know? 3. use this

787b stimulus bill approvedwashington-less than one month : 787b stimulus bill approvedwashington-less than one month after president obama took office congress last night passed

Q pickles at the sour pickles ranch are picked either by : q. pickles at the sour pickles ranch are picked either by labor or by a machine. labor can be obtained very cheaply -

Qremington inc purchases a machine that costs 700000 and : q.remington inc. purchases a machine that costs 700000 and has an approximate d useful life of 10 years a macrs

User Account

All Pages