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Residual dividend model
Axel Telecommunications has a target capital structure that consists of 55% debt and 45% equity. The company anticipates that its capital budget for the upcoming year will be $5,000,000. If Axel reports net income of $2,400,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio? Round your answer to two decimal places.
Discuss the basic meanings and concepts and fundamentals of risk, return, and risk preference.
Explain the difference between a normal and a lognormal distribution as it pertains to stock prices and in same vein, explain Why is choosing an exercise price on a protective put like deciding which deductible to take on an insurance policy? Explain..
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.39 $38.6 $43.9 $52.6 $55.8 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The..
ABC Company sells 2,995 chairs a year at an average price per chair of $198. The carrying cost per unit is $27.77. The company orders 330 chairs at a time and has a fixed order cost of $31 per order. The chairs are sold out before they are restocked...
Common stock value: Constant growth The common stock of Denis and Denis
Matt operates a sole proprietorship and files his return on a calendar year basis. He took out a fire insurance policy for his business effective July 1, year 1, and paid a premium of 3,600 for 4 years. Matt reports his income and expenses on a cash ..
Over the period of 1926-2014, which one of the following investment classes had the highest volatility of returns?
The Mann Company belongs to a risk class for which the appropriate discount rate is 13 percent. Mann currently has 228,000 outstanding shares selling at $126 each. What will be the price of the stock on the ex-dividend date if the dividend is declare..
Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the perc..
The James Company has issued bonds that have a 6.75% coupon rate and a par value of $1,000. The coupon amount is payable annually in arrears. The bonds mature 17 years from now. If the bonds’ yield-to-maturity is 7.15%, what is the current market pri..
You buy a bond for $994 that has a coupon rate of 6.1% and a 5-year maturity. A year later, the bond price is $1,184. What is the new yield to maturity on the bond? What is your rate of return over the year?
Select a portfolio of common stocks in five companies whose stock is traded on the New York Stock Exchange (NYSE). Base your selection of stocks on your own personal willingness to take risks. Look up the beta of each company. Using equal weights, co..
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