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Ten Pins Manufacturing has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 5 percent and sells for 95 percent of par. The second issue has a face value of $40 million and a coupon rate of 6 percent and sells for 104 percent of par. The first issue matures in 20 years, the second in 4 years. a. What are the company’s capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) b. What are the company’s capital structure weights on a market value basis?
The Sampsons learn that many corporate bonds have recently been downgraded due to questionable financial statements. - Explain the possible impact of a downgrade of the corporate bond to the Sampsons, given their financial goals.
What impact does asymmetric information have on the optimal level of leverage? In your answer, be sure to describe the implications of adverse selection and the lemons principle for equity issuance, as well as the empirical implications.
Which of the following would most likely be considered nonoperating income (versus operating income) on the income statement of a healthcare organization?
Mr. Sampson will receive $6,500 a year for the next 14 years from his trust. If an 8 percent interest rate is appropriate: What is the current value of the future payments? What is the current value, if they are received at the beginning of each year..
A stock has a beta of .6 and an expected return of 10 percent. A risk-free asset currently earns 4.1 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has an expected r..
A 10-year ordinary annuity that provides a return of 7% has a present value of $15,000. What are the annual annuity payments?
A put option has an exercise price of $40 and the put premium is $5. Is the option in the money or out of the money?
Diddy Corp. stock has a beta of 1.2, the current risk-free rate is 6 percent, What is Diddy’s cost of equity?
how much money can he borrow from the bank on the basis of this information?
Bond rating agencies have invested significant sums of money in an effort to determine which quantitative and nonquantitative factors best predict bond defaults
First, to focus more on the relationship between debt and the cost of capital, can you or anyone else provide an example in which changes in leverage would not affect the cost of capital, and subsequently the viability of future projects and investme..
Calculate the value of delta if the value in each of the above accounts is equal after 7.25 years.
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