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You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent.
Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Share price $
If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Number of shares $
What would your cash flow be for each year for the next two years? Hint: Dividends will be in the form of an annuity. (Do not round intermediate calculations.)
Cash flow $
Company X wants to acquire another similar company. It estimates that net cash flows for the acquired company will be $8,500,000 per year for 10 years. The cost is $50,000,000. The company's cost of capital is 10 percent. Should the company go ahead ..
Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1. Ethier is financed with 55% debt and has a levered beta of 1.5. If the risk free rate is 6% and the market risk premium is 6%, how much is the additional premium that Ethier's s..
If she rebalances her portfolio to keep the same expected return but reduce her exposure to inflation to zero (i.e., bp2 = 0), what will its sensitivity to the first factor become?
Harvey Supplies Inc. has a current ratio of 4.56, a quick ratio of 1.95, and an inventory turnover ratio of 11.21. Harvey's total assets are $8,407,769 million and its debt ratio is 0.47. The firm has no long-term debt. What is Harvey's sales figur..
At beginning of year you bought 1,000 par value corporate bond with an annual coupon rate of 13%. Maturity = 15 years. expected yield to maturity is 11%. today bond sells for $1320.00. A. What did you pay for the bond? B. If you sell the bond today, ..
Rearrange the following accounts to construct a bank balance sheet for First National Bank. What are the total amounts that make the bank’s balance sheet balance?
You place an order for 390 units of inventory at a unit price of $180. The supplier offers terms of 3/15, net 60. a-1 How long do you have to pay before the account is overdue? Days until overdue days a-2 If you take the full period, how much should ..
A long forward contract on a non-dividend-paying stock was entered into some time ago. It currently has 8 months to maturity. The risk-free rate with continuous compounding is 6.6% per annum, the stock price is $39.26 and the delivery price is $30. C..
Briefly discuss the purpose and role that each the three principal types of financial institutions (depositary, contractual, and investment) play in the U.S. economy. How do each of these institutions intersect with the various types of markets,
A project has the following estimated data: price=$72 per unit; variable costs=$46 per unit; fixed costs=$21,000; required return=15 percent; initial investment =$42,000; life=six years. Ignoring the effect of taxes, what is the accounting break even..
Monte’s Coffee Company purchased packaging equipment on January 5, 2014, for $116,600. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,600. Determine the amount of depreciation ex..
You are now 25 years old and have just been sold an insurance policy with $10,000 protection on your life. The cost is $170 per year. If you live to age 65, the insurance company will pay you $20,000. Assuming you live to age 65, what portion of the ..
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