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1.A stock pays no dividends for the first 2 years and then pays a dividend of $2/share for ever. Discount rate is 10%.
2. A stock pays a dividend of $0.60 the first year, $0.80 the second, and $0.90 the third. It then will pay a constant dividend of $2 for ever. Discount rate is 16%.
3. Y corp expects dividends to grow very rapidly for the next 3 years at 30%. The growth rate will then be 8%. The required rate of return is 15%. The current dividend being paid is $1.50. Find the stock price.
4. A stock pays a dividend of $0.60 the first year, $0.80 the second year, and $0.90 the third year. The dividend is then expected to grow at a constant rate of 7% forever. The discount rate is 16%. Currently the stock is selling for $10.00. Should the investors buy this stock?
A five-year, $2000.00 note bearing interest at 10% compounded annually was discounted at 12% compounded semi-annually yielding proceeds of $1900.00. How many months before the due date was the note discounted?
Jemisen's firm has expected earnings before interest and taxes of $1,400. Its unlevered cost of capital is 15 percent and its tax rate is 35 percent. The firm has debt with both a book and a face value of $2,000. This debt has a 7 percent coupon and ..
Why do banking regulations tend to encourage financial innovation? How have money market funds, junk bonds, commercial paper, and securitization tended to reduce the profitability of traditional bank lending?
VIP Chemical Industries is looking to set up a new plant and expand its operations. The company currently has an option to buy an existing building for £480,000, with the necessary equipments to operate the plant costing £320,000. Evaluate whether th..
What arbitrage opportunity is available for an investment banking firm? What is the profit on the activity?
St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are General Administration $2,000,000 Facilities 5,000,000 Financial services 3,000,000. What are the cos..
Which of the following investments will have the HIGHEST FUTURE VALUE at the end of 10 years? Assume that the effective annual rate for all investments is the same.
Lee Manufacturing's value of operations is equal to $540.00 million after a recapitalization (the firm had no debt before the recap). Lee raised $238.00 million in new debt and used this to buy back stock. Lee had no short-term investments before or ..
If the following bonds are identical except for coupon and price, what is the coupon of bond B?
7.05 percent coupon bond with 20 years left to maturity is priced to offer a 6.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent.
Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $8.50 per share and has announced that it will increase the dividend by $6.50 per share for each of the next four years, and then never pay another dividend. Require..
Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 9 percent, and T-bills are currently yielding 4.6 percent. The company’s most recent dividend was $1.80 per share, and dividends are expected to grow at an annual rate of 8 pe..
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