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Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, a coupon rate of 7 percent, and sells for 94 percent of par. The second issue has a face value of $35 million, a coupon rate of 8 percent, and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years. Suppose the most recent dividend was $5.60 and the dividend growth rate is 8 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 35 percent. What is the company’s WACC?
You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $510,000 per year. Thus, in one year, you receive $1.51 million. In two years you get $2.02 million, and so on. If the appropriate intere..
Six-month T-bills have a nominal rate of 5%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 2.5%. In the spot exchange market, 1 yen equals $0.008. If interest rate parity holds, what is the 6-month forward exchange ..
The carmar company has preferred stock that is selling at $22 per share and its preferred stockholders have a required return of 14.54%. The company has common stock too and expects to pay dividends of $1.10 per share in 2016, $1.00 in 2017, zero in ..
A 7-year, $1,000 par bond has an 8% annual coupon and is currently yielding 7.5%. The bond can be called in 2 years at a call price of $1,010. What is the bond yielding, assuming it will be called (known as the yield to call)? (use annual compounding..
Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free rate is 7%. By how much does the required return on the riskier stock exceed that on the less risky stock?
Hahn’s Pianos has a profit margin of 6.95 percent on sales of $24,400,000. Assume the firm has debt of $9,600,000 and total assets of $16,200,000. What is the firm’s ROA?
Lisa Simpson wants to have $1,500,000 in 30 years by making equal annual end of the year deposits into a tax - deferred account paying 11.75 percent annually. What must Lisa's annual deposit be?
A company has target values of debt, preferred and common of $23MM, $16MM and $85MM. It has book values of debt, preferred and common of $66MM, $7MM and $18MM. It also has liquidation values of debt, preferred and common of $38MM, $19MM and $6MM. Wha..
You are given an investment to analyze. The cash flows from this investment are End of year. What is the present value of this investment if 15 percent per year is the appropriate discount rate?
ET Industries has net working capital of $12,700, current assets of $38,200, equity of $53,400, and long-term debt of $11,600. What is the amount of the net fixed assets?
A machine was purchased 5 years ago at the cost of $25000. It can be sold now for $6000. If the machine is kept for 5 more years, it is anticipated that the machine can be sold for $1000. a.) At a cost of capital of 12%, what is the present value of ..
Revco Drug Store filed for bankruptcy in July of 1988 and was one of the largest bankruptcies in US financial history as well as being one of the largest leveraged buyouts. what the costs of the Revco bankruptcy will be, and how long you expect befor..
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