Value of share of stock is the present future cash flows

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Reference no: EM132005686

1. Explain how currency undervaluation influences the amount of FDI flowing into an economy.

2. Tangshan Mining is considering issuing long−term debt. The debt would have a 30 year maturity and a 12 percent coupon rate and make semiannual coupon payments. In order to sell the? issue, the bonds must be underpriced at a discount of 2.5 percent of face value. In? addition, the firm would have to pay flotation costs of 2.5 percent of face value. The? firm's tax rate is 33 percent. Given this? information, the after−tax cost of debt for Tangshan Mining would be? ________.

a. 4.98%

b. 12.76%

c. 8.48%

d. 6.38%

3. The free cash flow valuation model is based on the same principle as dividend valuation? models; that? is, the value of a share of stock is the present value of future cash flows.

a. true

b. false

Reference no: EM132005686

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