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A company has a single zero coupon bond outstanding which matures in 10 years with a face value of $15 million. The current value of the company’s assets is $13.2 million, and the standard deviation of the return on the firm’s assets is 47 percent per year. The risk-free rate is 6 percent per year, compounded continuously. a. What is the current market value of the company’s equity? b. What is the current market value of the company’s debt? c. What is the company’s continuously compounded cost of debt? d. The company has a new project available. The project has an NPV of $1.8 million. If the company undertakes the project, what will be the new market value of equity? Assume volatility is unchanged.
How does portfolio analysis impact its decision making? Why do higher interest rates lead to higher call price but lower put prices?
Metropolis Health System (MHS) uses a basic work week of 40 hours throughout the sys- tem. Thus, one full-time employee works 40 hours per week. MHS also uses a standard 24-hour scheduling system of three 8-hour shifts. Set up a staffing requirements..
what was the addition to net working capital (NWC)?
calculate the price if the bond will be called at the 5th year.
Cody Degrott is planning to retire and she currently has $500,000 in her retirement fund.
Describe the externalities argument for distributing money from one community to another.- Provide an example of this kind of redistribution based on externalities.
What is the total return of your stock investment? What is the total dollar return on your investment?
We have a 12% 20 year bond, which we buy when the ytm is 10%. We intend to sell it in 2 years at which time required rates are 8%. Derive the price of the bond.
Winnebagel Corp. currently sells 35,000 motor homes per year at $73,000 each, and 14,500 luxury motor coaches per year at $110,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 30,000 of the..
Are all of the items listed below reasons why having a will is important? Which items will go through probate? Which property ownership could he sell without the consent of a co-owner?
Dan and Mary Green are in their mid-30s and have two children, ages 8 and 5. They have combined annual income of $95,000 and own a house in joint tenancy with a market value of $310,000, on which they have a mortgage of $250,000.
A savings institution (SI) has funded $12 million of 30-year fixed-rate mortgages with an average interest rate of 5.75%. These assets are funded with time deposits with an average maturity of six months. The deposits are currently paying 3.50%. In s..
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