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In mid-2015, Qualcomm Inc. had $11 billion in debt, total equity capitalization of $87 billion, and an equity beta of 1.32 (as reported on Yahoo Finance). Included in Qualcomm's assets was $22 billion in cash and risk-free securities. Assume that the risk-free rate of interest is 2.9% and the market risk premium is 4.1%.
a. What is Qualcomm's enterprise value?
b. What is the beta of Qualcomm's business assets?
c. What is Qualcomm's WACC?
Suppose a particular investment project will require an initial cash outlay of $905,000 and will generate a cash inflow of $472,000 in each of the next three years. What is the project’s IRR? Suppose a company’s hurdle rate is 18%, should it accept t..
Muture fund needs to pay a load. In order to earn back a load of 5%, the fund would have to pay on average, year in and year out for over 5 years, more than a 1% higher return than a similar no-load fund. Using the Arbitrage Theory to explain why you..
The Dunning Co. needs to raise $66.9 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $69 per share and the company’s underwriters ..
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 2.8 percent per year, compounded monthly for the first six months, increasing thereafter to 17 percent compounded monthly.
What is the expectations trap? If people thought that the central bank was likely to raise the inflation rate to 3 percent from 2 percent, how might that lead to an expectations trap?
You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.53 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?
The Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley Act) basically repealed the Glass-Steagall Act of 1933. Do you believe the passage of this Act was beneficial for the banking industry, or will it be a detriment to the industry in ..
The Claxton Company manufactures children's toys and also has a division that makes automobile parts. Due to a change in its strategic focus, the company sold the automobile parts division. The division qualifies as a component of the entity accordin..
There is a stock, which will not pay dividends for 5 years. In year 6 it starts paying $2 annually for 4 years. After that time, it will increase its dividend by 3% yearly, and it expects to do that for 200 years. If you know, the risk premium is 7%,..
What is the project's adjusted present value? This is all the information provided in the text.
A sporting goods manufacturer has decided to expand into a related business. Management estimates that to build and staff a facility of the desired size and to attain capacity operations would cost $430 million in present value terms. What is the max..
If the average rate of inflation over the 70-year period has been 3%, what has been the average yearly rate of appreciation, adjusted for inflation?
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