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1.Consider two securities that pay risk-free cash flows over the next two years and that have the current market prices shown here:
a. What is the no-arbitrage price of a security that pays cash flows of $100 in one year and $100 in two years?
b. What is the no-arbitrage price of a security that pays cash flows of $100 in one year and $500 in two years?
c. Suppose a security with cash flows of $50 in one year and $100 in two years is trading for a price of $130. What arbitrage opportunity is available?
2.Suppose a security with a risk-free cash flow of $150 in one year trades for $140 today. If there are no arbitrage opportunities, what is the current risk-free interest rate?
What is the equivalent annual cost of one these machines if the required return is 16 percent? Use depreciation using straight line to zero. Assume tax rate of 40%.
Describe a WACC and describe your reasoning within the context of the models discussed in class
The X is a standard item stocked in a Corporation inventory of component parts. Each year the Corporation, on a random basis, uses a bout 2,000 of item X, which costs $25 each.
A bond with a $114 yearly coupon, maturing in ten years at a value of $1000 has a current market price of $920. Determine the nominal yield of the bond?
In addition, the company has a second debt issue on the market, a zero coupon bond with three years left to maturity; the book value of this issue is $76 million and the bonds sell for 78 percent of par.
questions1. a very small countrys gross domestic is 12 million. a. if government expenditures amount to 7.5 million and
Explain why do corporations buy back their own stock? What does it tell you about the corporation? What effect does the purchase have on the price of a company's stock?
You are paying an effective annual rate of 12.68% on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account?
Bernie and Pam Britten are a young married couple starting careers and establishing a household. They will each make about $50,000 next year and will have accumulated about $40,000 to invest.
assume the following informationu.s. deposit rate for 1 year10u.s. borrowing rate for 1 year12new zealand deposit rate
If the stock sells for $63 per share, what is the market-to-book ratio? The price-earnings ratio? If the company had sales of $4.5 million, what is the price-sales ratio?
Find out the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in years 1-9? Find out the maximum lease payment which you would be willing to make?
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