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You own 2, 200 shares of stock in Avondale Corporation. You will receive a $1.40 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $48 per share. The required return on Avondale stock is 20 percent.
Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
What would your cash flow be for each year for the next two years? (Do not round intermediate calculations.)
What is the sensitivity of your base-case NPV to changes in fixed costs?
Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $12 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 16%, a before-tax cost of debt of 10%, and a tax rate of 40%. If the firm's net income is exp..
Describe how the Internal Rate of Return is calculated and describe the information this measure provides about a sequence of cash flows. What is the IRR criterion decision rule? What is the relationship between IRR and NPV and are there any situatio..
A mutual fund investment is expected to earn 8% per year for the next 25 years. If inflation will average 4% per year during this 25-year period of time, what is the compounded value (in today's dollars) of this savings vehicle when $9,000 is investe..
Using Income Statement and Balance Sheet figures for 2007, calculate the liquidity ratios and leverage ratios for the company. Show your work.
what is your net profit per share from this position?
Your firm needs a machine which costs $260,000, and requires $41,000 in maintenance for each year of its 5 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 5-year class life category. Assume a tax rate of 30% ..
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GFI manufacturers ping pong tables and has a JIT policy. Provide an example of implementation of the bottom-up approach to budgeting.
Suppose that in 2014 Julie lends Bill $1,000 to be repaid in 2015 at a nominal interest rate of 5%. Additionally, suppose Julie and Bill both expect prices to rise by 2% between 2014 and 2015. What is the ex ante real interest rate? How much money do..
You are considering an investment in 30-year bonds issued by Envision Corporation. The bonds have no special covenants. The Wall Street Journal reports that one-year T-bills are currently earning 3.25 percent. What is the inflation premium? What is ..
Assume Home Depot had a significant new television advertising campaign that was to be rolled out during the Super Bowl.
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