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1. The Lenzie Corporation’s common stock has a beta of 1.6. If the risk-free rate is 5.6 percent and the expected return on the market is 10 percent, what is the company’s cost of equity capital?
2. Soprano's Spaghetti Factory issued 25-year bonds two years ago at a coupon rate of 7.5 percent. If these bonds currently sell for 108 percent of par value, what is the YTM? What is the current yield? What is the capital gains yield? Assume semi-annual compounding.
3. XYZ, inc. operates in a country whose risk-free rate is 2.45%. The expected return of the market in the country is 8.20 % and The company has a beta of 1.06. The company has a $10M Bank loan with an interest rate of 7% and a $12M line of credit at 14%. The total equity of the company is valued at $15M. The company’s corporate tax rate is 35%.What is the firms WACC?
A firm has total debt of $1,540 and a debt-equity ratio of 0.39. What is the value of the total assets?
If 10 year T-bonds have a yield of 6.0%, 10 year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1,3% and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default ris..
What can you learn from Starbucks financial statements and performance about determining the overall health of companies?
The ABC Corp. has a stated policy of distributing 40% of its annual profits to its shareholders as an annual dividend payment. Historically, ABC has produced a return on equity of 18%, and it is presumed that this level will be maintained for the for..
Rodney Murdock just began operating his own business, the Murdock Construction Company. Murdock obtained $50 million of equity capital from friends and relatives by selling them an aggregate of 100,000 shares of stock. what should be the value of eac..
You have $250,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 13.88 percent. What is the beta of your portfolio?
What does it mean if a company has a total debt to equity ratio of 62.96 while the industry and sector ratios are 122.21 and 67.70? How are they performing against the industry and sector? Why are they performing as such?
Capital stock is a part of which of the following accounts?
Using an internal rate of return approach, determine the maximum amount Fabco should be willing to pay for the valves.
What is your estimate of the stock's current price?
If the risk-free rate is 5.0 percent and the market risk premium is 7.4 percent, what are the reward-to-risk ratios of Y and Z?
Credit Policy Evaluation The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Calculate the NPV of the decision to change credit policies.
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