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Franklin Corporation has a current stock price of $23 per share and paid a dividend last year of $2.00; and, it expects that dividends, earnings and stock price to grow at the rate of 7%. In addition, Franklin has a Beta of 1.6, the expected return on the market is 13.2% and the risk free rate is 8%.
a. What is the estimated required return "r" using the dividend constant growth approach?
b. What is the estimated required return "r" using the CAPM approach?
A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. What is the current selling price for a) and b)?
If the appropriate interest rate is 7 percent, what is the present value of your winnings?
Suppose the following data for the BU Scholarship Investment Fund. The total investment in the fund is $1 million.
Based on your analysis would you recommend an individual invest in this company? What strengths do you see? What risks do you see?
Project cost $23 million, generate cash flows $14,000,000, $11,750,000 and $6350,000 over next 3 years. Cost of capital is 20%. what is internal rate of return?
Tom Co value of operations is worth $1.2B after a recapitalization. Tom raised $300M in debt to buy back stock.
Compare and contrast knowledge, skills, abilities, and other characteristics (KSAOs) and tasks, duties, and responsibilities (TDRs) as they relate to different processes of job analysis.
What is the add-on interest rate (to the nearest tenth of a percent) for a 4 year loan with monthly payments of $210 if the original amount borrowed was $7500?
A 7.5 coupon bond with 16 years left to maturity is offered for sale at $834.92. What yield to maturity is the bond offering? (assume interest payments are paid semi-annually and par value is $1,000)
Why might firms whose sales levels change drastically over time choose to use debt only sparingly in their capital structures?
When is consolidation considered inappropriate even though the parent holds a majority of the voting common shares of another firm?
The corporate tax rate is 34 percent. What is Basket Weaver's weighted average cost of capital?
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