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A firm has 40,000 shares whose current price is $80.75. Those stockholders expect a return of 15%. The firm has a 2-year loan of $900,000 at 6.4%. It has issues 12,500 bonds with a face value of 1000, 15 years left to maturity, semiannual compounding, a coupon interest rate of 6%, and a current price of $1090. Using market values for debt and equity, what is the firm's cost of capital:
a) before taxes?
b) After taxes with a rate of 40%?
Rasheed works for Company A, earning $350,000 in salary during 2014. Assuming he has no other sources of income, what amount of FICA tax will Rasheed pay for the year?
Suppose the A company bond paid interest semiannually. What would its value be if the yield is 12%?
What is the total asset turnover and the capital intensity?
The employs credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union inverts in risk-free securities to stabilize income. Rish-f..
Suppose we have the following returns for large-company stocks and Treasury bills over a six year period:
Discuss inflation, deflation-theories of yield curve determination. Explain TIPS (treasury inflation protected securities) and their advantages and disadvanges.
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 11 percent, and the company just paid a di..
What is the value today of $4,600 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today?
Calculate the differences in cost and risk. Explain why the costs and risks of external financing are important for the organization to understand.
Assess which cash-flow variables are the most sensitive to change and the likely impact on a firm’s valuation.
Suppose a forecasting service predicts that the one-year interest rate four years from now will be 5.00%.Based on this forecast, ascertain what the five-year spot yield must be if bond prices permit no arbitrage
What is the probability that your return on these bonds will be less than -3.7 percent in a given year?
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