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The Electro-Dynamo Company (EDC) is trying to raise funds to expand its production facilities by selling bonds. The bonds have 15 years to maturity, carry a coupon of 10%, pay interest semiannually, and have a par value of $1,000. You have some excess cash that is sitting in a bank CD (that means certificate of deposit, not compact disc) which pays 6%, compounded semiannually. Assuming that the security characteristics of the bond are satisfactory, what is the maximum price you would pay for this bond?
A company calculates its discretionary financing needed and determines this amount of capital cannot be raised at a reasonable cost. Which of the following would reduce the amount of discretionary financing needed?
Sqeekers Co. issued 12-year bonds a year ago at a coupon rate of 7.8 percent. what is the current bond price?
Sorensen Systems Inc is expected to pay a $2.50 dividend at year end (D1=$2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. What is the company's WACC if all equity us..
Find the “terminal” stock price using a benchmark PE ratio.
Which of the following statements regarding arbitrage and security prices is incorrect?
If you believe that investors require a 20 percent rate of return on a stock of this risk, what price would you recommend as the IPO price for Konawalski?
what should the current rate be on 3-year Treasury securities?
The annual standard deviation of returns on Stock A's equity is 31% and the correlation coefficient of these returns, with those on the market index is 0.82. Comparable numbers of stock B are 34% and 0.64. Assume the standard deviation for the market..
What is the risk neutral probability p? What is the call price?
Your firm is considering the purchase of a new computer system. What is the NPV and should the firm make the investment in the new computer system?
Test-marketing would allow the firm to improve the product and increase the probability of success to 80%. What is the NPV of going directly to market?
The machine has a class life of seven (7) years and will be depreciated using the straight line method. Calculate the Annual Cash Flows for year 1.
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