What is the operating cash flow or ocf

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1. Likeline, Inc., has sales of $445,000, costs of $173,000, depreciation expense of $72,000, interest expense of $36,000, and a tax rate of 35 percent. What is their net income?

2. Hammett, Inc. has sales of $19,570, costs of $9,460, depreciation expense of $2,130, and interest expense of $1,620. If the tax rate is 35 percent, what is the operating cash flow, or OCF? (Show your work.)

3. App Co. issued 15-year, $1,000 bonds at a coupon rate of 6 percent. The bonds make annual payments. If the YTM on these bonds is 5 percent, what is the current bond price?

4. Seventeenth Bank has an issue of 9% preferred stock with a $100.00 par value that just sold for $119 per share. What is the bank's cost of preferred stock? (Show your work and round your answer to two decimal places.

5. You own a portfolio that has $1,500 invested in Stock A and $2,600 invested in Stock B. If the expected returns on these stocks are 10 percent and 16 percent, respectively, what is the expected return on the portfolio? (Show your work.)

6. A stock has a beta of 1.25, the expected return on the market is 12 percent, and the risk-free rate is 2 percent. What must the expected return on this stock be? (Show your work.)

7. Suppose Tom, Ltd. just issued a dividend of $2.00 per share on its common stock. The company's dividends have been growing at a rate of 7%. If the stock currently sells for $50.00, what is your best estimate of the company's cost of equity? (Show your work.)

8. Given the following information, calculate the weighted average cost for the Han Corp.

Percent of capital structure:
Preferred stock 10%
Common equity 60%
Debt 30%

Additional information:
Corporate tax rate 34%
Dividend, preferred $9.00
Dividend, expected common $3.50
Price, preferred $102.00
Growth rate 6%
Bond yield 10%
Flotation cost, preferred $3.20
Price, common $70.00

Reference no: EM131319344

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