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You work for a pharmaceutical company that has developed a new drug. the patent of the drug will last 17 years. You expect that the drugs profits will $5 million dollars in its first year and that this amount will grow at a rate of 2% per year for the next 17 years. Once the patent expires, other pharmaeutical companies will be able to produce the same drug and competiton will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year?
You can solve for this in Excel if you wish, but you must also explain in words or with a mathematical formula how you arrived at the result.
Suppose that Wal-Mart changes its capital structure so that its market value weight of debt to capital increases to 20 percent, and its after-tax interest rate on debt at this new leverage level is 4 percent.
Explain how the Wal-Mart outlets in China would use the spot market in foreign exchange. Explain how Wal-Mart might utilize the international money markets when it is establishing other Wal-Mart stores in Asia.
If you would be index funds, which ones? How about foreign investments?
This investment will cost the company $1,000,000 today (initial outlay). We assume that the firm's cost of capital is 7.8%.
What are some considerations for companies in choosing which marketable securities to invest idle cash balances?
What if interest rates on the 10 percent loan go up to 15 % in the second year and 18% in the third year? What would be the total interest cost compared to the 12%, three year loan?
How do dividends impact the value of a share of stock? Are there any instances in which companies should not pay dividends?
Perctange Capital Gain in each year for teh first year that you held the stock, for the second year that you held the stock, and for the third year that you held the stock. If you sold the shares today, what is your total return earned for the ful..
Most qualified plan sponsors seek an advance determination letter from the IRS stating that the plan provisions meet Code requirements.
There is a fixed dividend of $6 per share. With the passage of time, yields have soared from the original 6 percent to 14 percent:
Fleury Co. has a 32 percent tax rate. Its total interest payment for the year just ended was $33.2 million.
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