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The management of Southern Express Corporation is considering investing 10% of all future earnings in growth. The company has a single growth opportunity that it can take either now or in one period. Although the managers do not know the return on investment with certainty, they know it is equally likely to be either 4% or 23.1% per year. In one period, they will find out which state will occur. Currently the firm pays out all earnings as a dividend of $10 million; if it does not make the investment, dividends are expected to remain at this level forever. If Southern Express undertakes the investment, the new dividend will reflect the realized return on investment and will grow at the realized rate forever. Assuming the opportunity cost of capital is 10.1%, what is the value of the company just before the current dividend is paid (the cum-dividend value)? Round your answer to two decimal places (e.g., 10.25 million).
What is the maximum price an investor should pay for the common stock of a firm that has no growth opportunities but pays an annual dividend of $1.85? The market rate of return on similar securities is 14.5 percent.
When the required rate of return on a bond equals its coupon rate, the bond will sell at its par value. When interest rates rise, bond prices on outstanding issues fall. When interest rates fall, bond prices on outstanding issues rise.
A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price?
In considering the main components of a construction budget, which costs would be expected to constitute the largest portion of a development project’s expense? The correlation between the two stocks is –.10. What is the weight of each stock in the m..
Build an amortization schedule for a loan with the following terms: $220,000 borrowed for 3 years at 15% APR compounded monthly with payments every 4 months. You may attached a spreadsheet printout or complete a table manually below.
The present value of an investment is $2,500.00 and after a period of 10 years, its future value is $6,000.00. What compound interest rate would be needed for this to occur?
Find the HPR on? Simon's portfolio during the year ended December? 31, 2017.
Dinklage Corp. has 8 million shares of common stock outstanding. calculate the cost of equity and cost of debt to get the WACC.
Cary exchanges real estate for other real estate in a qualifying like-end exchange. Carey's basis in the real estate given up is $120,000, and the property has a fair market value of of $165,000. In exchange for her property, Carey receives real esta..
What is the maximum price you will pay for a bond with a face value of $1000 and a coupon rate of 14%, paid annually, if you want a yield of 10%. Assume that bond will mature in 10 years and the first payment will be received in one year
What interest rate would the investment have to yield in order for Stanley's brother to deliver on his promise?
Several workers within State A have lodged complaints with the ILO about their right to associate and bargain collectively.
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