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Question: Calculating Capital Structure Weights. Liu Industrial Machines issued 175,000 zero coupon bonds four years ago. The bonds originally had 30 years to maturity with a yield to maturity of 6.1 percent. Interest rates have recently decreased, and the bonds now have a yield to maturity of 5.9 percent. If the company has a $68 million market value of equity, what weight should it use for debt when calculating the cost of capital?
The common stock currently sells for $35 per share and has a beta of 1.25. The bonds have exactly 10 years to maturity and the current annual yield to maturity (YTM) is 9%. The market risk premium for stocks is 7.6%, T-bills are yielding 4%, and c..
While the decision to use just one WACC will result in accepting more projects in the manufacturing division and fewer projects in its data processing division than if it followed the consultant's recommendation, this should not affect the firm's ..
A firms dividends have grown over the last several years. 3 years ago the firm paid a dividend of $2. Yesterday it paid a dividend of $6. What was the average annual growth rate of dividends for this firm?
Calculating the NPV in ZAR using the ZAR equivalent cost of capital according to the Fisher effect and then converting to USD at the current spot rate. Converting all cash flows from ZAR to USD at purchasing power parity forecasted exchange rates and..
1. Scenario analysis is a way of testing forecasts by changing one assumption at a time.
After collection all the information and prepares the following table - accordingly, compute the component costs of debt, preferred stock, and common stock.
A bond with a $1,000 par value has a 4 percent annual coupon rate. It will mature in 4 years, and annual coupon payments are made at the end of each year. Present annual yields on similar bonds are 3.5 percent. What should be the current price?
1. Compute the price of an American call option with strike K=110 and maturity T=.25years. 2.Compute the price of an American put option with strike K=110 and maturity T=.25years. 3. Is it ever optimal to early exercise the put option of Question 2? ..
Since the early 1980s, foreign portfolio investors have purchased a significant portion of U.S. Treasury bond issues. Discuss the short-term and long-term effects of foreigners' portfolio investment on the U.S. balance of payments.
Jasmine Scents has been given two competing offers for short-term financing. Both offers are for borrowing $15,000 for 1 year. The first offer is a discount loan at 8%; the second offer is for interest to be paid at maturity at a stated interest rate..
Firm P liqudated balance sheet below is current Fixed assets sold = 900,000.00 Current assets " = 700,000.00 Fixed assets pledge collateral all mortage bond Subordinated deben tures only note payable Trustee cost = 70,000.00 Sales current asset = 70..
How i will determine my target markets evaluation of my price and their ability to purchase it? My target market is young people between thirteen and twenty-one years old or most collage student and low income working people.
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