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OMG Inc. has 5 million shares of common stock outstanding, 4 million shares of preferred stock outstanding, and 6,000 bonds. Suppose the common shares sell for $20 per share, the preferred shares sell for $19 per share, and the bonds sell for 109 percent of par.
What weight should you use for preferred stock in the computation of OMG’s WACC? (Round your answer to 2 decimal places.)
Weight used %
B7530- Describe the managerial problems or opportunities each of the three topics address? Provide a short description for each research topic, highlighting the problem or opportunity in organizations that needs to be addressed
If the company has 40 million shares outstanding and pays dividends quarterly, what is the company's nominal dividend payment per share each quarter?
A father wants to set up a bank acount that will pay his daughter $18,000 at the end-of-quarter (EOQ) 4 and $32,000 at EOQ 8. He will fund this account by making quarterly payments of $x from the present (time zero) through EOQ 7. a) Draw a cash-flow..
A bondholder owns 15-year government bonds with a $5 million face value and a 6 percent coupon that is paid annually. The bonds are currently priced at $550,018.73 with a yield of 5.034 percent. The bonds have a duration of 10.53 years. If interest r..
Explain how an option’s delta/gamma and a bond’s duration/convexity are similar. Suppose you own an American call option on a stock that does not pay common dividends. The call option has one month until expiration. Under what circumstances would you..
Chapman, Inc.'s Mexican subsidiary, V. Gomez Corporation, is expected to pay to Chapman 4 pesos in dividends in 1 year after all foreign and U.S. taxes have been subtracted. The exchange rate in 1 year is expected to be $0.07 per peso. What is the pr..
Derive the functional relationship between the no arbitrage values of the two vertical spreads, C(K1)-C(K2) and C(K2)-C(K3)?
Compare your completed ratios to the industry average chart. Evaluate in 175 words which company, of the two you have researched, is doing better.
Gamer Co. has no debt. Its cost of capital is 10.4 percent. Suppose the company converts to a debt–equity ratio of 1. The interest rate on the debt is 7.5 percent. Ignore taxes for this problem. What is the company’s new cost of equity? What is WACC?
You own a portfolio equally invested in a risk-free asset and a risky stock. If the beta (B) of the overall portfolio...… what is the beta for the risky stock in your portfolio?
Suppose 1-year T-bills currently yield 6.00% and the future inflation rate is expected to be constant at 2.95% per year. What is the real risk-free rate of return, r*?
external environmental scannbspin order to develop effective strategies it is critical to understand the marketplace
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