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The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is show here;
Stock price $73Number of shares 45,000Total Assets $6,500,000Total Liabilities $2,600,000Net Income $630,000
MHMM is considering an investment that has the same PE ratio as the firm. The cost if the investment is $1,100,000 and it will be financed with a new equity issue. The return on the investment will equal MHMM's current ROE. What will happen to the book value per share, the market value per share, and the EPS? WHat is the NPV of this investment? Does dilution take place?
What does the profitability index measure? How would you state the profitability index rule?
The expected return on the Market Portfolio M is E(rM)=15%, the standard deviation is ?M=25% and the risk-free rate is rf=5%. The CAPM is assumed to hold.
Explain whether you would view their products or services as commodities and define your reasoning
The machine would have no effect on the firm's sales or revenues, but it is expected to save Kidd $20,000 per year in before-tax operating costs. The standard risk adjustment is 4 percentage points and its corporate cost of capital is 10 percent.
Suppose your hurdle rate is 15 percent. The first project is a seven year project with an expected IRR of 15.2% and the second project is a five year project with an IRR 15.3 percent.
If a similar US dollar denominated bond yielded 6.0%, which bond has the higher yield after inflation? Is the difference less than .2%? Assume the current spot is $1.2200/E and one-year forward is $1.2450/E. Show work.
1. A 20-year bond comes with 25 warrants attached. Each warrant has a strike price (also called an exercise price) of $15 and 10 years until expiration. Each warrant's value is estimated to be $8. The cost of debt for a 20-year annual payment bond wi..
During the last year, Delta Co had Net Income of $159, paid $15 in dividends, and sold new stock for $30. Beginning equity for the year was $670. What was the ending equity?
Given the following information, calculate the theoretical intrinsic value of the Call option using the Black Scholes Model. IF the market price for the Call option = $11, should the investor buy?
Computation and explain the arbitrage opportunity and what would you do as an arbitrager and when would you stop doing it
Which of the following statements concerning the asymmetric information theory of capital structure is false?
Capital Expenditure Budget
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