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Your state is considering putting in a toll road and issuing a revenue bond to fund it. Your state currently has a AAA rating and your research shows that similar state bonds are paying a 4% coupon rate.
The toll road is estimated to require a 2-million-dollar investment upfront and an additional $100,000 every other year in maintenance fees but it should generate $200,000 in revenues for at least 10 years.
Would you recommend using the NPV or IRR methodology to evaluate this project? Why?
Assuming that the only relevant opportunity cost of capital is the 4% coupon on the bond issue, use your chosen methodology to evaluate and make a recommendation on the project.
Why is assumption in b potentially problematic?
Do you see an opportunity? How would you exploit it? How much would you make on this trade?
What is the current (time 0) value of a share of Highland stock?- What value would you project for a share of stock at the beginning of year 3?
Lcorp has a $11.9 million debt issue outstanding, with a 5.9% coupon rate. The debt has semi annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 94% of par value. If Lcorp faces a 40% ta..
Fernardo bank has interest expense of 150 million, earning assets of 1,400 million and a net interest margin of 5.00%. The bank also has interest bearing liabilities of 1,100 million. what is Fernando Bank spread?
Calculate budgeted labor cost for an engine design which Pohlman has built before
Preferred stock dividends:
What is the new yield to maturity on the bond? What is your rate of return over the year?
Parry Electronics is a regional electronics wholesales and distributor that earned $1,250,000 in EBITDA this year based on revenues of $4,000,000. The enterprise values of publicly traded firms that operate in the same industry currently are valued a..
Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR).
What additional information would you like to have if you were the team leader of this department's cost improvement team?
Schultz Industries is considering the purchase of Arras Manufacturing. What is the maximum price per share Schultz should pay for Arras?
A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is expected to grow at a 5% annual rate. The return on equity for similar stocks is 12%. What is P0?
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