QUESTION Schwartz Industry is an industrial company with 100 million shares outstanding and a market capitalization (equity value) of $4 billion. It has $2 billion of debt outstanding. Management have decided to delever the firm by issuing new equity to repay all outstanding debt. a. How many new shares must the firm issue? b. Suppose […]
QUESTION Betas and Leverage Suppose drug retailer CVS has an equity beta of 0.80 and a debt-equity ratio of 0.10. Estimate its asset beta assuming its debt beta is zero. Suppose CVS were to increase its leverage so that its debt-equity ratio was 0.50. Assuming its debt beta were still zero, what would you expect […]
QUESTION Suppose a toy manufacturer is faced with the following collection of investment projects: a. Opening a retail outlet. b. Introducing a new line of dolls. c. Introducing a new action gure in an existing line of action gures. d. Adding another packaging line to the production process. e. Adding pollution control equipment to avoid […]
QUESTION Your oldest daughter is about to start kindergarten at a private school. Tuition is $10,000 per year, payable at the beginning of the school year. You expect to keep your daughter in private school through high school. You expect tuition to increase at a rate of 5% per year over the 13 years of […]
QUESTION The all-equity financed Lasar plc has a Beta of 0.8. What rate of return should it seek on new investment: (i) with similar risk to existing activities? (ii) with 25 per cent greater risk compared to existing activities? (iii) with 25 per cent lower risk compared to existing activities? The risk-free rate of interest […]
QUESTION Your daughter is currently eight years old. You anticipate that she will be going to college in 10 years. You would like to have $100,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 3% per year, how much money do […]
QUESTION Assignments Business EthicsLP2.1 Assignment: Case AnalysisWal-MartDirectionsRead Case 3: Wal-Mart: The Future is Sustainability found within Part 5 of your textbook. At the end of the case is found three questions. Use these questions to frame a detailed response based upon the information provided in the case. This response should be one to two pages […]
QUESTION See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. Compute Mydecos PE ratio each year from 2009 to 2013. In which year was it the highest? b. What was Mydecos Enterprise Value to EBITDA ratio each year? In which year was it the highest? c. What might explain […]
QUESTION Questions 1) A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1,000 of face value that the bond will trade at if the Yield to Maturity is 7%? a) $296 b) $327 c) $362 d) $388 2) Colby bonds pay annual interest of $140. […]
QUESTION See Table 2.5 showing financial statement data and stock price data for My-deco Corp. Use the data from the balance sheet and cash flow statement in 2009 to determine the following: a. How much cash did My-deco have at the end of 2008? b. What were My-decos accounts receivable and inventory at the end […]
