QUESTION 1. Lee Manufacturings value of operations is equal to $900 million after a recaptitalization (the firm had no debt before the recap). Lee raised $300 million in new debt and used this to buy back stock. Lee had no short-term investments before or after the recap. After the recap, wd = 1/3. The firm […]
Date: September 2nd, 2020
QUESTION The required rate of return calculation has an enormous effect on the stocks price using these types of models. If we assume that Nations Banks required rate of return on its common stock is 12% instead of 13%, what would the Gordon Growth Model Stock Growth Price yieldP0 = FV(1 + i) / kj […]
Date: September 2nd, 2020
QUESTION W.C. Cycling had $55,000 in cash at year-end 2007 and $25,000 in cash at year end 2008. Cash flow from long-term investing activities totaled -$250,000, and cash flow from financing totaled +$170,000If accruals increased by$25,000, receivables and inventories increased by $100,000, and depreciation If we assume cash flow from operating activities was 50,000 as […]
Date: September 2nd, 2020
QUESTION Financial Statement PepsiCo PepsiCo PepsiCo PepsiCoInformation (in millions) $2,004 $2,003 $2,004 $2,003Current Assets $8,630 $6,930 $12,094 $8,396Total Assets $27,987 $25,327 $9,306 $8,860Current Liabilities $6,752 $6,415 $10,971 $7,886Total Liabilities $14,484 $13,453 $15,392 $13,252Compute the ra (since everything is listed as Pepsi, I dont know which is which) Current ratio = current assets/current liabilites A. For […]
Date: September 2nd, 2020
QUESTION Famas Llamas has a weighted average cost of capital of 9.8 percent. The companys cost of equity is 15 percent, and its cost of debt is 7.5 percent. The tax rate is 35 percent. What is Famas debt-quity ratio? Weighted Average Cost of Capital (WACC)=9.8% Cost of Equity(Ke)=15% Cost of Debt(Kd)=7.5% Tax Rate (T)=35% […]
Date: September 2nd, 2020
QUESTION Lynn Jones is financing $69,700 for a home at 7% interest with a 17-year fixed-rate loan.Find the interest paid and principal paid for each of the first two months of the loan and find the principal owed at the end of he second month.interest paid the 1st month = $interest paid the 2nd month […]
Date: September 2nd, 2020
QUESTION It is now December 31, 2008 (t = 0), and a jury just found in favor of a woman who sued the city for injuries sustained in a January 2007 accident. She requested recovery of lost wages, plus $400,000 for pain and suffering, plus $80,000 for her legal expenses. Her doctor testified that she […]
Date: September 2nd, 2020
QUESTION 1. if a security is underpriced (i.e., intrinsic value > price), then what is the relationship between its market capitalization rate and its expected rate of return2. Why do you think the most actively traded options tend to be the ones that are near the money 1. if a security is underpriced (i.e., intrinsic […]
Date: September 2nd, 2020
QUESTION Your client is 20 years old, and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $11,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future.If […]
Date: September 2nd, 2020
QUESTION What is the weighted average cost of debt for Dell using the market value weights? Note you can get the market prices for all debts in the same webpage above, and can adjust the book value of each debt by its market price, for example if the book value of one debt is $1000, […]
Date: September 2nd, 2020
