QUESTION 5. Respond briefly to the following statement: You say stock prices equals the present value of future dividends? That is crazy! All the investors I know are looking for capital gains6. Company A is expected to pay an end of year dividend of $5 a share. After the dividend its stock is 5. Respond […]
Date: September 2nd, 2020
QUESTION Please prepare the homework problems in the form of a Word and/or Excel file. Try to use only one file to submit your answers, if possible, and include the questions with your answers. You must show your calculations. A dermatology clinic expects to contract with an HMO for an estimated 80,000 enrol Budgeted Actual […]
Date: September 2nd, 2020
QUESTION Suppose the December CBOT Treasury bond futures contract has a quoted price of 80-07. What is the implied annual interest rate inherent in the futures contract? Assume this is a a 20 year bond with semi-annual interest payments. The face value of the bond is $1000, and the semi-annual coupon payment Current price of […]
Date: September 2nd, 2020
QUESTION 6. A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $925. If the corporation sells more bonds it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is […]
Date: September 2nd, 2020
QUESTION 6. Based on the data contained in Table A, what is the break-even point in sales dollars?TABLE AAverage selling price per unit $18.00Variable cost per unit $13.00Units sold 400,000Fixed costs $650,000Interest expense $ 50,000 (Points : 1)$2,340,000$1,850,000$1,775,500$700,0007. The final approval of 6) Break-even point in sales dollars:Average selling price per unit $18.00 Variable cost […]
Date: September 2nd, 2020
QUESTION a. 9% coupon bond, face value $20 mill, maturity 10 yrs., yield to maturity 10%, coupons paid annually.b. maturity 15%, coupon = annually, coupon rate = 10%, face value = $25 mill, issue sells for 94% of par1.what is the before tax cost of debt?2. what is the after tax cost of debt? (1) […]
Date: September 2nd, 2020
QUESTION First National Bank pays 6.2% interest compounded semiannually. Second National Bank pays 6% interest, compounded monthly. Which bank offers the higher effective annual rate? First National Bank: Annual Interest Rate = 6.2% Effective Annual Interest Rate = [1 (0.062 / 2)] 2 1 Effective Annual Interest Rae = [1 0.031] 2 1 Effective Annual […]
Date: September 2nd, 2020
QUESTION GD has a target capital structure of 40% debt and the 60% equity. The yield to maturity on the companys outstanding bonds is 9% and the companys tax rate is 40%. GDs CFO has calculated the companys WACC as 9.96%. What is the companys cost of equity capital? 9.96% = 40%*9%*60% 60% times the […]
Date: September 2nd, 2020
QUESTION Equipment basic price 70,000.00additional cost to modify 15,000.00MACRS 3 yr class .33/.45/.15/.07for sale after 3 years 30,000.00use will increase net working capital of 4,000.00save firm per year before tax 25,000.00federal +state tax 40%a. what is the net cost of the spectrometer?b. What are the Given information: Equipment basic price 70,000.00 additional cost to modify […]
Date: September 2nd, 2020
QUESTION Analyzing a Portfolio: You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 18.5 percent. If Stock X has an expected return of 17.2 percent and a beta of 1.4, and Stock Y has an expected return […]
Date: September 2nd, 2020
