QUESTION You purchase 1000 shares of Spears Grinders, Inc. stock for $45 per share. A year later, the stock pays a dividend of $1.25 per share and it sells for $49.a) calculate your total dollar return.b) Calculate your total percentage return.C) do the answers to (a) and (b) depend on whether you sell the s […]
Date: September 2nd, 2020
QUESTION Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent projects should Tapley accept, assuming that the company uses the NPV method when choosing projects?Answer a.Project A, wh 13) Option (b), should be chosen. (for positive NPV, […]
Date: September 2nd, 2020
QUESTION Retirement Planning InfoAn individual is currently 30 years old and she is planning her financial needs upon retirement. She will retire at age 65 (exactly 35 years from now) and she plans on funding 20 years of retirement with her investments. Ignore any social security payments and ignore any taxe This question has 3 […]
Date: September 2nd, 2020
QUESTION Kedia Inc. forecasts a negative free cash flow for the coming year, FCF1 = -10 million, but it expects positive numbers thereafter, with FCF2= $14 million. After year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14.0%, what is the firms […]
Date: September 2nd, 2020
QUESTION A zero coupon bond matures in 5 years. The market interest for the bond is 10%.What will be the price of the zero? Calculating the price of the Zero-coupon bond using excel sheet:We know that for Zero coupon bond, there will be no coupon payments.Therefore, the coupon payment is zero.According to the given information,Number […]
Date: September 2nd, 2020
QUESTION A company is going to issue a $1,000 par value bond which pays 8% in annual interest. The company expects investors to pay $910 for the 20-year bond. The expected flotation cost per bond is $42. What is the firms cost of debt in this example? (Assume a 34% tax rate.) Face value = […]
Date: September 2nd, 2020
QUESTION a) Suppose you have three personal loans outstanding to your friend Elizabeth. A payment of $1,000 is due today, a $1,500 payment is due one year from now, and a $2,500 payment is due two years from now. You would like to consolidate the three loans into one, with 36 equal monthly payments, beginnin […]
Date: September 2nd, 2020
QUESTION How do you calculate the total market value of debt? The simple formula to calculate Market Value added is Market Value added = Market Value Capital Capital Invested. This value is the difference between the current market value of a company and the capital given by investors; this includes both shareholders and bondholders. If […]
Date: September 2nd, 2020
QUESTION Based on the corporate valuation model, the value of a companys operations is $1,200 million. The companys balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 Total Market Value = Total value of operation […]
Date: September 2nd, 2020
QUESTION The buzz campus eatery offers a specific type of biscuits for $1.5 each from 8am to 3pm. The biscuits are ordered from a supplier at the start of each day and delivered before the store opens. The supplier charges 75 cents per biscuit. If, at 3pm, some biscuits are left, the buzz people mark […]
Date: September 2nd, 2020
