An arbitrage firm (A) notes that a bidder (B) whose stock is selling at $30 makes an offer for a target ( T) selling at $40 to exchange 1.5 shares of B for 1 share of T. Shares to T rise to $44; B stays at $30. A sells 1.5 B short for $45 and goes long on T at $44. One month later the deal is...
A ton of coffee bean has a market price of $ 1500 and would cost $25 to store foe the next 3 months.the continuously compounded risk free rate of interest has a contact value of 4% per annum.calculate the 3- month forward price for a ton of coffee.
The equity beta for National Napkin Company is 1.29. National Napkin has a debt-to equity ratio of 1.0. The expected return on the market is 13 percent. The risk-free rate is 7 percent. The cost of debt capital is 7 percent. There are no corporate taxes. (a) What is National Napkin s cost of...
Please perform a discount cash flow analysis. Please calculate the IRR and WACC of BFM before and after the acquisition.Average capital structure in industry is 30% debt/ 70% Equity. Risk free rate used should be based on yield to maturity of a 10-year us treasury bond at the time."...
Steubenville Liquidators wants to raise $6.2 million to expand their business. To accomplish this, they plan to sell 20-year, $1,000 face value, zero-coupon bonds. The bonds will be priced to yield 9.5 percent. What is the minimum number of bonds they must sell to raise the $6.2 million they need?
"An arbitrage firm (A) notes that a bidder (B) whose stock is selling at $30 makes an offer for a target (T) selling at $40 to exchange 1.5 shares of B for 1 share of T. Shares of T rise to $44; B stays at $30. A sells 1.5 B short for $45 and goes long on T at $44. One month later the...
how can the MACRS method be used to accelerate deductions? how can the "Section 179 deduction" be used to speed up deductions?
how can the MACRS method be used to accelerate deductions?
You are evaluating two different silicon wafer milling machines. the Techron I cost $290,000, has three-year life, and has pre-tax operating cost of $67,000 per year. the Techron II costs $510,000, has a five-year life, and has pre-tax operating costs of $35,000 per year. For both milling...
Thaks Rachel, but I'll just have to try it on my own. I can't afford that much. Thanks though.
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1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10