Alex Corporation's bonds have a 10-year maturity, a 6% quarterly coupon, and a par value of $1,000. The going interest rate (rd) is 4%. What is the bond s price?
Jericho, Inc plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $50. If the required return on this stock is currently 8%, what should be the stock s market value?
Johnson Contracting has sales of $14 million per year of which 20% are cash sales. Credit sales call for payment within 30 days of invoice. Its accounts receivable are $1.5 million. What is Johnson s DSO?
Ajax, Inc. purchases $22 million of material on terms of 2/10, net 30, and it currently pays within 10 days and takes discounts. Ajax intends to expand and will need additional financing. If Ajax decides to forgo discounts, how much additional credit could it get, and what would be the nominal...
Perry Corp has a capital structure with of 30% debt, 10% preferred stock and 60% common stock. It s YTM (Rd) on debt is 10% and tax rate (T) is 40%. Preferred stock has a dividend (Dp) of $10 and Price (Pp) of $125. Common stock has a cost from retained earnings (Rs) of 15%. Calculate its WACC....
Netting Gains and Losses Trisha, whose tax rate is 35%, sells the following capital assets in 2009 with gains and losses as shown: A $15,000 15 months B 7,000 20 months C (3,000) 14 months a. Determine Trisha s increase in tax liability as a result of the three sales. All assets are stock...
Miles Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges, it had $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the...
you have just turned 30 yrs old, have just received your MBA and accepted your first job.now you must decide how much money to put into your retirement plan.the plan works as follows
10. If a country's government imposes a tariff on imported goods, that country's current account balance will likely __________ (assuming no retaliation by other governments). a. decrease b. increase c. remain unaffected d. either A or C are possible 12. The U.S. typically has a...
Corporate Finance: The Core Chapter 4: The Three Rules of Time Travel 3. Calculate the future value of $2000 in a. Five years at an interest rate of 5% per year. b. Ten years at an interest rate of 5% per year. c. Five years at an interest rate of 10% per year. d. Why is the amount...
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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