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225 were interested in an interview show and a documentary, but not reruns; 30 were interested in an interview show and reruns, but not a documentary; 105 were interested in reruns but not an interview show; 180 were interested in an interview show but not a documentary; 75 were interested in...
if money is worth 13% simple interest, find the value of a debt of $1500 due in eight months with interest at 14.50% (a) today, (b) four months from now, (c) one year from now
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You have a stock mutual fund in which you put $3,000 per year. How much will you accumulate in the account in 25 years if the interest rate is 10 percent? What if they have $4,000 to deposit in the mutual fund earning 10 percent? If they add $2,000 to that account annually, how much will they...
4) Table P10.2.1 used model 10-04 to calculate the premerger stand-alone values of Dow and Union Carbide has a higher net operating margin and a higher-growth rate. Because of its higher credit rating it had a somewhat lower cost of capital. Analysts' reports predicted that the combined...
Great Pumpkin Farms (GPF) just paid a dividend of $2 on its stock. The growth rate in dividends is expected to be a constant 3 percent per year indefinitely. Investors require a 17 percent return on the stock for the first 3 years, a 12 percent return for the next 3 years, and an 8 percent return...
A firm is considering a project that will generate perpetual after-tax cash flows of $11,000 per year beginning next year. The project has the same risk as the firm's overall operations and must be financed externally. Equity flotation costs 15.0 percent and debt issues cost 4.0 percent on...
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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