k=10 n=7 A=2000 PV of annuity=?
project s costs 15000 and is expected to produce benefits(cash flows)of 4500 per year for five years.project l costs 37500 and is expected to produce cash flows of 11100 per year for five years. 1.calculate the NPV,IRR and traditional payback period for each project,assuming a required rate of...
Great Pumpkin Farms just paid a dividend of $3.50 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a 16 percent return on the stock for the first three years, a 14 percent return for the next three years, and an 11 percent...
Filer Manufacturing has 8.5 million shares of common stock outstanding. The current share price is $55, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $74 million, a 6 percent coupon, and sells for 90 percent...
suppose investors believe that the standard deviation
The Carter Company's bonds mature in 10 years have a par value of $1,000 and an annual coupon payment of $80. The market interest rate for the bonds is 9%. What is the price of these bonds?
1. The Lo Tech Co. just issued a dividend of $2.70 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. Required: If the stock sells for $44.50 a share, what is the company s cost of equity? 2.Bohannon...
he primary purpose of portfolio diversification is to: 1. increase returns and risks. 2. eliminate all risks. 3. eliminate asset-specific risk. 4. eliminate systematic risk. 5. lower both returns and risks
Given the following information, what is the variance for this stock? A. .016570 B. .018477 C. .020046 D. .025454 E. .027835
Lamar Lumber buys $8 million of materials (net of discounts) onterms of 3/5, net 60, and it currently pays after 5 days and takesdiscounts. Lamar plans to expand, and this will require additionalfinancing. If Lamar decides to forego discounts, how muchadditional credit could it get, and what...
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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