1)KMW Inc plans to pay a dividend of $0.50 per share both 3 and 6 months from today.KMW's share price today is $ 36 and the continuously compounded interest rate is 1.5%.What is the price of a 6 month prepaid forward contract,which expires immediately after the second dividend? 2)The S...
1. Aviva (USA) is considering opening a factory in Hungary. The following data are given. a) The initial investment is 2.5 billion Forint. b) Current exchange rate (forint/$) = 2150. The spot rate is expected to move according to the PPP between the U.S. and Hungary. U.S. and Hungarian...
Why is net income an unreliable indicator of a health care organization s cash position?
"1. Assess the structural characteristics of the American financial system, including both institutions and markets, that lead to its efficiency and effectiveness. 2. Describe and evaluate the functions of financial markets. Provide an example of the functions of the Bond Market, the...
Currently a firm has $1 million in 10% debt. The firm also has 50,000 shares outstanding that sell for $40 each. The firm used the $1.0 million to repurchase stock, as they previously were an all equity firm. Three states of the economy are possible: a slump under which the firm would have...
Your firm is financed with common stock, preferred stock, and debt. You currently have 32,000 shares of common stock outstanding with a market price of $36.00. Value line has published your firm s = 1.05. The past 6 years of dividends, 2010 2005 are listed as, $2.05, $1.99, $1.73,...
. An investment today of $25,000 promises to return $10,000 annually for the next three years. What is the approximate real rate of return on this investment if inflation averages 6% annually during the period?
Simon Fixtures Corp. is expected to pay $2.00 per share in dividends at the end of the next 12 months. The growth rate in dividends is expected to be constant at 8% per year. If the stock is selling for $50 per share, what is the required rate of return?
Caculate the expected return, variance, and standard deviations for investments in either stock A or stock B, an equally weighted portfolio of both, and a portfolio of 75% A and 25% B. Explain which investment you recommend and why. (Please see attachment for more info on the question)
Real Options in a Technology Firm Your firm has completed an analysis of its e-commerce business. Based on the findings of your evaluation team, a proposal has been developed to partner with an Internet startup as a basis for creating value for the firm (i.e., the potential of the complementary...
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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