Chapter 14 Solutions

# Chapter 14 Solutions - a \$89 \$980 = 0.09082(assuming the...

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Chapter 14 Solutions 1) a. P / E = 20 (E = EPS), P=\$15 therefore \$15 / E = 20 and \$15 / 20 = E = \$0.75 b. D / \$15 = 0.05 therefore D = \$0.75 c. P / B = 1.5 B = \$15 / 1.5 = \$10 thus \$10 x 100,000 = \$1,000,000 2) \$88 / X = 0.07 = X = \$1,257 3) \$83 / X = 0.07 = X = \$1,186 4) \$88 / X = 0.096 = X = \$917 5) \$83 / X = 0.096 = X = \$865 6) 5.4 / (1 - .25) = 7.2 percent taxable 7) 5.7 / (1 - .33) = 8.51 percent taxable 8) 8.7(1-.25) = 6.53 percent tax free 9)
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Unformatted text preview: a) \$89 / \$980 = 0.09082 (assuming the purchase price of 980 is also the current price) b) \$89 / (0.09082 – 0.02) = \$1,256 c) [{89 + ((1000-980) / 20)} / (1000+980) / 2] = 90 / 990 = 0.09091 10) a) \$82 / \$1,100 = 0.07455 (assuming the purchase price of 1,100 is also the current price) b) [{82 + ((1000-1100) / 18)} / (1000+1100) / 2] = (82 – 5.56) / 1050 = 0.0728 c) \$82 / (0.07455 + 0.015) = \$915.69...
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## This note was uploaded on 08/27/2008 for the course FIN 200 taught by Professor Delcorral during the Spring '08 term at Loyola New Orleans.

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