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SolutionsToReviewQuestions.docx - Final Study Guide FIN623...

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Final Study GuideFIN623 Corporate Finance1.Vps = DpsRpsVps = $10.30Vps =$33.332.Annual Dividend = $4.50 x 2 = $9.00Kp = DpVpKp = $9$60Kp = .15 =15%3.4 N32 I/YR19.25 + 170 FVPV-$62.344.P = [DO x (1+g)](r – g)P = (4 x 1.30)(.40 - .30)P =$52.005.Yr 0 = 2.00Yr 1 = 2.20Yr 2 = 2.42Yr 3 = 2.9042.904(.22 - .20) = 145.20145.20 + 2.42 = 147.620 CFj2.20 CFj147.62CFj22 I/YROrange NPV$100.98
Final Study GuideFIN623 Corporate Finance6.R = RF+ B x (RM)17.35% = 7% + b (15%)10.35% = (15%) b0.69 = b7.0.9 = (110) (0.3) + (910) b0.9 = (0.03) + (910) b0.9 – 0.03 = (910) b0.87 = (910) bb is average beta for other 9 stocksNew Beta = 0.87 + (110) (0.8) =0.958.Kp = 0.8 (13%) + 0.2 (21%) = 0.146 =14.6%bp = 0.8 (1.3) + 0.2 (2.2) =1.489.HINT:CARRY ALL DECIMAL PLACESbp = [200,000550,000] (1.8) + [250,000550,000] (2.2) + [100,000550,000]
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Term
Fall
Professor
NoProfessor
Tags
Net Present Value, Trigraph, Decimal

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