Solutions 5-30 & 34 - Bond M Years to maturity 20...

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Chapter 5 Question 30 Input area: Revenues $110,000,000 Initial outlay for new project $12,000,000 Outlay next year for new project $7,000,000 Perpetual profit level for new project $10,000,000 Shares outstanding 20,000,000 Required return 15% Output area: a) Cash cow company value $733,333,333 Cash cow stock price $36.67 b) PV of next year's outlay $6,086,956.52 Total PV of cash outlays $18,086,956.52 PV of earnings increase $57,971,014.49 NPVGO $39,884,057.97 c) NPVGO per share $1.99 New share price $38.66
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Chapter 5 Question 34 Input area:
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Unformatted text preview: Bond M: Years to maturity 20 Years to first round of interest payments 6 Years to second round 14 Face value $20,000 Amount of first round interest payment 1,200 Amount of second round 1,500 Bond N: Years to maturity 20 Face value $20,000 Required return on both bonds 10% Output area: Bond M: a) Present value of face value = $2,840.91 Present value of first round = 7,242 Present value of second round = 3,391.44 Current price of Bond M = $13,474.20 b) Current price of Bond N = $2,840.91...
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This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Spring '09 term at University of Maryland Baltimore.

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Solutions 5-30 & 34 - Bond M Years to maturity 20...

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