corporate+finance - 1. Thirsty Cactus Corp. just paid a...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Thirsty Cactus Corp. just paid a dividend of $1.30 per share. The dividends are expected to grow at 35 percent for the next 7 years and then level off to a 9 percent growth rate indefinitely. If the required return is 15 percent, what is the price of the stock today? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16)) 2. Ashes Divide Corporation has bonds on the market with 20 years to maturity, a YTM of 11.2 percent, and a current price of $1,015.84. The bonds make semiannual payments. The coupon rate on these bonds must be percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) 3. You are considering a new product launch. The project will cost $520,000, have a 4-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 220 units per year; price per unit will be $20,000, variable cost per unit will be $12,000, and fixed costs will be $104,000 per year. The required return on the project is 16 percent, and the relevant tax rate is 38 percent. Required:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/29/2011 for the course ACCOUNTS 100 taught by Professor James during the Spring '11 term at UMass (Amherst).

Page1 / 2

corporate+finance - 1. Thirsty Cactus Corp. just paid a...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online