Finance Material From Exam 3 to Final

Finance Material From Exam 3 to Final - Finance Material...

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Finance Material From Exam 3 to Final Starting 11/8 iClicker Questions: 1. Neotech Corporation’s 14 percent coupon rate, semiannual payment, 1000 par value 30-year bonds currently sell at a price of $1353.54. If its marginal tax rate is 40%, what is Neotech’s after-tax cost of debt? 5.10% 6.12% 9.8% 10.20% None of the above Enter into your TVM calculator app. PV=-1353.54, semiannual payments so P/Y=2, N=60, PMT=$70 (14% of 1000/2),FV=1000 to get i=10.20% - then 10.20%(100- 40%)=10.20%*0.60=6.12% 2. Neotech Corporation’s 14 percent coupon rate, semiannual payment, 1000 par value 30-year bonds currently sell at a price of $1000. if its marginal tax rate is 40%, what is Neotech’s after-tax cost of debt? 6.12% 8.40% 10.20% 14.00% None of the above Enter into your TVM calculator app. PV=-1000, semiannual payments so P/Y=2, N=60, PMT=$70 (14% of 1000/2),FV=1000 to get i=14.00% - then 14%(100- 40%)=14.00%*0.60=8.4% 3. Neotech Corporation’s 10 percent coupon rate, semiannual payment, 1000 par value 10-year bonds currently sell at a price of $885. if its marginal tax rate is 30%, what is Neotech’s after-tax cost of debt? 6.12% 8.40% 10.20% 14.00%
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None of the above Enter into your TVM calculator app. PV=-885, semiannual payments so P/Y=2, N=20, PMT=$50 (10% of 1000/2),FV=1000 to get i=12.00% - then 12%(100-30%)=12%*0.70=8.4% 4. Maness Corporation plans to issue some $100 par preferred stock with an 11% dividend. The stock is selling on the market for $97 and Maness must pay floatation costs of 5% of the market price. What is the cost of the preferred stock for Maness? 9.5% 10.67% 11.00% 11.94% None of the above It has to be above the 11% dividend, so the answer is D (sniff test). 97*(100- 5%)=97*0.94=92.15 then 11%/92.15=11.94% 5. Maness Corporation plans to issue some $100 par preferred stock with an 6% dividend. The stock is selling on the market for $102 and Maness must pay floatation costs of 3% of the market price. What is the cost of the preferred stock for Maness? 5.88%
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This note was uploaded on 12/12/2011 for the course FINA 363 taught by Professor Masoudie during the Fall '10 term at South Carolina.

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Finance Material From Exam 3 to Final - Finance Material...

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