8.Corporationsthatannuallyretireasetportionoftheirlongtermdebtaresaidtobeusing
indexed
bonds.
sinking
funds.
convertible
debt.
secured
debt.
1. Assume a firm with 5,000 shares outstanding earns $10 per share and has a 30%
plowback ratio. These earnings wi
Question 1
5 out of 5 points
Assume a firm with 5,000 shares outstanding earns $10 per share and has
a 30% plowback ratio. These earnings will cause retained earnings to:
Correct
Answer:
increase by
$15,000.
Question 2
5 out of 5 points
Which one of the f
Chapter 5: The Time Value of Money
5.1 The simple interest per year is:
$5,000 0.09 = $450
So, after 10 years, you will have:
$450 10 = $4,500 in interest.
The total balance will be $5,000 + 4,500 = $9,500
With compound interest, we use the future value f
Week 1
Review: Time Value of Money
Valuation of stocks and bonds
Agenda
Time value of money - review
Bonds
Price: Zeros, Coupon, Consol
YTM
Holding period return
Stocks and the dividend discount model
D / r, D / ( r-g), Two stage growth
g = ROE * re
Chapter 6: How to Value Bonds and Stocks
6.1 The price of a pure discount (zero coupon) bond is the present value of the par. Remember, even though
there are no coupon payments, the periods are semiannual to stay consistent with coupon bond payments.
So,
Global Financial Markets Financial Statement Analysis Module Developed By Ivan Brick John Longo Yaxuan Qi Department of Finance & Economics Summer, 2003 Learning Objectives To retrieve financial data from S&P's Research Insight software program. To c
Chapter 5 Residual Income Valuation Solutions
1. Yes, VIM earned a positive residual income: EBIT Interest Pretax income Tax expense Net income Equity charge 300,000 120,000 (2,000,000 6%) 180,000 72,000 108,000
= Equity capital Required return o
Chapter 2 Discounted Dividend Valuation Solutions
1. For AOL Time Warner, the required return is r = RF + [E(RM) RF] = 4.35% + 2.50(8.04%) = 4.35% + 20.10% = 24.45% For J.P. Morgan Chase, the required return is r = RF + [E(RM) RF] = 4.35% + 1.50(8
Chapter 4 Market-Based Valuation: Price Multiples Solutions
1. A. Normal EPS is the level of earnings per share that the company could currently achieve under mid-cyclical conditions. Averaging EPS over the 19972000 period, we find that ($2.55 + $2.
Chapter 3 Free Cash Flow Valuation Solutions
1. $100 increase in: A. Net income B. Cash operating expenses C. Depreciation D. Interest expense E. EBIT F. Accounts receivable G. Accounts payable H. Property, plant, and equipment I. Notes payable J. C