Example: You may invest $100,000 today. Depending on the state of the economy, you may get one of three possible cash payoffs:
Economy Slump Normal Boom
Payoff
$80,000 110,000 140,000 Expected payoff
14. Jacks Construction Co. has 80,000 bonds outstanding that are selling at par value.
Bonds with similar characteristics are yielding 8.5%. The company also has 4 million
shares of common stock outst
BEF Fall 2014 - Midterm Number 2
Solutions
1) Which one of the following is a correct ranking of securities based on their volatility over the
period of 1926-2010? Rank from highest to lowest.
A. larg
20161231 10K FY_Taxonomy2015
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANG
ROE = PM x AT x EM
Income Statement
Equity Multiplier
Total Asset Turnover
Profit Margin
1.47
1.6
5.7
13.41
EQUITY MULTIPLIER= assets/equity
Debt-equity ratio
0.76
Return on assets
8.0%
Total Equity
$
Problem Set 5
1. ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of
$20 a share. XYZ has 2,500 shares outstanding at a price of $28 a share. XYZ is acquiring ABC
f
Problem Set 3
1. Suppose the XYZ Corporation's common stock has a beta of 0.8. If the risk -free rate is 4% and the expected
market return is 9%. What is the expected return for XYZ's common stock. (2
Problem Set 2
1. Your parents are giving you $100 a month for four years while you are in college. At a 6% discount rate, what are
these payments worth to you when you first start college?
th
2. Today
Problem Set 2 solutions
1. Your parents are giving you $100 a month for four years while you are in college. At a 6% discount rate, what are
these payments worth to you when you first start college?
A
Problem Set 1 Solution
1.Given the tax rates as shown, what is the average tax rate for a firm with taxable income of $126,500?
Tax = .15($50,000) + .25($25,000) + .34($25,000) + .39($126,500 - $100,0
ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price
of $20
a share. XYZ has 2,500 shares outstanding at a price of $28 a share. XYZ is acquiring
ABC for
$36,000 in cas
(a). Suppose a Miller equilibrium exists (V L = VU) with corporate tax rate of 30% and
personal tax rate on income from bonds of 35%. What is the personal tax rate on income
from stocks?
0 = 1-(1-0.3)
Midterm Solutions
1.
You have just made a $1,500 contribution to your individual retirement account. Assume
you earn a 12 percent rate of return and make no additional contributions. How much
more wil