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bus 320 connect homework 5 (new version sep 2013)

Question # 00001441
Subject: Business / Accounting
Due on: 09/18/2013
Posted On: 09/21/2013 01:25 AM
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neel2103
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Rest attched in the file total 34 question



1 Problem 10-2 Bond value [LO3]

Applied Software has $1,000 par value bonds outstanding at 20 percent interest. The bonds will mature in 15 years. UseAppendix BandAppendix D.

Compute the current price of the bonds if the present yield to maturity is(Round "PV Factor" to 3 decimal places, intermediate and final answers to2 decimal places. Omit the "$" sign in your response):

Price of the
bond

(a) 10 percent

$

(b) 15 percent

$

(c) 12 percent

$


2.

value:
1.00 points

Problem 10-4 Bond value [LO3]

Barry’s Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 40 years.

If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent? UseAppendix BandAppendix D.(Round intermediate calculations to 2 decimal places, "PV Factor" and final answer to 3 decimal places. Omit the "%" sign in your response.)

Principal repayment

%

3.

value:
1.00 points

Problem 10-5 Bond value [LO3]

Essex Biochemical Co. has a $1,000 par value bond outstanding that pays 19 percent annual interest. The current yield to maturity on such bonds in the market is 11 percent. UseAppendix BandAppendix D.

Compute the price of the bonds for these maturity dates(Round "PV Factor" to 3 decimal places, intermediate and final answers to 2 decimal places. Omit the "$" sign in your response):

Price of the
bond

(a) 25 years

$

(b) 15 years

$

(c) 4 years

$



rev: 04_27_2012

check my workeBook Linkr

5.

value:
1.00 points

Problem 10-11 Effect of maturity on bond price [LO3]

Refer toTable 10-2

(a)

Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 10-year, a 20-year, and a 30-year time period.(Round "PV Factor" to 3 decimal places, intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Maturity

Bond price

10 Years

$

20 years

30 years


(b)

Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 10-year, a 20-year, and a 30-year period.(Round "PV Factor" to 3 decimal places, intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Maturity

Bond price

10 Years

$

20 years

30 years


(c)

Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. If interest rates in the market are going down, which bond would you choose to own?

Longest-term bond

Shortest-term bond

(d)

Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If interest rates in the market are going up, which bond would you choose to own?

Longest-term bond

Shortest-term bond

6.

value:
1.00 points

Problem 10-13 Effect of yield to maturity on bond price [LO3]

Tom Cruise Lines, Inc., issued bonds five years ago at $1,000 per bond. These bonds had a 20-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below:

Real rate of return

4

%

Inflation premium

5

Risk premium

5



Total return

14

%






Assume that five years later the inflation premium is only 2 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 15 years remaining until maturity.

Compute the new price of the bond. UseAppendix BandAppendix D.(Round "PV Factor" to 3 decimal places, intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

New price

$


rev: 07-13-2011

7.

value:
2.00 points

Problem 10-14 Analyzing bond price changes [LO3]

(a)

Find the present value of 3 percent × $1,000 (or $30) for 15 years at 11 percent. The $30 is assumed to be an annual payment. UseAppendix D. (Round "PV Factor" to 3 decimal places, intermediate and final answerto 2 decimal places. Omit the "$" sign in your response.)

Present value

$

(b)

Add the answer obtained in partato 1,000.(Round "PV Factor" to 3 decimal places, intermediate and final answerto 2 decimal places. Omit the "$" sign in your response.)

Present value

$

8.

value:
2.00 points

Problem 10-17 Deep discount bonds [LO3]

Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 8 percent annual interest and has 17 years remaining to maturity. The current yield to maturity on similar bonds is 10 percent.

(a)

What is the current price of the bonds? UseAppendix BandAppendix D. (Round "PV Factor" to 3 decimal places, intermediate and final answers to 2 decimal places. Omit the "$" sign in your response.)

Current price

$

(b)

By what percent will the price of the bonds increase between now and maturity?(Round "PV Factor" to 3 decimal places, intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.)

Price increases by

%


rev: 07-13-2011

check my workeBook Linkreferences

9.

value:
1.00 points

Problem 10-19 Approximate yield to maturity [LO3]

Bonds issued by the Tyler Food Corporation have a par value of $1,000, are selling for $1,410, and have 20 years remaining to maturity. The annual interest payment is 20.5 percent ($205).

Compute the approximate yield to maturity.(Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Approximate yield to maturity

10.

value:
2.00 points

Problem 10-22 Bond value-semiannual analysis [LO3]

You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 11 percent, which is paid semiannually. The yield to maturity on the bonds is 14 percent annual interest. There are 20 years to maturity. UseAppendix BandAppendix D.

(a)

Compute the price of the bonds based on semiannual interest payments.(Round "PV Factor" to 3 decimal places, intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

Price of the bonds

$

(b)

With 15 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds?(Round "PV Factor" to 3 decimal places, intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

New price

$

11.

value:
1.00 points

Problem 10-24 Preferred stock value [LO4]

Bedford Mattress Company issued preferred stock many years ago. It carries a fixed dividend of $11 per share. With the passage of time, yields have gone down from the original 10 percent to 9 percent (yield is the same as required rate of return).

(a)

What was the original issue price?(Round your answer to 2 decimal places.Omit the "$" sign in your response.)

Original price

$

(b)

What is the current value of this preferred stock?(Round your answer to 2 decimal places.Omit the "$" sign in your response.)

Current value

$

12.

value:
1.00 points

Problem 10-26 Preferred stock rate of return [LO4]

Grant Hillside Homes, Inc., has preferred stock outstanding that pays an annual dividend of $10.30. Its price is $167.

What is the required rate of return (yield) on the preferred stock?(Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Rate of return

%

13.

value:
1.00 points

Problem 10-28 Common stock value [LO5]

Laser Optics will pay a common stock dividend of $3.20 at the end of the year (D1). The required rate of return on common stock (Ke) is 20 percent. The firm has a constant growth rate (g) of 10 percent.

Compute the current price of the stock (P0).(Round your answer to 2 decimal places.Omit the "$" sign in your response.)

Current price

$

14.

value:
2.00 points

Problem 10-29 Common stock value under different market conditions [LO5]

Ecology Labs, Inc., will pay a dividend of $6.80 per share in the next 12 months (D1). The required rate of return (Ke) is 15 percent and the constant growth rate is 5 percent.(Each question is independent of the others.)

(a)

Compute the price of Ecology Labs' common stock.(Round your intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

Price

$

(b)

Assume Ke, the required rate of return, goes up to 20 percent; what will be the new price?(Round your intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

New price

$

(c)

Assume the growth rate (g) goes up to 7 percent; what will be the new price? Kegoes back to its original value of 15 percent.(Round your intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

New price

$

(d)

Assume D1is $7.50; what will be the new price? Assume Keis at its original value of 15 percent and g goes back to its original value of 5 percent.(Round your intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

New price

$

15.

value:
2.00 points

Problem 10-31 Common stock value based on determining growth rate [LO5]

Justin Cement Company had the following pattern of earnings per share over the last five years:

Year

Earnings
per share

2006

$

10.00


2007


10.50


2008


11.03


2009


11.58


2010


12.16



The earnings per share have grown at a constant rate (on a rounded basis) and is expected to do so in the future. Dividends represent 40 percent of earnings.

(a)

Project earnings and dividends for the next year (2011).(Round yourintermediate and final answers to 2 decimal places. Omit the "$" sign in your response.)


2011

Earnings

$


Dividend

$



(b)

If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 2011?(Round yourintermediate and final answers to 2 decimal places. Omit the "$" sign in your response.)

Anticipated stock price

$

check my workeBook Linkreferences

16.

value:
1.00 points

Problem 10-32 Common stock required rate of return [LO5]

A firm pays a $9.80 dividend at the end of year one (D1), has a stock price of $137, and a constant growth rate (g) of 5 percent.

Compute the required rate of return (Ke).(Round yourintermediateand final answerto 2 decimal places. Omit the "%" sign in your response.)

Rate of return

%

17.

value:
4.00 points

Problem 10-35 Common stock value based on PV calculations [LO5]

Beasley Ball Bearings paid a $4 dividend last year. The dividend is expected to grow at a constant rate of 4 percent over the next four years. The required rate of return is 16 percent (this will also serve as the discount rate in this problem). UseAppendix B.

(a)

Compute the anticipated value of the dividends for the next four years.(Round your intermediate calculations and final answers to 3 decimal places. Omit the "$" sign in your response.)

Anticipated
value

D1

$

D2

$

D3

$

D4

$


(b)

Calculate the present value of each of the anticipated dividends at a discount rate of 16 percent.(Round "PV Factor", intermediate calculations and final answers to 3 decimal places. Omit the "$" sign in your response.)

PV of
dividends

D1

$


D2


D3


D4




Total

$






(c)

Compute the price of the stock at the end of the fourth year (P4).(Round "PV Factor", intermediate calculations and final answer to 3 decimal places. Omit the "$" sign in your response.)

Price of the stock

$

(d)

Calculate the present value of the year 4 stock price at a discount rate of 16 percent.(Round "PV Factor", intermediate calculations and final answer to 3 decimal places. Omit the "$" sign in your response.)

Price of the stock (discounted)

$

(e)

Compute the current value of the stock.(Round "PV Factor", intermediate calculations and final answer to 3 decimal places. Omit the "$" sign in your response.)

Current value

$

(f)

Use formula given below to show that it will provide approximately the same answer as parte.(Omit the "$" sign in your response.)

P0

=

D1

Ke? g

Current value

$

(g)

If current EPS is equal to $5.329 and the P/E ratio is 1.2 times higher than the industry average of 6, what would the stock price be?(Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Stock price

$

(h)

By what dollar amount is the stock price in partgdifferent from the stock price in partf?(Input the amount as a positive value. Round intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)

Amount

$

(i)

In regard to the stock price in partf, indicate which direction it would move if

(1)

D1increases

(2)

Keincreases

(3)

g increases


18.

value:
1.00 points

Problem 11-2 Cost of capital [LO2]

Speedy Delivery Systems can buy a piece of equipment that should provide an 6 percent return and can be financed at 3 percent with debt. The CEO likes earning more than the cost of debt, and he thinks this would be a good deal. The firm can also buy a machine that would yield a 13 percent return but would cost 15 percent to finance through common equity. Earning less than the cost of equity sounds bad to the CEO. Assume debt and common equity each represent 50 percent of the firm’s capital structure.

(a)

Compute the weighted average cost of capital.(Round your intermediate and final answers to 1 decimal place. Omit the "%" sign in your response.)

Weighted average cost of capital

%

(b)

Which project(s) should be accepted?

Piece of equipment should be financed.

New machine should be financed.

19.

value:
1.00 points

Problem 11-3 Effect of discount rate [LO2]

A brilliant young scientist is killed in a plane crash. It was anticipated that he could have earned $260,000 a year for the next 25 years. The attorney for the plaintiff’s estate argues that the lost income should be discounted back to the present at 5 percent. The lawyer for the defendant’s insurance company argues for a discount rate of 10 percent.

What is the difference between the present value of the settlement at 5 percent and 10 percent? Compute each one separately.UseAppendix D.(Round "PV Factor" to 3 decimal places. Round your answers to the nearest dollar amount. Omit the "$" sign in your response)

Present value

PV at 5% rate

$

PV at 10% rate



Difference

$






20.

value:
1.00 points

Problem 11-5 Aftertax cost of debt [LO3]

Calculate the aftertax cost of debt under each of the following conditions.(Round your answers to 2 decimal places. Omit the "%" sign in your response.)


Yield


Corporate
tax rate


Cost of debt

a.

4.0

%



10

%




%


b.

6.6

20

c.

6.0

20


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bus 320 connect homework 5 (new version sep 2013)

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Preview: a xxxxx dividend xx $11 per xxxxx With the xxxxxxx of xxxxx xxxxxx have xxxx down from xxx original 10 xxxxxxx to x xxxxxxx (yield xx the same xx required rate xx return) xxxxxxxxxxx xxx the xxxxxxxx issue price? (Round xxxx answer to x decimal xxxxxx xxxxxx the xxx sign in xxxx response )    Original xxxxxxxxxxxxxxxxxxxxx is xxx xxxxxxx value xx this preferred xxxxxxxxxxxx your answer xx 2 xxxxxxx xxxxxx  Omit xxx "$" sign xx your response xxxxxxxxxxxxxxxx value$   Explanation:(a) Original xxxxx xxxxxxxxxxxxxxxxx 00  = xxxx 00Kp0 10  (b)Current xxxxxxxxxxxx 00 = $122 xxx 09 Bottom xx xxxxxx award:0 xxx of1 00 xxxxxxxxxxxxxxxxxx 10-26 Preferred xxxxx rate xx xxxxxx [LO4]Grant xxxxxxxx Homes, Inc x has preferred xxxxx outstanding xxxx xxxx an xxxxxx dividend of xxx 30 Its xxxxx is xxxx xxxxxx is xxx required rate xx return (yield) xx the xxxxxxxxx xxxxxxxxxxxxxx your xxxxxx to 2 xxxxxxx places Omit xxx "%" xxxx xx your xxxxxxxx )     Rate of xxxxxxxxx   Explanation:Kp=Dp=$10 30 = x 17%Pp$167 xxxx xxxxxxx out xxx 00 point   Problem xxxxx Common stock xxxxx [LO5]Laser xxxxxx xxxx pay x common stock xxxxxxxx of $3 xx at xxx xxx of xxx year (D1) xxx required rate xx return xx xxxxxx stock xxxx is 20 xxxxxxx The firm xxx a xxxxxxxx xxxxxx rate xxx of 10 xxxxxxx   Compute the xxxxxxx price xx xxx stock xxxx  (Round your xxxxxx to 2 xxxxxxx places xxxxxx xxx "$" xxxx in your xxxxxxxx )    Current price$    Explanation:P0=D1=$3 xxxxxxxxxx 00Ke ? xx xx ? x 1014 award:0 xxx of2 00 xxxxxxxxxxxxxxxxxxx 10-29 xxxxxx xxxxx value xxxxx different market xxxxxxxxxx [LO5]Ecology Labs, xxx , xxxx xxx a xxxxxxxx of $6 xx per share xx the xxxx xx months xxxx The required xxxx of return xxxx is xx xxxxxxx and xxx constant growth xxxx is 5 xxxxxxx  (Each xxxxxxxx xx independent xx the others xxxxxxxxxxxxxxxxx the price xx Ecology xxxxx xxxxxx stock xxxxxxxx your intermediate xxx final answer xx 2 xxxxxxx xxxxxx Omit xxx "$" sign xx your response xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Ke, xxx xxxxxxxx rate xx return, goes xx to 20 xxxxxxxx what xxxx xx the xxx price? (Round your xxxxxxxxxxxx and final xxxxxx to x xxxxxxx places xxxx the "$" xxxx in your xxxxxxxx )      New xxxxxxxxxxxxxxxxxxxxxxxxx xxx growth xxxx (g) goes xx to 7 xxxxxxxx what xxxx xx the xxx price? Ke goes xxxx to its xxxxxxxx value xx xx percent xxxxxxxx your intermediate xxx final answer xx 2 xxxxxxx xxxxxx Omit xxx "$" sign xx your response xxxxxxxxxxxx price$       (d)Assume xxxxxx xx 50; xxxx will be xxx new price? xxxxxx Ke is xx xxx original xxxxx of 15 xxxxxxx and g xxxx back xx xxx original xxxxx of 5 xxxxxxx  (Round your xxxxxxxxxxxx and xxxxx xxxxxx to x decimal places xxxx the "$" xxxx in xxxx xxxxxxxx )      New xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx g  (a) $6 80=$6 xxxxx $68 000 xx ? x xxx 10     (b)        $6 xxxxx 80 = $45 xxx 20 ? x 050 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxx 80 = xxx 000 15 xx 070 08     (d)        $7 xxxxx 50 = xxx xxx 15 x 0 050 xxxx award:0 out xxx 00 xxxxxxxxxxxxxxxxxxx xxxxx Common xxxxx value based xx determining growth xxxx [LO5]Justin xxxxxx xxxxxxx had xxx following pattern xx earnings per xxxxx over xxx xxxx five xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx share  2006$10 00  200710 xxxxxxxxxxxx 03  200911 58  201012 xxxxxxxxxxx earnings xxx xxxxx have xxxxx at a xxxxxxxx rate (on x rounded xxxxxx xxx is xxxxxxxx to do xx in the xxxxxx Dividends xxxxxxxxx xx percent xx earnings      (a)Project xxxxxxxx and dividends xxx the xxxx xxxx (2011) xxxxxxxx your intermediate and xxxxx answers to x decimal xxxxxx xxxx the xxx sign in xxxx response )    2011  Earnings$   xxxxxxxxxxxxxxxxxxxxxxxxxxxx the xxxxxxxx xxxx of xxxxxx (Ke) is xx percent, what xx the xxxxxxxxxxx xxxxx price xxxx at the xxxxxxxxx of 2011? (Round xxxxxxxxxxxxxxxxxx and xxxxx xxxxxxx to x decimal places xxxx the "$" xxxx in xxxx xxxxxxxx )         Anticipated xxxxx price$   Explanation:(a) Earnings have xxxx growing at x rate xx x percent xxx year Base xxxxxxxxxxxxxxxxx / 2006) x 1= xxxx xxxxxx ($10 xx / $10 xxxxxxxxxxxx / 2007) x 1= xxxx xxxxxx ($11 xx / $10 xxxxxxxxxxxx / 2008) x 1= xxxx xxxxxx ($11 xx / $11 xxxxxxxxxxxx / 2009) x 1= xxxx xxxxxx ($12 xx / $11 xxxxxxxx projected EPS xxx 2011 xx xxx 77 x ($12 16 xx 1 05) xxxxxxxxxxx for xxxx xxxxxxxxx 40% xx earnings or xx 11  ($12 xx × 40%) This xx xxx value xxx D1 (b)Ke (required xxxx of return) xx 13% xxx xxx growth xxxx is 5% xxxxxxxxxxxxxxxxxx 11=$5 11  = xxx 8816 xxxxxxx xxx of1 xx point   Problem 10-32 xxxxxx stock required xxxx of xxxxxx xxxxxx firm xxxx a $9 xx dividend at xxx end xx xxxx one xxxxx has a xxxxx price of xxxxx and x xxxxxxxx growth xxxx (g) of x percent   Compute xxx required xxxx xx return xxxx  (Round your intermediate and xxxxx answer to 2 xxxxxxx places xxxx xxx "%" xxxx in your xxxxxxxx )    Rate of xxxxxxxxx   Explanation:Ke=D1 + xxxxxxxx xxxxx 5% x 7 15% x 5% = xx 15%17 xxxxxxx xxx of4 xx points   Problem 10-35 xxxxxx stock value xxxxx on xx xxxxxxxxxxxx [LO5]Beasley xxxx Bearings paid x $4 dividend xxxx year xxx xxxxxxxx is xxxxxxxx to grow xx a constant xxxx of x xxxxxxx over xxx next four xxxxx The required xxxx of xxxxxx xx 16 xxxxxxx (this will xxxx serve as xxx discount xxxx xx this xxxxxxxx Use Appendix B xxxxxxxxxxxxxxxx the anticipated xxxxx of xxx xxxxxxxxx for xxx next four xxxxx  (Round your xxxxxxxxxxxx calculations xxx xxxxx answers xx 3 decimal xxxxxx Omit the xxx sign xx xxxx response xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx the present xxxxx of each xx the xxxxxxxxxxx xxxxxxxxx at x discount rate xx 16 percent xxxxxx "PV xxxxxxxx xxxxxxxxxxxx calculations xxx final answers xx 3 decimal xxxxxx Omit xxx xxx sign xx your response xxxxxxxxxxxxx ofdividends  D1$    D2   D3   D4     Total$        (c)Compute the xxxxx of xxx xxxxx at xxx end of xxx fourth year xxxx  (Round xxx xxxxxxxx intermediate xxxxxxxxxxxx and final xxxxxx to 3 xxxxxxx places xxxx xxx "$" xxxx in your xxxxxxxx )      Price of xxx stock$       (d)Calculate xxx xxxxxxx value xx the year x stock price xx a xxxxxxxx xxxx of xx percent  (Round xxx Factor", intermediate xxxxxxxxxxxx and xxxxx xxxxxx to x decimal places xxxx the "$" xxxx in xxxx xxxxxxxx )      Price xx the stock xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx the current xxxxx of xxx xxxxx  (Round xxx Factor", intermediate xxxxxxxxxxxx and final xxxxxx to x xxxxxxx places xxxx the "$" xxxx in your xxxxxxxx )       Current xxxxxxxxxxxxxxxxxxxxxxxx xxxxxxx given xxxxx to show xxxx it will xxxxxxx approximately xxx xxxx answer xx part e  (Omit xxx "$" sign xx your xxxxxxxx xxxxxxxxxxxxxxxxxxx g      Current xxxxxxxxxxxxxxxxxxxxxxx current EPS xx equal to xx 329 xxx xxx P/E xxxxx is 1 x times higher xxxx the xxxxxxxx xxxxxxx of xx what would xxx stock price xxxxxxxxxxx your xxxxxxxxxxxx xxxxxxxxxxxx and xxxxx answers to x decimal places xxxx the xxx xxxx in xxxx response )      Stock xxxxxxxxxxxxxxxxxxxxxxx what dollar xxxxxx is xxx xxxxx price xx part g different from xxx stock price xx part f? (Input xxx xxxxxx as x positive value xxxxx intermediate calculations xxx final xxxxxx xx 2 xxxxxxx places Omit xxx "$" sign xx your xxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx regard xx the stock xxxxx in part f, xxxxxxxx which xxxxxxxxx xx would xxxx if        (1)  D1 increasesStock price xxxxxxxxx  (2)  Ke increasesStock price xxxxxxxxx  (3)  g xxxxxxxxxxxxxx xxxxx increases xxxxxx 10_18_2012 Explanation:(a)D1 =  $4 xxx (1 04) x $4 xxxxxxxxxx xx 160 xx 04) = xx 326D3 =  $4 xxx (1 xxx x $4 xxxxxxxxxx $4 499 xx 04) = xx 679  (b)   DividendsPV xxxxxxx xxxxxxxxxxxxxxxxxxxxx 160  xxxxx 586    D2 4 xxxxx 743 3 214 xxxxxxxxxxx 499  xxxxxx xxxxxxxxxxxxxxxx 679  xxxxxx 583             $12 xxx          (c)P4=D5     D5  = 4 xxx (1 xxx x $4 xxxxxxxx g      P4=$4 866=$4 xxxxxx $40 550 xx ? xx xxxxxxxxxxx of xxxxxxx (n = xx i = xxxxxxx 550 xx xxx = xx 384  (e)     PV xx dividends$12 267 xxxxxxxx of xxxxxx xxx      Current xxxxx of the xxxxxxxx 651      (f) Po=D1=$4 xxxxxx 160  = xxx xxxxxxxx g xx ? 04 xxxxxxxxxxxxxx = P/E xx EPSP/E x x × x 2 = x 20Price = x 20 xx xx 33 x $38 37  (h)      Part g$38 xx    Part f?34 67 xxxxxxxxxxxxxx 70 xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx  PV xx 58604 160    Answer: xx 586 PV xx D1  NI/YPVPMTFV216CPT xxxx xx 21404 xxxxxxxxxxxxxxxxxx $3 214 xx of D2    NI/YPVPMTFV316CPT xxxx ?2 xxxxx xxxxxxxxxxxxxxxxxx $2 xxx PV of xxxxxxxxxxxxxxxxxxxxxxxxxxx  PV ?2 xxxxx 679    Answer: xx xxx PV xx D4   Total = x 586 + x 214 x x 884 x 2 583 x $12 267   (d)NI/YPVPMTFV416CPT xxxx ?22 xxxxxx xxxxxxxxxxxxxxxxxx $40 xxx PV of xxxx award:0 out xxx 00 xxxxxxxxxxxxxxxxxx xxxx Cost xx capital [LO2]Speedy xxxxxxxx Systems can xxx a xxxxx xx equipment xxxx should provide xx 6 percent xxxxxx and xxx xx financed xx 3 percent xxxx debt The xxx likes xxxxxxx xxxx than xxx cost of xxxxx and he xxxxxx this xxxxx xx a xxxx deal The xxxx can also xxx a xxxxxxx xxxx would xxxxx a 13 xxxxxxx return but xxxxx cost xx xxxxxxx to xxxxxxx through common xxxxxx Earning less xxxx the xxxx xx equity xxxxxx bad to xxx CEO Assume xxxx and xxxxxx xxxxxx each xxxxxxxxx 50 percent xx the firm’s xxxxxxx structure xxxxxxxxxx xxx weighted xxxxxxx cost of xxxxxxx  (Round your xxxxxxxxxxxx and xxxxx xxxxxxx to x decimal place xxxx the "%" xxxx in xxxx xxxxxxxx )  Weighted xxxxxxx cost of xxxxxxxxxx  (b)Which project(s) xxxxxx be xxxxxxxxxxxxxxxxxx xxxxxxx should xx financed rev: xxxxxxxxxxxxxxxxxxxx 06_21_2013_QC_31967  Explanation:(a)SPEEDY DELIVERY xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 5%  Common xxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxx average xxxx of capital    9 xxxxxxxxxxxxxxxxxxxxx the new xxxxxxx with x xxxxxx of xx percent The xxxxxx exceeds
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