FIN - A stock has just paid a dividend and has declared an annual
Question # 00037652
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Updated on: 12/18/2014 11:48 PM Due on: 12/19/2014
A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is expected to grow at a 5% annual rate. The return on equity for similar stocks is 12%. What is PO?
a Bond had 5 years to maturity and has a YTM of 8%. Its par value is $1,000. Its semiannual coupons are $50. What is the bonds current market price?
A bond currently sells for $1,000 and has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannual. What is the YTM?
What is B and why is it important to investors and issuers of stock? Descrive the behavior of stocks with Bs of greater than one, less the one, and less than zero.
A company has 100 million shares outstanding trading for $8 per share. It also has $900 million in outstanding debt. If its equity cost of capital is 15% and its debt cost of capital is 12%, and its effective corporate tax rate is 40% what is its weighted average cost of capital?
A company has the opportunity to do any of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why? You must use at least two capital budgeting methods.
Year a b c
0 -300 -100 -300
1 100 -50 100
2 100 100 100
3 100 100 100
4 100 100 100
5 100 100 100
6 100 100 100
7 -100 -200 0
a Bond had 5 years to maturity and has a YTM of 8%. Its par value is $1,000. Its semiannual coupons are $50. What is the bonds current market price?
A bond currently sells for $1,000 and has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannual. What is the YTM?
What is B and why is it important to investors and issuers of stock? Descrive the behavior of stocks with Bs of greater than one, less the one, and less than zero.
A company has 100 million shares outstanding trading for $8 per share. It also has $900 million in outstanding debt. If its equity cost of capital is 15% and its debt cost of capital is 12%, and its effective corporate tax rate is 40% what is its weighted average cost of capital?
A company has the opportunity to do any of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why? You must use at least two capital budgeting methods.
Year a b c
0 -300 -100 -300
1 100 -50 100
2 100 100 100
3 100 100 100
4 100 100 100
5 100 100 100
6 100 100 100
7 -100 -200 0
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Solution: FIN - A stock has just paid a dividend and has declared an annual