PMT = (.1085/2)*1000=54.25 N = 60 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =? Answer: 1,190.90 b.What is the value of this bond 10 years after it was issued? PMT = (.1085/2)*1000=54.25 N = 40 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =? Answer: 1170.20 The price will decrease as approaching maturity since at maturity (just before expiration) it will be worth the par ($1,000) since this is a premium bond. 2.Suppose your company needs to raise $30 million and you want to issue 30-year bonds for this purpose.
Given the following cash flow stream at the end of each year: Year 1: $4,000 Year 2: $2,000 Year 3: 0 Year 4: -$1,000 Using a 10% discount rate, the present value of this cash flow stream is: a. $4,606 b. $3,415 c. $3,636 d. Other 8. Consider a 10-year annuity that promises to pay out $10,000 per year, given this is an ordinary annuity and that an investor can earn 10% on her money, the future value of this annuity, at the end of 10 years, would be: a. $175,312 b.
The par value of the stock is $15, and earnings per share have grown at a rate of 8% per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant dividend/earnings ratio of 30%. The price of this stock is now $28, but 5% flotation costs are anticipated. c. Internal common equity where the current market price of the common stock is $43.50.
| | | = | $787,526.87 | Rounded as last step | b)This is not correct. The investor sold the security 39 days later. To calculate the sale price, the maturity value of the Note must be discounted from its maturity date back to the date of sale. The period of the time line that we are interested in is from the maturity date (time 123 days) back to the sale date (time 39 days). Note also that the interest rate we must use is a simple discount rate.
Initial value of Pacific ridge investment (December 1995) is: 666,667 * $1.50 + 133,333 * $0.3 = $1,040,000.4 (initial investment, exhibit 7). If we now value the rest of the company’s stock before venture capitalist investment at $1.50, we have: $1.50 * (800,000 + 4,796,000) =
If you use the 10 year forecast, assume the net operating flows are constant from 1984 through 1989, that working capital does not change, i.e., it is zero; and property, plant and equipment (PPE) continues the same trend throughout the 10 year period. Also assume capital investment is $600,000 for the period 1985 through 1989 and assume the depreciation increases $60,000 annually for the period 1985-1989. • Free Cash Flow = Net Operating Profits After Tax + Capital Investment + Change in Working Capital. An inflow of cash is a + and an outflow of cash is a -. The tax rate is .48 and NOPAT = NOP (.52).
a. b. What is the minimum level of synergies for Vodafone shareholders to at least break even on the deal? Estimate the market’s assessment on December 17, 1999 about the likelihood that the deal will succeed. To do so, construct a merger arbitrage position where you buy one Mannesmann share (at the price prevailing on December 17, 1999) and sell short 53.7 Vodafone shares. Assume that the deal finalizes in 3 months time and a risk—free interest rate of 5.5%.
The interest you receive on the first investment is $110 per year for three years. You receive $330 on the second investment in the third year and nothing in the first two years. If your discount rate is 6%, what should you pay for each of these investments? Present Value of #1 = $110 + $110 + $110 = $294.03 (1.06) (1.06)2 (1.06)3 Present Value of #2 = $0 + $0 + $330 = $ 277.07 (1.06) (1.06)2 (1.06)3 You will pay more for investment #1 b) You can make two different new products at your plant. Product #1 is expected to earn no profit in the first year, $500 in the second year and $1,000 in the third year.
Using the high-low method of cost estimation determine total fixed costs are. Select the correct answer. $84,545 | | | $41,432 | | | $43,113 | | | $22,011 | | 5. Given the following cost and activity observations for Johnson Company's utilities, use the high-low method to calculate Johnson's fixed costs per month. | Cost | Machine Hours | April | $61,255 | 1,189 | May | $82,714 | 1,806 | June | $97,496 | 2,474 | Using the high-low method, determine the variable cost per unit, and the total fixed costs.
$35,000 0.8 1st Investment, 40,000 1.4 2nd Investment Total $75,000 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4) = 1.12 6-2 Required Rate of Return Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7? rRF = 6%; rM = 13%; b = 0.7; Solve for : rs = ? rs = rRF + (rM - rRF)b = 6% + (13% - 6%)0.7 = 10.9% 6-7 Required Rate of Return Suppose rRF = 9%, rM = 14%, and bi = 1.3. a. What is ri, the required rate of return on Stock i?