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General Electric/relative performance analysis

General Electric : Relative performance analysis 1. the five-year average return. 2. Determine the average five-year average return in your industry 3. Identify three additional stocks in each industry and determine their five year average return. 4. Compare your selected security performance to those in the

Expected rate of return and standard deviation.

45. You are considering investing in a project with the following possible outcomes: Probability of Investment States Occurrence Returns State 1: Economic boom 15% 16% State 2: Economic growth

Growth Rate in Dividends: Constant Growth Model

The Jon's Shoe Company, whose common stock is currently selling for $40 per share, is expected to pay a $2.00 dividend in the coming year. If investors believe that the expected rate of return on XYZ is 14%, what growth rate in dividends must be expected? a. 5% b. 14% c. 9% d. 6%

Determining Expected Rate of Return and Standard Deviation

If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return, what is the expected rate of return and the standard deviation?


Suppose that you wish to save for your child's college education by opening up an educational IRA. You plan to deposit $100 per month into the IRA for the next 18 years. Assume that you will be able to earn 10%, compounded monthly, on your investment. How much will you have accumulated at the end of 18 years? a. $21,600 b. $54


Which of the following choices is the best example of how a firm can use operating leverage to increase its earnings before interest and taxes? a. Issue new bonds to repurchase common stock. b. Toughen credit standards to improve the collection of accounts receivable. c. Purchase inventory in larger quantities. d. Instal


Which of the following statements is correct? a. The effect of new information about a company on the firm's stock price depends more on how the new information compares to expectations than on the actual announcement itself. b. If an increase in the cost of equity capital occurs when a company announces an increase in its d


Siebling Manufacturing Company's common stock has a beta of .8. If the expected risk-free return is 7% and the market offers a premium of 8% over the risk-free rate, what is the expected return on Siebling's common stock? a. 7.8% b. 13.4% c. 14.4% d. 8.7%

Expected value of the investment's payoff

You have invested in a project that has the following payoff schedule: Payoff Probability of Occurrence $40 .15 $50 .20 $60 .30 $70 .30 $80 .05 What is the expected value of the investment's payoff? (Round to the nearest $1) A) $70 B) $60 C) $59 D) $65

EBIT independent of financial leverage

Why is EBIT generally considered to be independent of financial leverage? Why might EBIT actually be influenced by financial leverage at high debt levels?

Finance: Which is true about a bond?

Which of the following statements is true? a. A bond that has a rating of AA is considered to be a junk bond. b. A bond will sell at a premium if the prevailing required rate of return is less than the bond's coupon rate. c. A zero coupon is a bond that is secured by a lien on real property. d. The legal document that desc

Senbet Ventures - Sales Volume

Senbet Ventures is considering starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be $2.50; and fixed costs are estimated at $120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero for the stereo

Marginal Cost of Capital for a 40% Tax Bracket

The XYZ Company is planning a $50 million expansion. The expansion is to be financed by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of return on equity is 14%. If the company is in the 40% tax bracket, what is the marginal cost o

Short-term Performance Forecast and Employee Stock Options

2. What is the benefit of a short-term performance forecast? How might a manager combine the benefits of both short-term and long-term performance forecasts to develop a more accurate value forecast? 6. Identify the strengths and weaknesses of the Enterprise DCF, Economic Profit, and Multiples approaches to estimating conti

Competitive Stock Market Results

How does a competitive stock market accomplish the result that Adam Smith described? Should the stock market be regulated? How and why?

Stock Valuation of the Mill Due Corporation

A15. (Stock valuation) Let's say the Mill Due Corporation is expected to pay a dividend of $5.00 per year on its common stock forever into the future. It has no growth prospects whatsoever. If the required return on Mill Due's common stock is 14%, what is a share worth?

This company pays a perpetual annual dividend of 2.5% of its par value.

1) This company pays a perpetual annual dividend of 2.5% of its par value. Par value is $100 per share. If investors require rate of return on this stock is 15%, what is the value of per share? 2) your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected


What is the present value of the following cash flows at an interest rate of 10% per year? a) $100 recieved five years from now. b) $100 received 60 years from now. c) $100 received each year beginning one year from now and ending 10 years from now. d) $100 received each year from 10 years beginning now. e) $100 each year


Real estate, Inc., has purchased a building for $1 million. the economic life of the building is 30 years and it will be fully depreciated over the 30 years using the straight-line depreciation method. the discount rate is 14% and the coporate tax rate is 35%. assume there is no inflation. what is the minimum lease payment the c

Wells Inc. Project Payback

Wells Inc. is considering a project that has the following cash flow data. What is the project's payback? Year: 0 1 2 3 Cash flow -$1000 $500 $500 $500

Calculating Return on stock

Suppose that you buy a stock for $48 by paying $25 and borrowing the remaining $23 from a brokerage firm at 8% annualized interest. The stock pays an annual dividend of $0.80 per share, and after one year, you are able to sell it for $65. Calculate your return on the stock. Then, calculate the return on the stock if you had use

Credit and depreciation

1)Nick has a revolving department store credit card account with an annual percentage rate of 15%. Last month's balance on the account was 423.78. During the current month, he made purchases totaling 123.42 and made a payment of 100. The store uses the unpaid balance method. According to this information, what must be the amou

After ten years, which job pays the higher salary?

You are offered two jobs. One initially pays $100,000 annually, and your salary will grow annually at 11.5%. The other pays $97,000 annually but your salary will grow at 12%. After ten years, which job pays the higher salary?

Compute DOL, DFL, and DCL

A firm has 40,000,000 in revenues, 12,500,000 in fixed costs, 10,250,000 in variable costs and interest of 2,000,000. Compute DOL, DFL, and DCL.

Using the Sharpe and Treynor Indexes

Assume the following information over a five-year period: ? average risk-free rate =6% ? average return for Crane stock =11% ? average return for Load stock = 14% ? standard deviation of Crane stock return =2% ? standard deviation of Load stock returns = 4% ? Beta of Crane stock = 0.8 ? Beta of Load stock = 1.1 Can yo