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Value of stock warrants

The Preston Toy Co has warrants outstanding that allow the holder to purchase a share of stock for $22. (exercise price) The common stock is currently selling for $28, while the warrant is selling for $9.25 per share. a. What is the intrinsic (minimum) value of this warrant? b. What is the speculative premium on this warr

Portfolio Managers and Commission on Products

Do you care if the portfolio manager 'stays''? What effect can/should you expect with regard to the tenure (or lack thereof) of a particular portfolio manager? Are load (commission loaded) or no-load (commission free) products better? Why?

Capital Structure and Dividend Policy : Dividend Paid

Fletcher Corp. has a capital budget of $1,000,000, but it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts this year's net income to be $600,000. If the company follows a residual dividend policy, what will be its dividend paid?

Capital Structure and Dividend Policy : Recapitalization

Jones Co. currently is 100% equity financed. The company is considering changing its capital structure. More specifically, Jones' CFO is considering a recapitalization plan in which the firm would issue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the


1. What is the meaning of the following sentence: Amortization affects the amount of interest expense? How does amortization of premium affect the amount of interest expense? How does amortization of discount affect the amount of interest expense? 2. Why might some stockholders be included to buy preferred stock rather th

Five aboriginal trackers were not paid from 1880: what is PV of the unpaid amount?

In 1880 five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1993 the granddaughters of two of the trackers claimed that this reward had not been paid. The prime minister of Victoria stated that, if this was true, the government would be h

Coefficient of varitaion

Five investments alternatives have the following returns and standard deviations of return. Alternative Returns-Expected Value Standard Deviation A $5,000 $1,200 B 4,000 600 C 4,000 800 D 8,000 3,200 E 10,000 900 Using

Values of Investments

Which would you prefer? a. An investment paying interest of 12 percent compounded annually. b. An investment paying interest of 11.7 percent compounded semiannually. c. An investment paying 11.5 percent compounded continuously. Work out the value of each of these investments after 1, 5, and 20 years.

What is the PV of $100 received in

What is the PV of $100 received in: a. Year 10 (at a discount rate of 1 percent). b. Year 10 (at a discount rate of 13 percent). c. Year 15 (at a discount rate of 25 percent). d. Each of years 1 through 3 (at a discount rate of 12 percent).

Executive Summary of Honda Motor Company

Headquartered in Japan, Honda Motor Company is one of the major producers of quality motor vehicles around the world. Honda's quality, innovation and reliability has made it one of the most sought after car brands in the world.

Finance problem solving

Please show the work on how each problem is done 3) You are trying to save for $140,000 Ferrari. You have $30,000 to invest and your bank pays 4.2% annual interest. How long before you have enough to buy the car? 8) In a typical month, Curfman Company receives 100 checks totaling $75,000. These are delayed 4 days on a

Business Finance: calculate cash and current assets

Cash Equation. A Company has a book net worth of $38,000. Long-term debt is $6,500. Net working capital, other than cash, is $4,300. Fixed assets are $32,500. How much cash does the company have? If current liabilities are $7,200, what are current assets?

Calculating the Total Percentage Gain on Shares

An investor buys shares in the no-load Go-Go Mutual Fund on January 1 at a NAV of $ 21.20. At the end of the year the price is $ 25.40. Also the investor receives .50 cents in dividends and a capital gains distribution of .35 cents. What is the total percentage gain on the beginning NAV (round off to two places to the right of t

Business risk versus financial risk

This is a critical thinking and concepts review question. I am trying to figure out from the Essentials of corporate finance by Ross Westerfield Jordan 6e Book for my finance class. Business risk versus financial risk. -Explain what is meant by business and financial risk. Suppose firm A has greater business risk than fi

MM Proposition 21-22

21. In a world of no corporate taxes if the use of leverage does not change the value of the levered firm relative to the unlevered firm this is known as: MM Proposition III that the cost of stock is less than the cost of debt. MM Proposition I that leverage is invariant to market value. MM Proposit

Pecking order

13. The pecking order states how financing should be raised. In order to avoid asymmetric information problems and misinterpretation of whether management is sending a signal on security overvaluation the firm's first rule is to: finance with internally generated funds. always issue debt then the market won't

The NuPress Valet Co. has an improved version of its hotel stand.

11. The NuPress Valet Co. has an improved version of its hotel stand. The investment cost is expected to be $72 million and will return $13.5 million for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%. The appropriate discount rate, ass

Which of the following are examples of erosion?

4. Which of the following are examples of erosion? (I) the loss of sales due to increased competition in the product market (II) the loss of sales because your chief competitor just opened a store across the street from your store (III) the loss of sales due to a new product which you recently introduced (IV) the loss of sal

Contemporary Issues in Financial Management

I need help in this area and suggestion if this is the right company to research the selected contemporary issue? Thank you!! How many credits will i need to answer following questions? evaluate the impact of mergers and acquisitions on Exxon/mobile In your evaluation be sure to address the following items:Describe your selecte

Capital Budgeting : Internal Rate of Return

Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year: 0 1 2 3 4 Cash flows: -$1,000 $250 $23

Capital Budgeting : Weighted Average Cost of Capital

Blanchford Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC = 10% Year: 0 1 2 3 4 Cash flows: -$1,000 $475 $475


Many corporate acquisitions result in losses to the acquiring firms' stockholders. Accordingly, why do firms purchase other corporations? Are they simply paying too much for the acquired corporation? A co-worker asks your opinion. Specifically state the reasons for your argument. PLEASE TO PROVIDE REFERENCE AND CITATION IN AP

Break-Even Point in Units of Output

You are a hard-working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units. Using this information, find the break-even point in units of outpu

Cost of preferred stock including flotation costs

On the New York Stock Exchange, the preferred stock of Ward Butler Inc., which has a stated dividend of 8% and a par value of $50, is trading for $49.00. The company will sell 1 million new shares at the going market rate and will have to pay 5% in flotation costs. What is the cost of the preferred stock, including flotation?

Underwriting spread

A company is the managing investment banker for a major under writing.the price of the stock to the investment is $18 per share, other members may buy the stock for $18.25 the price to the selected dealer group is $18.80, price to a broker of $19.20, price to the public $19.50. a) if the company sells the shares to the group,

Lottery Wiinings : How do you get the most money?

You just won the lottery for 1 million payable in annual installments of 200,000.00 with the first payment made in 1 year. Alternative, you could accept 850,000.00 today. Regardless on whether you take the 200,000.00 annually or the 850,000 today, you are confident yoiu could earn 8% each year on the payout or the next 5 yrs.

Earnings per Share under Bad, Normal & Good Economy

I am having trouble figuring out the effects of recapitalizing on the EPS. All equity firm, on 11/2/09 stockholder decide they don't want to put up 10,000000 and not borrow any debt so they recapitalize 5,000,000 in bonds at 5% with 5000,000 shares at $10. How do you calculate the threes scenarios EPS now that they have DEBT?