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Stock Valuation: Faulk Corporation

Faulk Corp is going through a period of growth. The company just paid a dividend of $1.50 per share and expects dividends to grow at a 22% rate for the next 7 years and then level off to a constant rate thereafter. The beta of stock is 1.4, the risk free rate of return is 5%, and the expected return on the market is 11%. The


Zymase is a biotechnology start-up firm. Researchers at Zymase must choose one of three different research strategies. The payoffs (after-tax) and their likelihood for each strategy are show below. The risk of each project is diversifiable. Strategy Probability Pay-off (million) A 100% 75


Raviv Industries has $100 million in cash that it can use for a share repurchase. Suppose instead Raviv invests the funds in an account paying 10% interest for one year. a. If the corporate tax rate is 40%, how much additional cash will Raviv have at the end of the year net of corporate taxes? b. If investors pay a 20% tax r

Financing and Investment Policy Differences

1. Advise the difference between financing and investment policies in working capital management and in each case provide an example to illustrate the answer. 2. Please note that R on teh below statement stands for South African rand known as ZAR. Mxolisi LTD has a total equity of R500,000. The market risk premium require

Stocks, Expected Returns, Standard Deviations, Risk Aversion

Julie is considering buying stock in and only one of the following companies which runs a website against geared retirement income and has a 10% probability of returning 20% this year and 90% probability of returning 7% or speculate incorporate will invest in type derivate security and has a 50% chance of returning

Market Portfolio for Expected Returns

2. Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while Microsofts stock has volatility of 30%. a. Given its higher volatility, should we expect Microsoft to have an equity cost of capital that is higher than 10%? b. What would have to be true for Microsofts equity cost of capital to be

Management Inquiries Right Tracks

I would like some help to ensure I am on the right track with these questions, thank you. (one choice per question) In which of the following ways do companies change the composition of their management? [A] The shareholders of a company engage in a proxy contest to replace the current board. [B] The firm can sell new

Corporate Finance

2. Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while Microsoft's stock has a volatility of 30%. a. Given its higher volatility, should we expect Microsoft to have an equity cost of capital that is higher than 10%? b. What would have to be true for Microsoft's equity cost of capital to be

Corporate Finance (University Level Question)

My subject is not listed. Looking for help with Corporate Finance, university level. ( 2nd year) The question is as follows: Snail corporation wants to purchase Bug corporation. The financial manager of Snail corporation forecasted the following free cash flows (FCFs) for Bug corporation for year 1-6 : $3.3mil, $3.6mil,

Kirkland Inc - Ratios for Publicly Traded Company

Pick any publicly traded company that their financials are published on the SEC website. For the purpose of this assignment we have selected Kirkland's Inc. Kirkland is specialty retailer of home décor in the United States, operating 299 stores in 34 states and offers a broad selection of distinctive merchandise. 1. Do

Break-even point and degree of leverage

Healthy Foods, Inc., sells 50-pound bags of grapes to the military for $10 a bag. The fixed costs of this operation are $80,000, while the variable costs of the grapes are $.10 per pound. a. What is the break-even point in bags? b. Calculate the profit or loss on 12,000 bags and on 25,000 bags. c. What is the degree of operat

Corporate Finance Fully Depreciated

This exercise is designed to refresh your understanding of basic accounting concepts and test your knowledge of income statements and balance sheets and the impact of various transactions and them. Show the effect of the following transactions listed below on the total assets, current ratio and net income of the firm. Use (+)

MBA Finance questions (CAPM, stock prices and more)

1) Assume that the CAPM is a good description of stock price returns. The market expected return is 7% with 10% volatility and the risk-free rate is 3%. New news arrives that does not change any of these numbers but it does change the expected return of the following stocks: Expected R

Calculating Expected Value of the Gamble for the Lottery

You have just won the Wisconsin lottery! You have been offered (1) $0.5 million, or (2) a gamble in which you would receive a $1 million if a head were flipped and $ 0 if a tail came up. a. What is the expected value of the gamble? b. Would you take the sure $0.5 million or take the gamble? Why? c. If you choose the sure $0

Apple Inc Ratios (Tax rate, Beta, WACD, etc)

I am working on a Financial Analysis for Apple Inc. I have attached the 10K Income statement and Balance Sheet for 2009. I need assistance in finding the Risk Free Rate ( 3 month T-Bill Rate), Beta, Tax Rate, Weighted Average Cost of Debt. Please use the excel formula so i can see how this was calculated or if some of the info s

Total Assets, EPS, EBIT, Debt Ratio and Amortization of Loan

As at 1 January 2009, ABC Ltd has the following information: 1. Retained earnings of 200,000 2. Current liabilities of $600,000 3. 50,000 ordinary shares issued at $22 per share 4. 10,000 units of coupon bonds with a coupon rate of 7% per annum paid semi-annually at the sale price of $878 per unit of $1000 The only non-

Calculating book value per share

Atlantic Coast Resources Company: Balance Sheet Data December 31, 2010 Accounts payable $ 64,400 Notes payable 71,400 Long- term debt 151,200 Common stock ( 30,000 authorized 20,000 shares outstanding) 364,000 Retained earnings 336,000 Total assets $ 987,000 Total liabilities and equity $ 987,000 Atlantic Coast Resources

What are the final answers to this word problem?

Trident Food Corporation generated th following income statement for the most recent fiscal year. Trident December 31, 2008 Sales Revenue $150,000 Variable Cost of Sales (112,500) Gross profit 37,500 Fixed Operating Cost 24,000 Net Operating Income (EBIT) 13,500 Interest (10,000) Earnings Before Taxe

Research Method Quantitative Approach

Please answer below questions in detail: What is a quantitative research? When do we use quantitative approach? and what is the advantages and disadvantages when using a quantitative research? What is a deductive approach? When do we use deductive approach? and what are the advantages and disadvantages when adopting a ded

Credit worthiness of the company

B2. (Choosing financial targets) Sanderson Manufacturing Company would like to achieve a capital structure consistent with a Baa2/BBB senior debt rating. Sanderson has identified six comparable firms and calculated the credit statistics shown here. a. Sanderson's return on assets is 5.3%. It has a total capitalization of $6

Financial Characteristics of J.P. Morgan Chase

Overall project: - Select a major financial institution. - Prepare a 1,250- to 1,750- word paper, describing characteristics of the institution's operations in the following areas: o Provided services o Main sources and uses of funds o How the institution competes or works with other financial institutions o Effect of f

Finance Question for Raptor Pharmaceuticals Corporation

After a banner year of rising profits and positive stock returns, the managers of Raptor Pharmaceuticals Corporation (RPC) decided to launch a seasoned equity offering to raise new equity capital RPC currently has 10 million shares outstanding and yesterday's closing market price was $75.00 per RPC share The company plans to sel

Overall financial Yield

The ABC Resort is considering hosting a prestigious corporate awards convention next year that will require 55% of the total rooms in the resort for 8 days and 7 nights during the resort's peak season. The convention group, comprised of professionals in their early 30s and 40s, will have all breakfasts, all lunches, and three di

Finance (Merges and Q.)

1,The book value of Nott's Nursery's total assets is $400,000. Suppose Golden Gardens Inc. acquires Nott's Nursery's assets for $1 million and finances the purchase by selling $ 600,000 in new stock, $ 300,000 in new debt, and reducing cash by $ 100,000. Describe how the acquisition affects Golden Gardens Inc., balance sheet.

Business portfolio theory expected return

I am looking for some formulas to calculate with this chart , ones to suit these questions please make them easy to understand and a clear explanation of the formula, so I can do the math myself, especially C and D. maybe make up your own examples so I watch how it's done and learn from an example (Portfolio returns and ri

Corporate Finance - Matrix Enterprises

Matrix Enterprises is considering offering both a stock dividend and a cash dividend in the upcoming year. The most recent balance sheet for Matrix (before any stock or cash dividend) is presented below (all amounts are in million $). Cash $114.5 Other Assets 2,835.5 Total Assets 3,250.0 Liabilities $1,750.0 Common shar

Operating, financial and total leverage

Use the following information to answer questions 1 and 2 Venture Inc. manufactures and sells headphones to airline and other passenger transportation companies. Each headphone sells for $5.50, and this year sales are expected to be 1,750,000 units. Variable manufacturing costs for this level of manufacturing and sales (Ventu