Explore BrainMass
Share

# Finance

### Company Current Stock price

The Zumwalt Company is expected to pay a dividend of \$2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price?

### Equilibrium Expected growth rate

McDonnell Manufacturing is expected to pay a dividend of \$1.50 per share at the end of the year (D1 = \$1.50). The stock sells for \$34.50 per share, and its required rate of return is 11.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

### Finance

You will receive \$5,000 three years from now. The discount rate is 8 percent. a. What is the value of your investment two years from now? Multiply \$5,000  .926 (one year's discount rate at 8 percent). b. What is the value of your investment one year from now? Multiply your answer to part a by .926 (one year's discount rate at

### Business Finance: Ethics and Finance

1) Why do many business managers feel that ethical behavior is essential to the profitability and survival of their firm? 2) Your Uncle left you a some of money and you need to calculate what is the most fiscally beneficial way to receive your payout. There are 3 options: 1. Take \$10,000 now 2. Take 8 \$2,000 payments at t

### Corporation Taxing

You are a shareholder in a S corporation. The corporation earns \$2 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. The S corporation tax rate is 40% and the personal tax rate on (both dividend and non-dividend) income is 30%. How much is left for you after al

### Calculating Option Values

The price of stock will be either \$60 or \$80 at the end of year. Call options are available with one year to expiration. T-bills currently yield 5 percent. Suppose the current price of stock is \$70. What is the value of the call option of the exercise price is \$45 per share?

### Semi strong from efficient

You do a study and find out that on average stock prices for firms decrease 3% evfor every 5% decrease in inside ownership. you are watching teh nightly business report and find out hat Magic Tape's stock has announced that insiders have sold 10% of their holdeing .. You are concerned because you own 1,000 shares of Magic Tape

### New stock offering

You work for abc in the finance department and own shares that are selling at \$20 per share on the NYSE. There is a new stock offering that is going to be publicly announced. the cost from the offering will be 10% of the new offerning. The new offering will increase the number of outstanding share by 30%. There are currently 2

### Expansion vs. raising price of product and the risk

Please explain why expanding production facilities would involve greater business risk than raising the price of the product.

### Client mix decision: Maximize Loren's Monthly Commissions

Client mix decision. a) Based on data given what client mix will maximize Loren's monthly commissions, assuming he works 160 hours per month? b) What other factors should Loren consider as he makes his decisions about his client mix? Customer Group A Average investment in company products per mo. \$900 Hrs. devoted per custome

### Rates of Return and Equilibrium

The beta coefficient for stock C is bc=0.4 and that for stock D is bd=-.05. (stock D's beta is negative, indicating that its rate of return rises whenever returns on most other stocks fall. There are very few negative beta stocks, although collection agency and gold mining stokcs are sometimes cited as examples)

### Patent Amortization Expenses

In early January 2011, Lopez purchased a patent for \$60,000 that was used exclusively for a single research project conducted during 2011. Lopez uses straight-line amortization over the maximum allowable periods(20yrs). In addition, on July 1, 2011, Lopez incurred legal fees of \$23,400 to defend the new patent that had been acqu

### Current Stock Price of the Francis Company

The Francis Company is expected to pay a dividend of D = \$1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.45, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price? \$2

### Grossnickle Corporation: Current Price of Bonds

Scenario: Grossnickle Corporation issued a 20-year, non-callable, 6.3% annual coupon bonds at their par value of \$1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 19 years to maturity? \$1,136.58 \$950.79 \$1,289.58 \$1,049.15

### Stocks

Scenario: Bobbie B. Beebee and I are looking at AT&T's stock because we are both very wealthy stock market investors. We usually spend summers together in the Swiss Alps (at his expense....you see, he likes me and we are pals). We agree on the expected dividend AT&T will be paying. For your information, BBBBB (that's what al

### Financial Management with a Health Care Organization

1. (Total revenue/inpatient revenue) x (inpatient days) = a. patient days b. adjusted patient days c. adjusted discharges d. average length of stay (days) 2. (Total operating revenue - total operating expenses) / (total operating revenue) = a. operating income b. operating margin c. current ratio (x) d. cushion ra

Suppose 10-year T-bonds have a yield of 5.30% and 10-year corporate bonds yield 6.80%. Also, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasury and corporate 10-year bonds is 1.15%. What is the default risk premium on corporate bonds? 1.1

Kelly Inc's 5-year bonds yield 7.50% and 5-year T-bonds yield 5.80%. The real risk-free rate is r* = 2.5%, the default risk premium for Kelly's bonds is DRP = 0.40%, the liquidity premium on Kelly's bonds is LP = 1.3% versus zero on T-bonds, and the inflation premium (IP) is 1.5%. What is the maturity risk premium (MRP) on all 5

### The Isberg Company: Current Stock Price

The Isberg Company just paid a dividend of \$0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company's beta is 1.25, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is the company's current stock price, P? \$15.49 \$16.66 \$14.66 \$19.32 \$

### Forecasting Risk and Cost-Cutting Proposal

Forecasting Risk - What is forecasting risk? in general, would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why? 2. Sensitivity analysis and Scenario analysis- What is the essential difference between sensitivity analysis and scenario analysis? 3.Marginal cash flows - A co-wor

### ACCOUNTING PROBLEM (see attachment for word doc)

Part: 1 The Following information was reported by Gap, Inc in its 2006 annual report. 2006 2005 2004 2003 2002 Total assets \$8,544 \$8,821 \$10,048 \$10,713 \$10,283 (In Millions) Working Capital \$2,757 3,297 \$ 4,062 \$4,156 \$2,972 Current ratio 2.2

### Fixed cost and Variable cost

1 page Details: Costs can be classified into two categories, fixed and variable costs. These costs behave differently based on the level of sales volumes. Suppose we are running a restaurant and have identified certain costs along with the number of annual units sold of 1000. Item: Raw Materials (cost for hamburge

### Amount of Annual Dividend: Example Problem

Suppose you are willing to pay \$30 today for a share of stock which you will expect to sell at the end of year one for \$32. If you require and annual rate of return of 12%, what must be the amount of the annual dividend which you expect to receive at the end of year one?

### Determining Present Value of Cash Flow Stream: Example Problem

Assume that your required rate of return is 12% and you are given the following streams of cash flow: Year Cash Flow 0 \$10,000 1 \$15,000 2 \$15,000 3 \$15,000 4 \$15,000 5 \$20,000 If the payments are made at the end of each period, what is the PV of the cash flow stream?

### Operating cycles

Indicate the impact of the following on the cash and operating cycles, respectively. Use the letter I to indicate an increase, the letter D for a decrease and the letter N for no change: a. The terms of cash discounts offered to customers are made less favorable. b. The cash discounts offered by suppliers are decreased; thus

### Estimating given stock's price

Sorenson Corp.'s expected year-end dividend is D1 = \$1.50, its required return is rS = 12.00%, its dividend yield is 8.00%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

### Stock Valuation

The Isberg Company just paid a dividend of \$0.80 per share, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.25, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is the company's current stock price? \$19.95 \$20.45 \$20.96 \$21.49

### Investment Alternatives: Planning to Retire

You are planning to retire in: a) 10 years, b) 20 years, and c) 30 years. In each given scenario, what investment alternatives would you choose and why?

### Kalpert common stock

A security analyst forecasts the dividends of Kalpert Enterprises for the next three years. Her forecast is D1=\$1.50, D2=\$1.75, and D3=\$2.20. She also forecasts a price in three years of \$48.50. The rate of return for similar-risk common stock is 14%. What is the value of Kalpert common stock?

### Finance, Discount Rate, and Retained Earning

Calculate the cost of Retained Earnings, then the cost of newly issued stock. The flotation cost is 12%, so the net value of the stock is 88% of the market price " Cost of Retained Earnings" " Cost of newly issued stock" Current Price of stock \$8.24 Growth Rate 3.00% Last Dividend Paid is \$1.20 "Calculate the Disco