Pretend that this restaurant Subway at a shopping mall is an indoor location has been open for 12 months and that business is slow and stockholders are putting pressure on us to do better. True or False?
Final Exam
1. The valuation of a financial asset is based on the concept of determining the present value.
T/F
True
2. The prices of financial assets are based on the expected value of future cash flows, ds rate and past dividends.
T/F
True
3. The market determined required rate of return is also called the discount rate.
T/F
True
4. In determining the cost of debt, yield and prices of outstanding bonds are used.
T/F
True
5. The cost of debt is equal to the current bond yield on bonds of similar risk class and adjusted for the corporate tax rate.
T/F
False
( One will take the YTM)
6. It is not unusual for corporate president, who deals with security analysts, to be as sensitive to after-tax income as to cash flow
T/F
False
7. Capital budgeting is primarily concerned with evaluating investment alternatives
T/F
True
8. We add depreciation to net income to arrive at a true earnings picture
T/F
False
( It is required to get the cash flows)
9. The Payback method is basic to ...
Solution Summary
Solution helps in estimating the current price of Stock
... Virtual Assist.com common stock now sells at a price of about $50 per share. The company has 7.5 million common shares outstanding. (6) The current yield on ...
... the maximum of (bond value an $176 =1040-864 (The value of the call option would depend on a number of factors including the current market price of the stock). ...
... Dividend for next year= Div1 = $4.32 =(1+8.%) *4 Cost of equity= r= 13.00% growth rate of dividends/earnings= g= 8% Current stock price= Po= Plugging in the ...
... 4. Use the CGM to find the current stock price for IBM. We will call this the theoretical price or Po. ... 4. Use the CGM to find the current stock price for IBM. ...
... Exercise value of call option = Current price of stock - Strike price. ... The exercise v decreases upon decrease in the current price of the stock. ...
... â?¢ The current bonds outstanding have the following characteristics ... â?¢ The companyâ??s preferred stock is paying ... of $10.00 per share and the price of the ...
... 4. The company's preferred stock pays a dividend of $2.50 per quarter, it has a ... and it is traded in the over-the- counter market at a current price of $ 104.00 ...