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
Motor Homes Inc: Calculate what should be the current price of the stock. Motor Homes Inc. ... What should be the current price per share of common stock. ...
... a. What required rate of return for this stock would result in a price per share of $28? Ans. Current stock price =dividend per share/return rate. ...
... 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. ...
...stock. 1. Burns Fire and Casualty Company has $1000 par value bonds outstanding at 11% interest. The bonds will mature in 20 years. Compute the current price...
... cost of external equity, re Question 3 Calculate the cost of preferred stock (rPS) with the given information: Par Value = $300 Current Price = $308 Flotation ...
... $2 Dividend for next year= Div1 = 1.90 =(1+(-5.%)) *2 Cost of equity= r= 15% growth rate of dividends/earnings= g= -5% Current stock price= Po= Plugging in the ...
... Key facts: Number of convertible bonds 1,000 Par value of bond $1,000 Conversion price $20.00 Years to maturity 15 Current price of stock $25 Furgeson's net ...
... Dividend for next year= Div1 = $4.95 =(1+10.%) *4.5 Cost of equity= r= 18% growth rate of dividends/earnings= g= 10% Current stock price= Po= Plugging in the ...
