8) Standard Olive Company Of California Has A $1,000 Par Value Convertible Bond Outstanding
8) Standard Olive Company of California has a $1,000 par value convertible bond outstanding with a coupon rate of 8 percent and a maturity date of 20 years. It is rated Aa, and competitive, nonconvertible bonds of the same risk class carry a 18 percent yield. The conversion ratio is 30. Currently the common stock is selling for $30 per share on the New York Stock Exchange. a. What is the conversion price? (Round your answer to 2 decimal places.) b. What is the conversion value? (Round your answer to 2 decimal places.) c. Compute the pure bond value. (Use semiannual analysis.) Use Appendix B and Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) d. Calculate the crossover point at which the pure bond value equals conversion value. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Question: Assume An M
Question: assume an M
At The Beginning Of 2007 (the Year The IPhone Was Introduced), Apple’s Beta Was
At the beginning of 2007 (the year the iPhone was introduced), Apple’s beta was 1.1 and the risk-free rate was about 5.2 % . Apple’s price was $ 83.37 . Apple’s price at the end of 2007 was $ 195.38 . If you estimate the market risk premium to have been 5.7 % , did Apple’s managers exceed their investors’ required return as given by the CAPM?
A Stock Market Comprises 6000 Shares Of Stock A And 2500 Shares Of Stock
A stock market comprises 6000 shares of stock A and 2500 shares of stock B. Assume the share prices for stocks A and B are $ 25 and $ 30 , respectively. What is the capitalization of the market portfolio? A. $ 247500 B. $ 213750 C. $ 225000 D. $ 191250
A Company Has An Outstanding Bond Issue ($1,000 Par) With 7 Years Remaining To
A company has an outstanding bond issue ($1,000 par) with 7 years remaining to maturity and an annual coupon rate of 6%. If the bond is currently selling at a price of $1,150, what is the company’s after-tax cost of debt? (Assume a tax rate of 30%.) A. 5.39% B. 7.69% C. 3.54% D. 2.48%
A Company Has An Issue Of Preferred Stock Outstanding, With A Current Market Price
A company has an issue of preferred stock outstanding, with a current market price of $74 per share. If the stock pays a dividend of 3% per share (based on a par value of $100), what is the company’s current cost of preferred stock? A. 3.00% B. 4.05% C. 2.22% D. 3.74%
Hero Manufacturing Has 6 Million Shares Of Common Stock Outstanding. The Current Share
Hero Manufacturing has 6 million shares of common stock outstanding. The current share price is $89 and the book value per share is $8. The company also has two bond issues outstanding, both with semiannual coupons. The first bond issue has a face value $85 million and a coupon of 6 percent and sells for 96 percent of par. The second issue has a face value of $60 million and a coupon of 7 percent and sells for 109 percent of par. The first issue matures in 21 years, the second in 9 years. a. What are the company’s capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) c. Which are more relevant? Market value weights Book value weights
Titan Mining Corporation Has 8.7 Million Shares Of Common Stock Outstanding And 310,000
Titan Mining Corporation has 8.7 million shares of common stock outstanding and 310,000 5.9 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $35 per share and has a beta of 1.25; the bonds have 20 years to maturity and sell for 116 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 5 percent, and the company’s tax rate is 22 percent. a. What is the firm’s market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .3216.) b. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Happy Times, Inc., Wants To Expand Its Party Stores Into The Southeast. In
Happy Times, Inc., wants to expand its party stores into the Southeast. In order to establish an immediate presence in the area, the company is considering the purchase of the privately held Joe’s Party Supply. Happy Times currently has debt outstanding with a market value of $220 million and a YTM of 9 percent. The company’s market capitalization is $300 million and the required return on equity is 14 percent. Joe’s currently has debt outstanding with a market value of $27.5 million. The EBIT for Joe’s next year is projected to be $16 million. EBIT is expected to grow at 10 percent per year for the next five years before slowing to 3 percent in perpetuity. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 9 percent, 15 percent, and 8 percent, respectively. Joe’s has 2 million shares outstanding and the tax rate for both companies is 38 percent. a. What is the maximum share price that Happy Times should be willing to pay for Joe’s? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. After examining your analysis, the CFO of Happy Times is uncomfortable using the perpetual growth rate in cash flows. Instead, she feels that the terminal value should be estimated using the EV/EBITDA multiple. The appropriate EV/EBITDA multiple is 8. What is your new estimate of the maximum share price for the purchase? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Kroger, A Grocery Store, Has A Bond That Will Mature In Exactly 10 Years.
Kroger, a grocery store, has a bond that will mature in exactly 10 years. The bond pays a semi-annual coupon and has a face value of $1,000. The coupon rate on the bond is 4.1% APR, while investors would like a 3.2% APR return to purchase the bond today. Based on this information, what is the current trading price of the Kroger bond?
Dickson, Inc., Has A Debt-equity Ratio Of 2.55. The Firm’s Weighted Average Cost
Dickson, Inc., has a debt-equity ratio of 2.55. The firm’s weighted average cost of capital is 12 percent and its pretax cost of debt is 10 percent. The tax rate is 23 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What would the company’s weighted average cost of capital be if the company’s debt-equity ratio were .55 and 1.55? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
4. When Looking To Cut FTEs, Why Is It Easier To Eliminate Open Positions
4. When looking to cut FTEs, why is it easier to eliminate open positions or reduce overtime, rather than eliminating current full-time staff?
6. What Are The Benefits Of Being Not For Profit/tax-exempt? What Are Some Of
6. What are the benefits of being not for profit/tax-exempt? What are some of the benefits of being for profit?
If A Budget Is Developed By Administration With No Input From Front Line Leaders,
If a budget is developed by administration with no input from front line leaders, whose job it is to implement it, is known as……
A Pharma Company Has Recently Recruited 4 Scientists At An Average Age Of 27
A Pharma company has recently recruited 4 scientists at an average age of 27 and is looking to develop quite a few pharmacological formulations. With a view to retain them the company proposes to offer a housing scheme to them on the following terms and conditions: The number of beneficiaries will be four in number The total cost of purchasing apartments will be Rs.1 crore PNBHFL offers an 18 year term @ 9.00% interest and HDFC offers 15 years term @ 8% interest. The company will pay the housing finance company on an installment basis. A Down payment of 5% of the cost of the apartment has to be made and recoverable from the employee in 24 installments. The upfront payment will be made by the company. In case of availing the loan from HDFC, 50% of the installment will be recovered from the employee on a monthly basis and in case of availing the loan from PNBHFL 45% will be recovered from the employee. The option of choosing the service rests with the company only. Assume that employee deductions happen on the first day of the month and housing loan payments made by the company happens on the last day of the year. The housing loan is offered on a fixed interest basis and EMI will not change. Assume the individual apartments are of equal value. You are called upon to do the following: Calculate the two EMI options and choose the best one.
How Is The Value Of Any Asset Whose Value Is Based On Expected Future
how is the value of any asset whose value is based on expected future cash flows determned?
What Is The Value Of A 13% Coupon Bond That Is Otherwise Identical To
what is the value of a 13% coupon bond that is otherwise identical to the bond described in part 1.2? Would we now have a discount or a premium bond?
Calculate The Following Elements Used To Derive A Cap Rate – Sinking Fund Factor
Calculate The Following Elements Used to Derive a Cap Rate – Sinking Fund Factor Loan/Holding Period 10 Equity Yield Rate 8% _____________ Loan/Holding Period 10 Equity Yield Rate 9% _____________ Loan/Holding Period 10 Equity Yield Rate 10% _____________ Loan/Holding Period 10 Equity Yield Rate 11% _____________
Calculate The Following Elements Used To Derive A Cap Rate 6.66pts Each Mortgage Constant
Calculate The Following Elements Used to Derive a Cap Rate 6.66pts each Mortgage Constant Loan Period 30, Interest Rate 4.5% Loan Period 25, Interest Rate 4.5% Loan Period 20, Interest Rate 4.5%
Calculate The Following Elements Used To Derive A Cap Rate Part Paid Off Loan
Calculate The Following Elements Used to Derive a Cap Rate Part Paid Off Loan Period 30, Interest Rate 6.5%, Holding Period 10 Loan Period 25, Interest Rate 6.5%, Holding Period 10 Loan Period 20, Interest Rate 6.5%, Holding Period 10 Loan Period 20, Interest Rate 6.5%, Holding Period 5 Loan Period 20, Interest Rate 7.5%, Holding Period 5
Calculate The Following Elements Used To Derive A Cap Rate Sinking Fund Factor Loan/Holding
Calculate The Following Elements Used to Derive a Cap Rate Sinking Fund Factor Loan/Holding Period 10 Equity Yield Rate 8% _____________ Loan/Holding Period 10 Equity Yield Rate 9% _____________ Loan/Holding Period 10 Equity Yield Rate 10% _____________ Loan/Holding Period 10 Equity Yield Rate 11% _____________
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