Entries by Hannah Wangui

interest, depreciation and taxes

Question The MoMi Corporation’s income before interest, depreciation and taxes, was $3.3 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 15% of pretax cash flow each year. The tax rate is […]

 

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rate of return

Question The risk-free rate of return is 6%, the required rate of return on the market is 14%, and High-Flyer stock has a beta coefficient of 1.2. If the dividend per share expected during the coming year, D1, is $5.40 and g = 6%, at what price should a share sell? (Do not round intermediate calculations. Round your answer […]

 

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bond

Question You are managing a portfolio of $1.9 million. Your target duration is 13 years, and you can choose from two bonds: a zero-coupon bond with maturity 6 years, and a perpetuity, each currently yielding 8%. a. How much of each bond will you hold in your portfolio?(Do not round intermediate calculations.  Round your answers to 2 […]

 

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duration of a bond

Question Find the duration of a bond with settlement date June 9, 2016, and maturity date December 11, 2025. The coupon rate of the bond is 8%, and the bond pays coupons semiannually. The bond is selling at a yield to maturity of 9%. (Do not round intermediate calculations. Round your answers to 4 decimal places.) […]

 

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