Project #52469 - Managerial Finance

 

6. A stock has just paid a dividend and will pay a dividend of $3.00 in a year. The dividend will stay constant for the rest of time. The return on equity for similar stocks is 14%. What is P0?

 

7. A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is expected to grow at a 5% annual rate. The return on equity for similar stocks is 12%. What is P0?

 

8. A given bond has 5 years to maturity. It has a face value of $1,000. It has a YTM of 6% and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell for?

 

9. A bond currently sells for $887 even though it has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannually. What is its YTM?

 

10. Explain thoroughly how stock portfolios affect the risk to an investor.

 

11. A company has 30 million shares outstanding trading for $8 per share. It also has $90 million in outstanding debt. If its equity cost of capital is 15%, and its debt cost of capital is 9%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital?

 

12. Relate how the job of the financial manager can be explained using the balance sheet.

 

13. What is the difference between the cash cycle and the operating cycle? Under what condition would they be the same?

 

14. A company has the opportunity to do any of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.

 

Year

A

B

C

0

-300

-100

-300

1

100

-50

100

2

100

100

100

3

100

100

100

4

100

100

100

5

100

100

100

6

100

100

100

7

-100

-200

0

 

 

 

Subject Business
Due By (Pacific Time) 12/18/2014 08:23 pm
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