Mengchao Essay

dealt at arm’s length, and the selling price of $1,250,000 is the fair market value of the shares at the

51. (LO2) Assume that on January 1, year 1, ABC Inc. issued 5,000 stock options with an estimated value of $10

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

| The portion of current assets financed through long-term financing is referred to as the:Answer

1. Ignoring taxation and other constraints, Ms. Jameson is better off taking the options. The stock currently trading at $18.75 and the exercise price is $35. This may seem drastically far away. However, 5 year T-Bill rates are currently at 6.02%. Combined with a current stock volatility of approximately 42%, this allows each option to be valued at approximately $4.93.

firms on the day of this tragedy. It is said that an extraordinary amount of put options (an option

Suppose you have $28,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $40 per share. You also notice that a call option with

- The Bet-r-Bilt Company has a 5-year bond outstanding with a 4.30 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1,000. This bond is currently selling for 93 percent of its face value. What is the company's pre-tax cost of debt?

11. Returning the risk free rate to 4%, what happens to the value of the option if the Whirlpool’s cost of capital goes from 9% to 15%?

The value of the option is so sensitivity about the ranges of returns. When the range decreases by 10%, the value decreases by 60.36% .When the range increases

However, it is important to remember that the APV valuation and the option valuation calculations in Exhibit 1 and 3 aren’t straight forward comparable, since APV assumes financing the acquisition with new $300 million debt and real option valuation is calculated assuming total equity financing. If the tax rate remains constant, the real option valuation could be performed by taking the present value of the tax shields into account. In this case the values obtained by real option valuation would be even higher than the ones presented in the table.

Entering the twentieth century as a shell of its former self, the Qing Dynasty (Manchus) was moving closer to its inevitable demise. A dominant force in the world for centuries, by the dawn of the twentieth the Chinese Empire was divided into zones of influence by Imperialist Europe and had suffered defeat at the hands of Meiji Japan in the First Sino-Japanese War. The Chinese people, increasingly angered, watched as their country was manipulated and coerced by their vanquishers. From these international humiliations arose individuals who sought to radically transform the politics, society and dynamics of China and to effectively bring her into the twentieth century and back to international glory. Two of these influential men were Liang Qichao and Sun Yat-sen, who, despite differences in thought, created their political ideologies through the concept of nationalism.

firm’s financing, for example, issuing or repurchasing stock and borrowing or repaying loans. It also

C) One side has the obligation to buy an asset for a certain price at some time during the next

With ̅ is the fixed rate coupon and ̃ is the floating rate coupon with period , and