After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Cornwall Enterprises. Unfortunately, you will be the only person voting for you. If the company has 405,000 shares outstanding, and the stock currently sells for $46, how much will it cost you to buy a seat if the company uses straight voting? (Do not round intermediate calculations.) Total cost
Q: How should the $4,500 spent last year be handled? The cost of research is an incremental cash flow…
A: $4500 spent on the feasibility study is a sunk cost. Sunk cost is a cost that has already occurred…
Q: The real risk-free rate is 2.35%. Inflation is expected to be 3.35% this year, 4.75% next year, and…
A: To calculate the yield on a 7-year Treasury note, we need to consider the components involved: the…
Q: You bought a 22.0-year, 9.08% semi-annual coupon bond today and the current market rate of return is…
A: Price of bond is value today based on market interest of coupon payment to be received in future and…
Q: What technique would you choose to forecast the Income Statement in future fiscal years? Why?
A: Company valuation is an important aspect so that the intrinsic value of the company's stock can be…
Q: The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout…
A: 1. NPV means Net present value.It is calculated by deducting initial investment from present value…
Q: Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are…
A: Bond price refers to the discounted value in the present times of the future cash stream of payments…
Q: Your bank is offering a certificate of deposit with an APR of 6.02% compounded monthly. What is the…
A: Effective annual rate is computed by following formula-EAR = - 1 Where,EAR = effective annual rate…
Q: You have 6,000 USD in your brokerage account. You decide to short 100 shares of Apple stock AAPL…
A: The stock price is determined by various factors such as supply and demand dynamics, investor…
Q: ABC Inc. had Free Cash Flow of $30 million last year and is expected to grow at a rate of 3%. The…
A: Enterprise value =(FCF0*(1+g)) /(r-g)Market capitalization=Enterprise value-Debt +Cash and cash…
Q: If the company has 4 million shares outstanding, and these shares are trading at a price of $8.24…
A: The market price of a company's shares reflects how investors perceive the value and potential of…
Q: What is the break-even point (unit sales)? Round your answer to the nearest whole number.…
A: Break even point is where there is no loss or no profit and all cost variable cost and fixed cost…
Q: The cost of a new home is $190,000.00 and the bank requires a 5.8% down payment. What is the amount…
A: House cost = $190,000Down payment = 5.8%
Q: Q1. What is the expected return on an Exxon Mobil bond if the return is 12% one-half (50%) of the…
A: Expected return, also known as the mean return, is the anticipated return on an investment based on…
Q: Waste Industries is evaluating a $53,800 project with the following cash flows. Years 2 3 4 5 Cash…
A: The net present value represents the value produced by investment and is expressed in absolute…
Q: Use the following data to answer the question regarding the performance of Guardian Stock Fund and…
A: The information ratio (IR) is used to determine the stock return above the return of the benchmark…
Q: At the end of every 6 months, Tomas deposits $20,000 into a savings account, which pays an annual…
A: Compound = Semiannual = 2Saving Deposits = d = $20,000Interest rate = r = 12.3 / 2 = 6.15%Time = t =…
Q: Role of Central Banks and Moral Hazards The potential answers for moral hazard. How might moral…
A: The central bank is the institution which ensures that the growth and good health of the financial…
Q: You hold a diversified portfolio consisting of many different common stocks with a total market…
A: Old Portfolio Beta = 1.15 Old Portfolio Value = $100,000 Value of Sold Stock = $10,000 Beta of Sold…
Q: Suppose that you hold a piece of land in the City of London that you may want to sell in one year.…
A: If the British economy booms (P):The land cost is £22.5 million (£18 million$1.25).The probability…
Q: You currently own 600 shares of JKL, Inc. JKL is an all-equity firm that has 75,000 shares of stock…
A: Total number of shares owned=600All equity firm has a number of shares=75,000Earnings before…
Q: Our Space is a social media site that is growing in popularity. The firm has been around for a few…
A: CompanyP/S MultipliesFacebook13.51Snap18.29Twitter13.27Required:Average P/S ratio=?
Q: m eBook St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine…
A: When employing the net present value (NPV) technique, the cash inflows that are received over the…
Q: CBOOK Problem 22-15 Management of Braden Boats, Inc. is considering an expansion in the firm's…
A: NPV is a useful tool in capital budgeting for the decisions making purposes. It helps investors to…
Q: Consider the following information: State of Probability of Economy State of Economy Boom Bust .58…
A: Expected return refers to the average return to be earned from the portfolio investment in a certain…
Q: Find the EAR in each of the following cases. Note: Do not round intermediate calculations and enter…
A: An effective annual rate of interest or E.A.R. is the interest which is earned in real times over a…
Q: Using provided data, solve for the number of compounding periods. Use the I/Y when looking up the…
A: Loans are paid by periodic payments and these payment carry payment for interest and payment for…
Q: A house sells for $275,000 and a 4% down payment is made. A mortgage is secured at 4% for 15 years.…
A: Mortgage is a legal agreement in which a lender provides a loan to a borrower for the purpose of…
Q: 2. Consider the following two projects with rate of 15%: Year 0 1 2 3 Projcet A -1000 400 500 600…
A: Net Present Value (NPV) is a financial measure that calculates the present value of an investment's…
Q: Project B is expected to earn $233,000 in year four. Project C is expected to earn $75,000 in year…
A: The internal rate of return is important part in capital budgeting decisions .These decision…
Q: You just deposited $6,500 in a bank account that pays a 4.0% nominal interest rate, compounded…
A: Future value represents the value of an investment or asset at a future point in time, based on a…
Q: State bonds with nominal value of 10 000 USD and with a coupon rate of 5% p.a. has paid off its last…
A: Bonds refers to the financial instrument used for providing funds to the business for operating…
Q: 7. Suppose you are deciding whether or not to buy a particular bond for $2,990.08. If you buy the…
A: The concept of present value is a fundamental tool for investors as it allows them to assess the…
Q: rminants of interest rates for individuals securities you are considering an investment in 30 years…
A: Due to inflation that is increase in prices the actual rate of return is much less rather than…
Q: New Mexico Lumber recently reported that its earnings per share were $2.5. The company has 400,000…
A: Earning Per Share = EPS = $2.5Number of Share = n = 400,000Interest Expenses = $500,000Tax rate = t…
Q: For the year just ended, Alpha Construction Services, Inc. started the year with net fixed assets of…
A: To determine the net fixed assets at year-end, we need to consider the changes in fixed assets and…
Q: For the given student loan, find the interest that accrues in a 30-day month, then find the total…
A: It is a case of student loan repayment where the loan is repaid after 6 months of the completion of…
Q: Use the following information to answer five questions related to the Abnormal Earnings Model; The…
A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: Understanding the optimal capital structure Review this situation: Transworld Consortium Corp. is…
A: According to bartleby guidelines , if multiple questions are asked , then 1st question needs to be…
Q: Which of the following statements is CORRECT? NVP 0 X? 1. X-$80 II. Y-7.65% Y? III. Z-19.44% Z? I,…
A: The relationship between Net Present Value (NPV) and the discount rate is crucial in evaluating the…
Q: A building sells for $325,000 and a 30% down payment is made. A 20-year mortgage at 4% is obtained.…
A: Mortgage loans help to purchase homes because they are easy to pay by monthly payments.Mortgage…
Q: Kelly Enterprises stock currently sells for $35.25 per share. The dividend is projected to increase…
A: Stock price refers to the price at which the shares are being buying and selling by the investors or…
Q: Yvette took out a term loan with an annual interest rate of 4.61% to pay for a car. The beginning…
A: Opening Balance of Loan = $6,596.82Closing Balance of Loan = $6,143.11Interest rate = 4.61% per…
Q: (Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three…
A: Discount rate = r = 25%
Q: St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a…
A: Net Present Value - It is the difference between the present value of cash outflow and present value…
Q: Melissa agrees to contribute $500 to the alumni fund at the end of each year for the next 9 years.…
A: Present value refers to the function of time, the value of money that is used for the computation of…
Q: 10. You must choose one of the 2 project proposals below. Interest rates are 10%. Which of t the…
A: With future value, annual interest rate (r) and annual period (n), the periodic payment or annuity…
Q: Preston Corporation has a bond outstanding with an annual interest payment of $100, a market price…
A: To find the approximate yield to maturity (YTM), we can make an estimate using the current yield as…
Q: A successful sushi chain in Hong Kong spent $500,000 to conduct a study on whether to open a…
A: According to bartleby guidelines , if multiple questions are asked , then 1st question needs to be…
Q: s the tax assessor for Indian Creek County, you have been informed that due to budgetary demands, a…
A: In property taxation mill rate is important and mill rate is the $1 per $1000 value of property and…
Q: Value of a mixed stream For the mixed stream of cash flows shown in the following table, determine…
A: YearOpening BalanceDepositInterestClosing balance1-32,700-…
Step by step
Solved in 3 steps with 2 images
- H3. Consider company Macrosoft, whose current stock price is 542. The board of directorsof Macrosoft has decided to engage a spin-off. Each shareholder of Macrosoft willreceive 3.50232 shares of Coco Colo, whose stock price is 8.34, for each share ofMacrosoft owned. Consider an investor who currently owns 152 shares of Macrosoft.What is the amount of cash that this investor will receive after that spin-off?A) 4436.88B) 2.941C) 4439.821D) 636.781 Please show proper step by step calculationStudent question Time Left : 00:09:33 (15 pts) An unlevered firm has 1000 shares outstanding and is worth $10,000. Its EBIT is $1,000. The firm decides to issue $5,000 of perpetual debt @ 4% interest rate and repurchase shares. What will be the common stock required return after the repurchase? (The firm faces a 40% tax rate and has zero costs of financial distress.) (6.857% - Note rsu = 6%, and Vl = Vu + TD = $12,000) PLEASE DO STEP BY STEP WRITTEN WORK THANK YOU Skip Start Solving Exit Exit QnA Training Student question Time Left : 00:09:33 (15 pts) An unlevered firm has 1000 shares outstanding and is worth $10,000. Its EBIT is $1,000. The firm decides to issue $5,000 of perpetual debt @ 4% interest rate and repurchase shares. What will be the common stock required return after the repurchase? (The firm faces a 40% tax rate and has zero costs of financial distress.) (6.857% - Note rsu = 6%, and Vl = Vu + TD = $12,000) PLEASE DO STEP BY STEP WRITTEN WORK THANK YOU…A5 8d 8. Mr. Toriop owns 5000 shares of stock in Yummy Corporation. The company has announced that it will pay a dividend of $5 per share in one year and then a liquidating dividend of $50 per share in two years. The required return on ABC stock is 10%. d. Suppose Mr. Toriop is thinking about buying a house for $220,000 in one year. How can he use homemade leverage on Yummy Corporation’s dividends to achieve this goal? Check that the present value of the cash flows will be the same as they are before the homemade leverage.
- A5 8c 8. Mr. Toriop owns 5000 shares of stock in Yummy Corporation. The company has announced that it will pay a dividend of $5 per share in one year and then a liquidating dividend of $50 per share in two years. The required return on ABC stock is 10%. c. Mr. Toriop wishes to have equal amount of dividend income for the next two years. How can he use homemade leverage on Yummy Corporation’s dividends to achieve this goal? Check that the present value of the cash flows will be the same as they are before the homemade leverage. (Hint: Dividends will be in the form of an annuity.)Ma1. Please give only typed answer. Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders' preference, the company wants to get rid of all its debt. Before recapitalization, what is the value of the firm? $25,000,000 $20,000,000 $80,000,000 $30,000,000 $50,000,000A5 10 c 10. The management of Oodles N Noodles Inc. is contemplating a 20% stock dividend. The company currently has cash of $300,000, fixed assets of $3.5 million, and debt of $1 million. Its net income for the most recent fiscal year was $500,000. The company’s shares are currently selling for $15 per share, and it has one million shares outstanding. Assume that there are no costs associated with issuing a stock dividend. c. If all that the company’s shareholders care about are their wealth and the P/E ratio, should the company go ahead with the stock dividend?
- 34.) You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 10% preferred, and 50% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 12.75%. The firm will not be issuing any new stock. What is its WACC?Group of answer choices 8.75% 9.55% 9.26% 9.53% 8.98%Hi there, I want help to solve this questions you are the CEO of Nelson Corporation, and the current stock price is $27.80. Pollack Enterprises announced today that it intends to buy Nelson Corporation. To obtain all the stock of Nelson Corporation, Pollack Enterprises is willing to pay $38.60 per share. At a meeting with your management, you realize that the management is not happy with the offer, and is against the takeover. Therefore, with the full support of your management team, you are fighting to prevent the takeover from Pollack Enterprises. Is the management of Nelson Corporation acting in the best interest of the Nelson Corpo ration stockholders? Explain your reasonA5 10aii 10. The management of Oodles N Noodles Inc. is contemplating a 20% stock dividend. The company currently has cash of $300,000, fixed assets of $3.5 million, and debt of $1 million. Its net income for the most recent fiscal year was $500,000. The company’s shares are currently selling for $15 per share, and it has one million shares outstanding. Assume that there are no costs associated with issuing a stock dividend. a Before issuing the stock dividend, the company’s management would like to know the effect of such a stock dividend on the following: ii Earnings
- Y8 Sarah bought stock on margin 8 months ago borrowing $10,000 at 7% EAR. She has just received a margin call for $3000 and her maintenance and initial margin was 15%. What must be the current value of the assets, BEFORE THE CALL, in her margin account? [Choose closest] a) Cannot be determined with the information provided, we need the number of shares b) Cannot be determined with the information provided, we need to know the original asset value c) $0 d) $9,310.51 e) $12,310.51 The answer is d) but why?Homework 11 Assume you have just been hired as a business manager of Arnie’s Artichokes a regional health food restaurant chain. The company’s EBIT was $80 million last year and is not expected to grow. The firm is currently financed with all equity and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firm’s owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained from the firm’s investment banker the following estimated costs of debt for the firm at different capital structures: % Financed With Debt rd 0% --- 25 9.0%…Task 4 Mr. M. Boy is the CEO of Money GmbH. His friends told him that the shares of Koinbase AG, which enables trading in a new type of cryptocurrency called "Litcoin", are particularly suitable for speculative purposes. Since he likes the name of the coin, he decides that Money GmbH will acquire shares of Koinbase AG worth €150k in t1. For a long-term investment, he also buys shares in Desla AG worth €200,000 on December 31. The performance of Desla AG shares is as follows: Mr. M.-Boy is not sure how Desla AG's share price could continue to evolve, as Desla AG's CEO, Mr. Helon Nusk, has often missed announced targets in the past. Mr. M.-Boy is interested in the highest possible annual result at t2. Money GmbH's balance sheet date is December 31. a) How should the shares of Desla AG be committed at t2? Justify your action! b) The share price of Koinbase AG has also fallen rapidly. The total market price of the shares is only 80 T€. How to close the end of t2? Justify your action! c)…
