micron Technologies made a before-tax profit of $50 million this year. The firm has no debt and 10 million shares outstanding, with a current market price of $45 per share. Its unlevered cost of capital is 10%. Omicron's board is meeting to decide whether to pay out the entire $50 million as a dividend or to use it to repurchase shares of the firm's stock in the open market.   If Omicron uses the entire $50 million to pay a dividend today, what is Omicron’s ex-dividend price of the shares in a perfect capital market with no taxes?   If Omicron instead chooses to use the entire $50 million to repurchase shares, what is the number of shares outstanding following the repurchase? What is the price of the shares, in a perfect capital market with no taxes,once the repurchase is complete

Q: The treasurer of a major U.S. firm has $30 million to invest for three months. The interest rate in…

A: Investment refers to the financial asset that is to be bought and sold at profit at some future…

Q: The owner Oak Hill Squirrel Farm deposits $2,000 at the end quarter into an account paying 2.5%…

A: Solution:- When an equal amount is saved each period at end of period, it is called ordinary…

Q: On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the…

A: Solution:- Cost-volume-profit graph is the graph which measures the loss, profit and break-even…

Q: Which is not correct about necessity of Financial Institutions? Cost reduction such as information…

A: Financial institutions are very important part of the economy in modern times and without them…

Q: Complete using the declining balance method of depreciation (Round to nearest hundredth of a…

A: Solution:- Depreciation is the wear and tear cost of asset. It is the cost of use of asset. In…

Q: A project that provides annual cash flows of $18,000 for ten years costs $86,000 today. What is the…

A: Given Annual cashflows are $18000 Cost of project is $86,000

Q: You believe you have found a trading strategy that could make significant profits. It requires…

A: Efficient market hypothesis advocates for complete discounting of any kind of information in the…

Q: Q 19 A local furniture store is advertising a deal in which you buy a $2,200 dining room set and do…

A: Solution: An amount invested somewhere, earns interest on it. Amount initially deposited is called…

Q: Compute the present value of $5,800 paid in two years using the following discount rates: 7 percent…

A: The present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Q: 9. Hansco borrowed $9200 paying interest at 11% compounded annually. If the loan is repaid by…

A: Given: Loan amount = $9,200 Interest rate = 11% Payment = $2,000

Q: Last year you purchased a 15-year bond at 98 with a coupon rate of 5%. The current market rate is…

A: Return on investment for a bond = ((Coupon+(Price today - Purchase price))/Purchase price)*100

Q: ming Kingsla Motors was on the stock exchange, why might it contemplate a share split if its sharer…

A: The companies which are listed on the market try increase the value of shares in the market and they…

Q: An investor shorts 1,000 shares of XYZ.com, a security eligible for reduced margin, at $48. The…

A: Margin is the amount of equity in an investor's brokerage account. To "margin" or "buy on margin"…

Q: Q 12 A loan is offered with monthly payments and a 16.25 percent APR. What’s the loan’s effective…

A: Annual percentage rate (r) = 16.25% Number of compounding per year (m) = 12

Q: ou own a stock portfolio invested 16 percent in Stock Q, 24 percent in Stock R, 36 percent in Stock…

A:

Q: . Looking at the stock information on figure 2, what would you conclude about the South African…

A: Stock markets are highly volatile and changing and but the over the long period of time stock market…

Q: Indicate which  investments   will   plot  on, above and below the SML?   If an investment’s…

A: When the expected return or mean is more than the required return, stock is undervalued. When the…

Q: Match the terms to the description Time Value of Money (TVM) Discounting Present Value (PV) Future…

A: The time value of money concept explains how money becomes less valuable with the passage of time.…

Q: Not having a credit may result in having a hard time finding an apartment. False True 199 What's the…

A: Several multiple choice questions appear on the screen. We have to find the correct answer for each…

Q: ● Suppose you have a two-security portfolio containing bonds A and B. The book value of bond A is…

A: Solution: Modified duration measures the sensitivity of bond price with respect to one percent…

Q: In 2014, Amira corporation had current assets of $144 million, inventory of $42.9 million and total…

A: Quick ratio = Current assets - InventoryCurrent liabilities Quick ratio in 2014 = $144 million-$42.9…

Q: Guelph Inc. would like you to assess the after-tax viability of a new machine using annual worth…

A: An annual worth analysis is a widely used technique for assessing the viability of an investment. It…

Q: Beltime Associates is a research firm that conducts market surveys and publishes reports on various…

A: The required return here is a function of three factors: Market, size and value. Several statements…

Q: nsider a stock worth K12.50 that can go up or down by 15% per period. Assume a period process of…

A: Call options gives opportunity to buy the stock on expiration period but there is no obligation to…

Q: Health Supplement Inc. Nutritional supplements provide nutrients, which may not be ingested in…

A: Solution: Payback period is the period at which the accumulated cash flows from the project becomes…

Q: A stock has a beta of 1.09, the expected return on the market is 10.3 percent, and the risk-free…

A: Given Beta is 1.09 Expected return on market is 10.3% Risk free rate is 4.8%

Q: You paid a premium of $1.47 for a call option on a common stock. The option has an exercise price of…

A: Solution:- Call option means right to buy the underlying asset at strike price, if at maturity the…

Q: 1) Please indicate whether the following statements are true or false. In case of a false statement,…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: A business issued $1,000,000 worth of 10-year bonds in the form of $1,000 units. 8% interest is paid…

A: Bond High-security debt instruments that help businesses raise capital are called bonds. Bonds are…

Q: A rate of return is... O A. the return which is required for an investment O B. the current worth of…

A: Solution:- Rate of return means the rate at which the investor wants the return.

Q: What is the effective annual rate​ (EAR) of a mortgage that is advertised at ​% ​(APR) over the next…

A: Effective interest rate is rate of return realized after considering the impact of compounding on…

Q: Mr. James would like an income of $300,000 per year in equal instalments for fifteen (15) years. How…

A: Solution: An equal amount received each period at end of period, it is known as ordinary annuity. We…

Q: Boris wants to save $93,000.00 for retirement. He already has $5,580.00, and he will make bi-weekly…

A: Required amount for retirement(FV)  $ 93,000.00 Current amount in account(PV)  $   5,580.00 Time…

Q: Jewelry Company receives a jewelry order to be made in 6 months from now, it needs to use 10,000…

A: Futures contracts are basically used to hedge an underlying exposure. These contracts trade on an…

Q: The Dental Clinic, Inc. is contemplating replacing an obsolete word processing system with one of…

A:

Q: Explain the concept of ‘beta’ within the framework of the Capital Asset Pricing Model (CAPM).…

A: The relationship between systemic risk, or the general dangers of investing, and expected return for…

Q: Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV…

A: Free cash flow refers to the cash that is generated by the company after considering all the cash…

Q: The part of finance concerned with design and delivery of advice and financial products to…

A: Finance is the amount of money needed to run a business. Finance is the study of banking, capital…

Q: Scheduled payments of $1054, $789, and $508 are due in one-and-a-half years, four years, and six…

A: Here, Schedule payment (FV)  $1,054.00 Time period (NPER) 1.50 Schedule payment (FV)  $789.00…

Q: An investment project costs $10,000 and has annual cash flows of $2,870 for six years. a. What is…

A: Year Cash flows 0  $ -10,000.00 1  $    2,870.00 2  $    2,870.00 3  $    2,870.00 4  $…

Q: You want to buy a computer for $2,000.  The interest rate is on the loan is 12%, and you have 18…

A: First we will calculate EMI, so that we know how much we are paying in each payment.  Formula for…

Q: Queen, Inc., has a total debt ratio of 0.11. What is its equity multiplier?

A: Equity Multiplier = 1 / (1 - Debt ratio)

Q: Lincoln Manufacturing is considering starting a new line of business with the excess capacity it…

A: Given: Particulars Amount New machine cost $100,000 Interest rate 7% Years 6 Replaced in…

Q: Consider the following information about the various states of economy and the returns of various…

A: Here, State of the Economy Probability T-Bills Philips Pay-up Rubber-Made Market Index…

Q: James Fromholtz is considering whether to invest in a newly formed investment fund. The fund's…

A: Formula for calculating Mean, Standard deviation and coefficient of variation with probability is as…

Q: 7. A gardener sells herbal plants at Php38 per pack, selling all that he harvests. His fixed cost is…

A: As per Bartleby honor code, when a student asks for a particular part of a question, then expert is…

Q: The treasurer of a firm has an opportunity to purchase a secured 15% mortgage with 5 years remaining…

A: NPV is net present value is the difference between the present value of cash flow and initial…

Q: Adiminus Inc had sales of R15 million, a net profit margin of 8%, total assets of R20 million,…

A: a). Net income = Net profit margin*Sales = 0.08*R15,000,000 = R1,200,000 Earnings per share(EPS) is…

Q: Robert bought shares of 6% $100 face value at a price of $120.  Sam bought shares of 8% $20 face…

A: Data given: Robert: Rate= 6% Face value=$100 Share price = $120.  Sam Rate= 8% Face value=$20…

Q: calculate the firms:  d) P/E ratio given the market price above  e) ROE,  f) Debt-equity ratio…

A: Solution:- Price Earnings ratio (P/E ratio) is the ratio of current market price per share to the…