Given the following cash flow stream at the end of each year: Year 1: $4,000 Year 2: $2,000 Year 3: 0 Year 4: -$1,000 Using a 10% discount rate, the present value of this cash flow stream is: a. $4,606 b. $3,415 c. $3,636 d. Other 8. Consider a 10-year annuity that promises to pay out $10,000 per year, given this is an ordinary annuity and that an investor can earn 10% on her money, the future value of this annuity, at the end of 10 years, would be: a. $175,312 b.
What is the company's current stock price, P0? Required Return= Rfr+ Beta X Risk Premium= 4%+1.15*5%= 9.75% P0= D0 * (1+g)/ (r-g) = .75 * (1+5.5%)/ (9.75%-5.5%) = $18.62 14. Sorenson Corp.’s expected year-end dividend is D1 = $1.60, its required return is rs = 11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7? P0= D1/ Dividend yield= $26.67 P7= P0 *(1+11%)^7= $ 55.36 15.
c. Internal common equity where the current market price of the common stock is $43.50. The expected dividend this coming year should be $3.25, increasing thereafter at a 7% annual growth rate. The corporation’s tax rate is 34%. d. A preferred stock paying a 10% dividend on a $125 par value. If a new issue is offered, flotation costs will be 12% of the current price of $150.
$27 c. By what amount did the company's paid-in capital increase during 20X6? $1,724,000 d. Did Star's total legal capital increase or decrease during 20X6? By what amount? $680,000 increase 2. Bond computations: Straight-line amortization Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1.
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm’s stock? Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year.
What is the amount of its credit carryover and the last year to which the carryover could be used? Answer: $7,750 carried over to 2004 or 2025 4. Margolin Corporation has a regular taxable income of $120,000. It has a positive adjustment of $90,000, preference items of $50,000 and negative adjustments of $40,000. What is its alternative minimum tax?
$25 a year for 3 years compounded annually at 2 percent rate (i)= 2% number of periods (n) = 3 present value (PV) = $25 type (0 at end of period) = 0 Future value (FV) = $76.51 5-6A (Present value of an annuity) What is the present value of the following annuities? a. $2,500 a year for 10 years discounted back to the present at 7 percent rate (i)= 7% number of periods (n) = 10 Future value (FV) = $2,500 type (0 at end of period) = 0 Present value (PV) = $17,558.95 b. $70 a year for 3 years discounted back to the present at 3 percent rate (i)= 3% number of periods (n) = 3 Future value (FV) = $70 type (0 at end of period) = 0 Present value (PV) = $198.00 c. $280 a year for 7 years discounted back to the present at 6 percent rate (i)= 6% number of periods (n) = 7 Future value (FV) = $280 type (0 at end of period) = 0 Present value (PV) = $1,563.07 d. $500 a year for 10 years discounted back to the present at 10 percent rate (i)= 10% number of periods (n) = 10 Future value (FV) = $500 type (0 at end of period) = 0 Present value (PV) =
A company issued a 30-year, $1,000 par value bond that has 10.85% coupon rate. Coupons are paid out semi-annually and the relevant interest rate is 9% compounded semiannually. a. (3 points) What was the value of this bond when it was issued? PMT = (.1085/2)*1000=54.25 N = 60 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =?
With this new development, if we assume that the previous 4,796,000 shares of common stock that were originally issued in March of 1993 are now also worth $1 per share, this gives a total of $4,796,000. The total valuation of the company will then be $800,000 + $4,796,000 = $5,596,000. This is the value that we believe to represent the valuation of Neverfail as of November 1994. After round 1 of VC investment: Due to the deal with the Pacific Ridge, Neverfail share prices were going for $1.50 per share The Company was valued at $9 million as of December 1994 according to the case study. Initial value of Pacific ridge investment (December 1995) is: 666,667 * $1.50 + 133,333 * $0.3 = $1,040,000.4 (initial investment, exhibit 7).
The annual growth rate is I in the following equation: $1(1 + I)10 = $2. We can find I in the equation above as follows: Using a financial calculator input N = 10, PV = -1, PMT = 0, FV = 2, and I/YR = ? Solving for I/YR you obtain 7.18%. Viewed another way, if earnings had grown at the rate of 10% per year for 10 years, then EPS would have increased from $1.00 to $2.59, found as follows: Using a financial calculator, input N = 10, I/YR = 10, PV = -1, PMT = 0, and FV = ?. Solving for FV you obtain $2.59.