The parent receives annual dividends from the subsidiary of $2,500,000. If the parent's marginal tax rate is 34% and if the exclusion on intercompany dividends is 70%, what is the effective tax rate on the intercompany dividends, and how much net dividends are received? Question 20 New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market.
a. Based on this information, the ValueLine 1995 expected dividend, and the annual rate of dividend change for the growth estimate, what is the company’s return on common stock using the constant growth model? What is the expected dividend yield and expected capital gains yield? Explain the difference in the required return estimates from the ValueLine (see question 1a) to the WSJ price data. Return on common stock…D1/Po+g=Expected Return…0.60/27+5.5%= 7.72% Expected dividend yield= D1/P0=2.22% Expected capital gains yield= growth rate, 5.50% Stock Price increased, but expected return decreased.
Nikko Corp's total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its ROE(Return on Equity)? (Points : 6) 16.87% 17.75% 18.69% 19.67% 20.66% Formula used in Return on Equity calculation is: 3. You have a chance to buy an annuity that pays $1,000 at the end of each year for three years. You could earn 5.5% on your money in other investments with equal risk.
If the YTM on these bonds is 6 percent, what is the current bond price? | | $1,160.76 | | $1,248.85 | | $1,302.62 | | $742.83 | | $1,258.85 | Ashes Divide Corporation has bonds on the market with 19 years to maturity, a YTM of 7.8 percent, and a current price of $1,206.50. The bonds make semiannual payments. What must the coupon
Questions 1. According to ValueLine estimates in Figure 1, James River’s expected annual dividend growth rate from the 91–93 to 97–99 period is 5.50%, and the next dividend (1995) is expected to be $0.60. Assume that the required return for James River was 8.36% on January 1 1995 and that the 5.50% growth rate was expected to continue indefinitely. a. Based on the Constant Growth Rate or Gordon Model, what was James River’s price at the beginning of 1995?
VOP = [FCF x (1+g)] / (WACC-g) = [$400,000 x (1+0.05)] / (0.12-0.05) = [$400,000 x 1.05] / 0.07 = $420,000 / 0.07 = $6,000,000 Problem 13-3: Horizon Value. Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012, and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2012? Actual Projected 2010 2011 2012 2013 Free cash flow (millions of dollars) $606.82 $667.50 $707.55 $750.00 g = ($750.00 - $707.50) / $707.50 = $42.50 / $707.50 = 0.06 VOP = [(FCF x (1+g)] /
You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?-PV $1 As the interest rate increases, the present value of an amount to be received at the end of afixed period-decreases. As the time period until receipt increases, the present value of an amount at a fixed interest Rate - decreases A home buyer signed a 20-year, 8% mortgage for $72,500. How much should the annual loan payments be?
How many years will it take for $197,000 to grow to be $554,000 if it is invested in an account with a quoted annual interest rate of 8% with monthly compounding of interest? 8. At what quoted annual interest rate must $134,000 be invested so that it will grow to be $459,000 in 15 years if interest is compounded weekly? 9. An annuity pays $24,000 per year for 11 years (first payment one year from today).
Fixed expenses are $424,000 per month. The marketing manager believes that a $7,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? A. Increase of $8,000 B.
Question: : (TCO D) A company issues $5,000,000, 7.8/%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on December 31. The proceeds from the bonds are $4,901,036. Using effective-interest amortization, how much interest expense will be recognized in 2010? 15.