If I took 25 years to pay off my loan the monthly Payment would be $761.22 per month. If it took 20 years to pay off my loan the monthly Payments would be $849.52 per month. So if I wanted to pay off the loan in 20 years I Would need to raise my total monthly payment by $88.30 per month. I also need to explain whether or not it would be reasonable to do this if I currently meet my monthly expenses with less than $100.00 left over. Yes I would be able to meet my monthly Expenses.
Precedents usually yield higher valuations than trading comps because a buyer must pay shareholders more than the current trading price to acquire a company. This is referred to as the control premium (use 20 percent as a 31 Customized for: JJ (firstname.lastname@example.org) Vault Guide to Private Equity and Hedge Fund Interviews Finance benchmark). If the buyer believes it can achieve synergies with the merger, then the buyer may pay more. This is known as the synergy premium. Between LBOs and DCFs, the DCF should have a higher value because the required IRR (cost of equity) of an LBO should be higher than
Problem 17-19 on Dividend Capture Strategy based on Chapter 17 Payout Policy Que Corporation pays a regular dividend of $1 per share. Typically, the stock price drops by $0.80 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 20%, but investors pay different tax rates on dividends. Absent transactions costs, what is the highest dividend tax rate of an investor who could gain from trading to capture the dividend? Problem 23-5 on Preferred Stock based on Chapter 23 Raising Equity Capital Three years ago,
Distinction between nominal and effective interest rate Nominal interest rate does not compound (added to the principal amount). The interest rate stated on an investment agreement or loan document is the interest paid to the new bondholder. There is also no adjustment for inflation, and if the interest is not paid, it is added to the principal balance. The effective interest rate is compounding (added to the principal) each period it is paid. Interest is calculated on the new principal amount.
I. Introduction and Comment * The Duplan Reorganization Plan and Proposed Compromise Settlement The reorganization plan of Duplan Corporation estimated its balance of cash at $27.1 million and stock at $27.2 million. The total $54.3 million were distributed to its creditors that included banks, trade creditors, note holders, debentures holders as well as some small claimers. Since the assets were less than $69 million of allowable debt, the original equity owners will be wiped out and there were some controversies among creditors regarding to distribution of cash and stock. In our opinion, the reorganization plan of Duplan Corporation underestimated its assets and distributed available cash and new stocks unfairly.
Executive Summary and Introduction In May 2001, portfolio manager Kimi Ford was considering whether Nike, Inc. would be a good investment option. With an emphasis on value investing, Ford estimated that Nike was undervalued at discount rates below 11.17%. Her assistant Joanna Cohen’s did further calculations and estimated that Nike’s cost of capital was 8.4%. Ford manages a well-diversified portfolio and she has the focus on value investing. Therefore, we assume she would be interested in quality stocks with are fairly priced.
"It all depends on the assumptions." To see just how good some of the new metrics are at valuing acquisitions, we asked both Stern Stewart and HOLT Value Associates LP to calculate a fair value for Snapple at the time of its acquisition by Quaker, using only data that was publicly available at that time. Stern Stewart declined, citing its former consulting relationship with Quaker, but HOLT agreed to take on the assignment using its CFROI (cash flow return on investment) methodology. First, some background. In valuing a company whose CFROI is higher than average, HOLT assumes those returns will gradually fade toward the market norm because of competitive pressures.
However, since the principal of the TIPS increases over time, the interest payment increases over time. This inflation rate adjustment of a TIPS’ principal every six months reduces the amount of downward price change in the price of the bond when interest rates increase. LG2 3. Explain how mortgage-backed securities work. A large amount of home mortgages are purchased and pooled together.
1. You have been given data for stock prices and dividends. Some of the stocks have undergone stock splits. To calculate returns when there is no stock split use r_t=(P_t-P_(t-1)+D_t)/P_(t-1) where P_t is the price at time t and Dt is the dividend. When there is an x for y stock split then you should calculate returns as r_t=(〖x/y P〗_t-P_(t-1)+〖x/y D〗_t)/P_(t-1) For example, in the case of a 5 for 4 stock split x/y=1.25.
Book to market ratio was the most powerful scaled price variable for predicting stock returns (more than PE and A/ME). - Size effect exists. - High BE/ME ~ value stocks. Low BE/ME ~ growth stocks - growth were typically overhyped? that did not go well with efficient markets hypothesis.