If the interest rate is 12% per year, what is the present value of this annuity? a. $1,229.97 b. $496.76 c. $556.38 d. Other 7. 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.
– 133 2013 net sales / base year 2011 net sales = 800,000 / 600,000 = 1.33 1.33 x 100% = 133% 5. In analyzing financial statements, horizontal analysis is a- tool 6. Comparative balance sheets - are usually prepared for at least two years 7. Assume the following cost of goods sold data for a company: 2013 $1,500,000 2012 1,200,000 2011 1,000,000 If 2011 is the base year, what is the percentage increase in cost of goods sold from 2011 to 2013? – 50% = New - Old Old 100 8.
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?
| | | | | Score: | 0/10 | | 2. Chapter 10 - The Cost of Capital Question MC #65 Bosio Inc.'s perpetual preferred stock sells for $75.00 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?
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 =?
(c/2) (d0.5 + d1) + d1 = 1 ⇒ c = 2(1-d1)/(d0.5+d1) = 5.8233% e) What is the 0.5-year zero rate? r0.5 = 2(d0.5-1-1) = 5.9406% f) What is the 1-year zero rate? r1 = 2(d1-1/2-1) = 5.8216% g) Considering the shape of the yield curve, should the yield on the 1-year 10%coupon bond be higher or lower than the 1-year par rate? Higher. Both the 10%-coupon bond and the par bond have yields that are some average of the two zero rates.
5. On January 28, 2012, the stock price for Gap was $18.84. Calculate the Price-Earnings multiple for Gap. (Stock Price/EPS). Does this seem high or low?
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.
Calculate the expected return and standard deviation of his portfolio if he invests: (a) 40% in share X and 60% in share Y. [40%] (b) 70% in share X and 30% in share Y. [40%] (c) Calculate the correlation coefficient between X and Y. [20%] Question 3 a) Suppose your neighbour wants to invest in bonds. One of the choices is a corporate bond with a coupon rate 2%, 2-year maturity with par value of £1000 paying annual coupon payment.
Explain the difference in these two readings. 8. In the legend beneath Figure 2, the authors give an equation indicating that diastolic blood pressure is DBP = 25.8 + 0.13x. If the value of x is postnatal age of 30 hours, what is the value for Yˆ for neonates ≤ 1,000 grams? Show your calculations.