Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.31%. Firm A just paid a dividend of $1.02 per share. The analyst estimates the β of Firm A to be 1.37 and estimates the dividend growth rate to be 4.61% forever. Firm A has 277.00 million shares outstanding. Firm B just paid a dividend of $1.85 per share. The analyst estimates the β of Firm B to be 0.85 and believes that dividends will grow at 2.58% forever. Firm B has 185.00 million shares outstanding. What is the value of Firm A?

Round to 2 decimal places

NPV—Mutually

exclusive projects   Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following​ table:

. The​ firm's cost of capital is 12​%.

a.  Calculate the net present value ​(NPV​) of each press.

b.  Using​ NPV, evaluate the acceptability of each press.

c.  Rank the presses from best to worst using NPV.

d.  Calculate the profitability index​ (PI) for each press.

e.  Rank the presses from best to worst using PI.

The table lists foreign exchange rates for August 25, 2017. On that day, how many dollars would be required to purchase 1,100 units of each of the following: British pounds, Canadian dollars, EMU euros, Japanese yen, Mexican pesos, and Swedish kronas? Use the direct quotation for your calculations. Round your answers to the nearest cent.

Too Young, Inc., has a bond outstanding with a coupon rate of 6.8 percent and semiannual payments. The bond currently sells for $949 and matures in 25 years. The par value is $1000. What is the company's pretax cost of debt?

Question 5 options:

I would like to discuss what happened to Valeant Pharmaceuticals at 12/31/2015 (what were the issues and what was there relationship to Philidor )? Is Valeant in business today ?

Divided Airlines is currently an unlevered firm. The company expects to generate $153.85 in EBIT in perpetuity. The corporate tax rate is 35%, implying after - tax earnings of $100. All earnings after tax are paid out as dividends. The firm is considering a capital restructuring to allow $200 of perpetual debt. Its cost of debt is 10%. Unlevered firms in the same industry have cost of equity of 20%. What is the new value of Divided Airlines (assuming t he cost of financial distress is 0)?

Name three investment rules. Detail the mechanics for each of these rules and compare their advantages and disadvantages. Finally, tell us which rule you personally prefer and why.

You decide to invest in a portfolio consisting of 11 percent Stock X, 53 percent Stock Y, and the remainder in Stock Z. Based on the following information, what is the standard deviation of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock X Stock Y Stock Z Normal .76 10.70% 4.10% 13.10% Boom .24 18.00% 26.00% 17.50%

1. Sway's Back Store is considering a 7-year project which will require the purchase of $2 million in new equipment. The equipment will be depreciated using MACRS method. Sway's Back Store will sell the equipment at the end of the project for a salvage value of $300,000. Annual sales from this project are estimated at $1,050,000 in year 1, and it is expected to grow by 3% each year. The variable cost is 40% of the annual sales and there is an annual fixed cost of $100,000. The store should build an inventory with a value of 10% of next year’s sales. All of the new net working capital will be recouped at the end of the project. The firm desires a minimal 12% rate of return on this project. The tax rate is 40%.  
2. 1. Construct a capital budgeting table and calculate the Free Cash Flow of each year. Hint: you need to find out capital expenditure (1 points) , Salvage Cash Flow (3 points), Change in Net working Capital (3 points), Operating Cash Flows (8 points), and then Free Cash Flow (1 point)
   2. Calculate the project NPV (3 points), IRR (2 points), Discounted Payback Period (4 points), Modified IRR (3 points)
   3. Conduct a sensitivity analysis of NPV to the % change of 1^st year sales. Hint: You will simulate at least 3 values for 1^styear sales and record the corresponding NPV for each of the simulated sales value (6 points). Analysis the sensitivity and interpret the result (4 points)
   4. Conduct a Scenario analysis of project NPV based on different level of first year sales.  

Please calculate the NPVs of the worst and best cases (4 points) and then the mean and standard deviation of the 3 NPVs (

LO, Inc., is considering an investment of $444,000 in an asset with an economic life of five years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $283,100 and $88,800, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. The company will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $64,000 in nominal terms at that time. The one-time net working capital investment of $19,500 is required immediately and will be recovered at the end of the project. The corporate tax rate is 24 percent. What is the project’s total nominal cash flow from assets for each year? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)

1. What role did irrational investors play in the financial crisis of 2007/2008?

The yield on 1 year treasury securities is 7.25%, 2 year securities yield 7.3%, and 3 year securities yield 7.5%. There is no maturity risk premium. Using expectations theory, forecast the yields on the following securities:

(a) A 1-year security, 1 year from now

(b) A 1-year security, 2 years from now

(c) A 2-year security, 1 year from now