The beta of the equity of CDE Company is 1.67 and CDE has a debt-to-equity ratio of 0.67 calculated at market values. The debt is risk-free and perpetual. CDE generates annual EBIT of $100 and has 100 shares of common stock outstanding. The expected return on the market portfolio is 15% and the risk-free interest rate is 5%. The corporate tax rate is 30%. Assume that personal taxes and bankruptcy costs are not relevant.

1. Compute the current market value of CDE Company.

2. CDE is considering an expansion project that will require an initial investment of 133.33. This expansion project is estimated to increase the firm’s annual EBIT by 20%. Determine the new value of CDE if it undertakes the investment and finances it 100% with debt, permanently altering its leverage. Also find the new value of the equity and the new share price.

3. If the investment in part 2 is financed entirely with new equity, how many shares must be issued? What is the new equilibrium price of the shares?

4. Should CDE undertake the project? Hint: Is the new value of the firm greater then the old value of the firm plus the investment?

Let X denote the distance (m) that an animal moves from its birth site to the first territorial vacancy it encounters. Suppose that for banner-tailed kangaroo rats, X has an exponential distribution with parameter λ = 0.01452.

(a) What is the probability that the distance is at most 100 m? At most 200 m? Between 100 and 200 m? (Round your answers to four decimal places.)

(b) What is the probability that distance exceeds the mean distance by more than 2 standard deviations? (Round your answer to four decimal places.)


(c) What is the value of the median distance? Hint: Find a such that

P(X≤a)= 0.50

(Round your answer to two decimal places.)

(d) Only 5% of animals will move farther than what distance? Hint: Find a such that

P(X≤a)= 0.95

. (Round your answer

Why would you prefer to receive $100 today rather than wait and receive $100 one year from now?

Prompts:

For the first part of the discussion post, list all the potential explanations you can think of for the time value of money. For each cause, write a sentence or two about how it explains your preference for money today rather than money at some future date. Let’s see how many different explanations we can uncover.

For the second part of the discussion post, imagine that I promise to pay you either $100 today or some different amount of money one year from now. How much would I have to promise to pay you in one year for you to choose to forego the $100 today and wait one year for the cash? Explain how you came up with the value you would need to receive in order to choose to wait.

We have the following information for the Valverde company. The stock pays a $10  dividend, and it will grow by 100% the first year, 30% the second year and 3% forever   after that. You know the ROR in the S&P 500 is 11%, the Bheta is 1.2 and the Treasury bond rate is 4%. Derive the value of Valverde.

You open a savings account that pays 1.2% and make 15 end-of-year deposits. Your first deposit is $500 at the end of year 1 and deposit amounts increase at a rate of $100 per year. How much will you have in the account immediately after the 15th deposit? by excel preferably

A growing monthly perpetuity will start 6 months from today. If the discount rate is 6% APR compounded monthly, what is the value of the perpetuity today (at time t=0) if the growth rate is 1.2% APR compounded monthly and the first payment is $100?

Enter answer as a dollar, rounded to nearest dollar.

The bull and alternate hypothesis are:
Ho:u1<u2
H1:u1>u2
A random sample of 20 items from the first population showed a mean of 100 and a standard deviation of 15. A sample of 16 items for the second population showed a mean of 94 and a standard deviation of 8. use the 0.5 significant level.

3) Price Discrimination

Graphically show and explain, given a constant marginal cost, how the profit maximizing price and quantity are determined by a

a) Single priced monopolist

b) Perfect (first degree) price discriminating monopolist

c) (Third degree) price monopolist who can separate the buyers into two groups and charge them each a single but different price.

Compare or rank (from highest to lowest) the resulting price and quantity and producer surplus in each of these three monopolistic situations, explaining why you rank them in the order given.

A zero- coupon bond matures in 15 years. At a market discount rate of 4.5% per year and assuming annual compounding, the price of the bond per 100 of par value is closest to

Group of answer choices

71.62

51.30

51.67

69.05

A callable bond pays annual interest of $5, has a par value of $100, matures in 10 years but is callable in 5 years at a price of $110, and has a value today of $106. Calculate the yield to call.

5.18%

5.27%

5.39%

5.58%