1. What are the annual cash outlays associated with the bond issue? The common stock issue/ The bond principal repayment will be $6.25 million annually. The cash dividends will be $7.5 million annually on additional stock. 2. How do you respond to each director’s assessment of the financing decision? The following assessments were given during the last board meeting: • Andrea Winfield considered issuing bonds was not a good option for financing the acquisition. She was particularly concerned
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average total estimated number of issued shares in companies of this industry[3]. Net profit margin of 6.5% is a measure of profitability as well as‚ shows pricing strategy and how the companies within Apparel store manage their costs. Additionally‚ dividend yield in this industry is only 1.1%‚ which illustrates the rate of return on investment. P/E ratio in this industry is
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Problem Set 3 - FINA 4200 Spring 2013 Due Wednesday February 26th before class I. Multiple Choices Chapter 2 1. According to the Capital Asset Pricing Model‚ investors are primarily concerned with portfolio risk‚ not the isolated risks of individual stocks. Thus‚ the relevant risk is an individual stock’s contribution to the overall riskiness of the portfolio. a. True b. False 2. Diversifiable risk‚ which is measured by beta‚ can be lowered by adding more stocks to a portfolio.
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Observation on U.S. Treasury Yields Date: Oct 10‚ 2012 Introduction In this paper‚ we establish three regression models on U.S. Treasury yields with two different maturities: three-month and one-year. Model 1 is to interpret the relationship between unemployment rates and the risk-free rates‚ which we choose the three-month T-bill interest rates. Model 2 is to evaluate the movement of short-term interest rates under pure expectation theory and liquidity premium theory as well as to compare
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Chapter 3 Problem 60 Page 133 Dividend yield is the annual dividend per share a company pays divided by the current market price per share expressed as a percentage. A sample of 10 large companies provided the following dividend yield data (The Wall Street Journal‚ January 16‚ 2004). Company | Yield % | Company | Yield % | Altria Group | 5.0 | General Motors | 3.7 | American Express | 0.8 | JP Morgan Chase | 3.5 | Caterpillar | 1.8 | McDonald’s | 1.6 | Eastman Kodak | 1.9 | United Technology
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> ks > kd. d. ke > ks > WACC > kd. e. None of the statements above is correct. Capital components Answer: a Diff: E [iii]. Which of the following statements is most correct? a. If a company’s tax rate increases but the yield to maturity of its noncallable bonds remains the same‚ the company’s marginal cost of debt capital used to calculate its weighted average cost of capital will fall. b. All else equal‚ an increase in a company’s stock price will increase the
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+92-336-5505398 E-mail: master_nasir18@yahoo.com Ali Kamran Institute of Management Sciences Peshawar Tel:+92-334-8808095 E-mail:alikamran.pk@gmail.com Abstract The purpose of this research article is to investigate the ability of earning yield (EY)‚ dividend yield (DY) and bookto-market ratio (B/M)‚ to predict stock returns. The sample of the study consists of 100 non-financial companies listed in the “Karachi Stock Exchange”. The duration of the study is 7 years from 2005 to 2011. To find whether
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weight of equity is 0.902 and the weight of debt is 0.098. In order to determine the cost of debt‚ the yield to maturity of the debt must be calculated. Using a financial calculator (N=30‚ PV=-$95.60‚ PMT=$3.375‚ FV=$100)‚ the YTM is equal to 7.24%. This is the cost of debt. The cost of equity can be determined using the Capital Asset Pricing Model (CAPM). Joanna was correct in using the 20-year yield on U.S. treasuries as her risk-free rate and was also correct in using 5.90% as her risk premium. However
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| Table of Contents Cost of Capital 2 Value of Equity 2 Cost of Equity 2 CAPM Model 2 Dividend Growth Model 3 Value of Debt 3 Cost of Debt 4 WACC (Weighted Average Cost of Capital) 4 Comparison to Joanna Cohen’s Analysis 4 Financial Statement Analysis 5 Nike Inc. 5 Financial Ratios 6 Leverage Ratios 6 Efficiency Ratios 6 Liquidity Ratios 7 Profitability Ratios 7 Valuation Ratios 7 Conclusion 8 Appendix A – Ratio Calculation 9 Leverage Ratios 9 Efficiency Ratios 9 Liquidity Ratios
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net income this year is $34‚285.72‚ its established dividend payout ratio is 30 percents‚ its federal-plus-state tax rate is 40 percent‚ and investors expect earnings and dividends to grow at a constant rate of 9 percent in the future. LEI paid a dividend of $3.60 per share last year‚ and its stock currently sells at a price of $54 per share. LEI can obtain new capital in the following ways: Preferred: New preferred stock with a dividend of $11 can be sold to the public at a price of $95 per
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