Managerial Finance - 1271 Words

Homework II – Managerial Economics – Fall 2011 Each question is worth 1 point. 1. A call provision gives bondholders the right to demand, or call for, repayment of a bond. Typically, calls are exercised if interest rates rise, because when rates rise the bondholder can get the principal amount back and reinvest it elsewhere at higher rates a. True b. False 2. Sinking funds are devices used to force companies to retire bonds on a scheduled basis prior to their maturity. Many bond indentures allow the company to acquire bonds for a sinking fund by either purchasing bonds in the market or selecting the bonds to be acquired by a lottery administered by the trustee through a call at face value c. True†¦show more content†¦If the firms required return (rs) is 11%, what is its current stock price? a. $30.57 b. $31.52 c. $32.49 d. $33.50 e. $34.50 22. The Ramirez Companys last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price? a. $41.58 b. $42.64 c. $43.71 d. $44.80 e. $45.92 23. Goode Inc.s stock has a required rate of return of 11.50%, and it sells for $25.00 per share. Goodes dividend is expected to grow at a constant rate of 7.00%. What was the last dividend, D0? a. $0.95 b. $1.05 c. $1.16 d. $1.27 e. $1.40 24. The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The companys beta is 1.15, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is the companys current stock price, P0? a. $18.62 b. $19.08 c. $19.56 d. $20.05 e. $20.55 25. Molen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share. If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell? a. $104.27 b. $106.95 c. $109.69 d. $112.50 e.Show MoreRelatedPrinciples of Managerial Finance4870 Words   |  20 PagesPrinciples of Managerial Finance The Prentice Hall Series in Finance Adelman/Marks Entrepreneurial Finance Andersen Global Derivatives: A Strategic Risk Management Perspective Bekaert/Hodrick International Financial Management Berk/DeMarzo Corporate Finance* Berk/DeMarzo Corporate Finance: The Core* Berk/DeMarzo/Harford Fundamentals of Corporate Finance* Boakes Reading and Understanding the Financial Times Brooks Financial Management: Core Concepts* Copeland/Weston/Shastri Read MoreAdvanced Managerial Finance2203 Words   |  9 Pages $1,760,000,000 = 2.86 Reasons of different capital structure Capital structure means the method that an organization used to finance their assets. It is included debt capital and equity capital. 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The firm is currently financed with all equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained fromRead MoreManagerial Finance1001 Words   |  5 Pages------------------------------------------------- Chapter 5: Bonds, Bond Valuation, and Interest Rates (5–1) Bond Valuation with Annual Payments Jackson Corporation’s bonds have N=12 years remaining to maturity. Interest is paid annually, the bonds have a FV=$1,000 par value, and the coupon interest rate is PMT=8%. The bonds have a yield to maturity of I=9%. 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In your post, discuss the role of management by addressing the following prompts: ExplainRead MoreEssentials of Managerial Finance3732 Words   |  15 PagesDepartment of Accounting and Finance/COBA Alabama State University FIN 321 Essentials of Managerial Finance Course Syllabus Course: Essentials of Managerial Finance | Instructor: | Course Credit Hours: 3 | Instructor’s Office: | Instructor’s Office Hours: TBA | Instructor’s Email Address: ghuang@alasu.edu | Instructor’s Office Phone: | Prerequisites: All courses in sequence prior to this course including: MAT137 and ACT 215 | COBA Mission Statement The mission of the CollegeRead MoreManagerial Finance Answers1546 Words   |  7 PagesTEST BANK: TIME VALUE OF MONEY (Difficulty: E = Easy, M = Medium, and T = Tough) Multiple Choice: Problems Easy: FV of a single payment Answer: d Diff: E . You deposit $2,000 in a savings account that pays 10 percent interest, compounded annually. How much will your account be worth in 15 years? a. $2,030.21 b. $5,000.00 c. $8,091.12 d. $8,354.50 e. $9,020.10 FV of a single payment Answer: c Diff: E . You deposit $1,000 in a savings account that pays 9 percentRead MoreAdvance Managerial Finance3171 Words   |  13 PagesProblem go to solution Business, Finance - Year 2 What is the bond s conversion ratio? What is the bond s conversion value? What is the bond s straight-debt value? The following data apply to Saunders Corporation s convertible bonds: Maturity 10 Stock Price $30.00 Par Value $1,000 Conversion Price $35.00 Annual Coupon 5% Straight-Debt Yield 8% 1) What is the bond s conversion ratio? A. 27.14 B. 28.57 C. 30.00 D. 31.50 E. 33.08 2) What is the bond s conversion value? A. $698.15 B. $734