Sunday, 15 June 2014

Finance

The firm is planning an expansion project that it desires to finance with newly issued common stock. The firm has an outstanding issue of common stock that just paid a dividend of $4.25 per share with 6% constant growth rate, which is trading for $65 per share. You have advised the firm that flotation costs will be 8% per share. What will be the cost of the newly issued common shares? 8.3% 7.11% 7.53% 13.53%
PROBLEM 14) If you purchased a share of Qualcomm stock on March 1, 1994 for $45 and you sold the stock at $ 78 on February 28, 1999, what was your annual rate of return on the stock?

PROBLEM 16) The corporation is evaluating a project that will cost $150,000; it is expected to last for 8 years and produce before-tax cash flows, including depreciation, of $52,302 per year. If the firm's cost of capital is 14% and its tax rate is 40%, what is the project's IRR? 31% -25% 14% 13% 18%
PROBLEM) 17. The firm filed Chapter 11 and the bankruptcy judge granted a new indenture on an outstanding bond issue to be put into effect. The bond has 20 years to maturity and coupon rate of 8 percent paid annually. The new agreement allows the firm to pay no interest for the first 10 years, and then start paying interest payments for the next 10 years and at maturity in 20 years, to repay the principal plus the interest that was not paid for the first five years, but without paying Ac€A?interest on the deferred interest.Ac€?? If the required rate of return is 15 percent, what the current price of bond should be as of today? $561.42 $209.22 $362.44 $456.54

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