Using the publicly available data‚ we estimated the weighted average cost of capital of the AMD and Duke Energy. For the AMD‚ the WACC is 10.83%. For Duck Energy‚ the WACC is 2.76% When we calculate those number‚ we need to know the equity and debt of the company which can easily find on yahoo finance. The cost of debt and the corporate tax rate that we calculated are also based on the data from yahoo finance. We made Beta for the companies with 10 year ranges and use it to calculate return of
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interest of $120 per year and has 10 years to maturity. The face value of the bond is $1‚000. If the yield for similar bonds is currently 14%‚ what is the bond ’s current market value? [Ans: $ 895.68] 2. For the Verbrugge Company bond described in Problem 1‚ find the bond ’s value if the yield for similar bonds decreases to 12%. [Ans: $ 1‚000] 3. For the Verbrugge Company bond described in Problem 1‚ find the bond ’s value if the yield for similar bonds decreases to 9%. [Ans: 1192.53]
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| Long Term Capital Management and the Hedge Fund industry | | | | | | Introduction The Hedge fund industry is surrounded by much controversy and debate; and that for many years. Lack of oversight‚ excessive returns‚ unclear impact on the market and more‚ are all subjects of concerns for market participants and the public. According to Priya Jestin on Hedge Fund Street‚ “on an average day‚ between 18 and 22 percent of all trading on the New York Stock Exchange is related
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practical application of the weighted average cost of capital (WACC) begins. It presents evidence on how some of the most financially complex companies and financial advisors estimated capital costs and focuses on the gaps found between theory and application. The approach taken in the paper differed from their predecessors in several various respects. Prior published information was solely based on written‚ closed-end surveys sent to a large number of firms‚ without a focused topic. The study set out
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How to Value Bonds 1. What is the present value of a 10-year‚ pure discount bond paying $1‚000 at maturity if the appropriate interest rate is: a. 5 percent? b. 10 percent? c. 15 percent? 2. Microhard has issued a bond with the following characteristics: Principal: $1‚000 Time to maturity: 20 years Coupon rate: 8 percent‚ compounded semiannually Semiannual payments Calculate the price of this bond if the stated annual
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In proper capital budgeting analysis we evaluate incremental a. Accounting income. b. Cash flow. c. Earnings. d. Operating profit. Capital Budgeting is a part of: (a)Investment Decision (b) Working Capital Management (c) Marketing Management (d) Capital Structure A project’s average net income divided by its average book value is referred to as the project’s average: A. net present value. B. internal rate of return. C. accounting return. D. profitability index. E. payback
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DOMINGO -ARVYNNE FAJARDO Chapter 8: Corporate Stocks 3 Classification of Capital Requirements 1. short term 2. intermediate-term 3. long term Stock Financing-when shares of stock are sold to raise funds for the long term financing requirements of the firm. Capital Stock‚ Dividends‚ and Retained Earnings CAPITAL STOCK- interest of the owners of a corporation. -Issued Stock- portion of the authorized stock has been issued and sold. - Unissued Stock- those which are not yet issued. DIVIDENDS-
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given EBIT. 12-2 Because Firm A has a higher fixed operating costs‚ its operating income will change by a greater percentage than Firm B’s operating income if sales change. Firm A has a higher degree of operating leverage than Firm B. 12-3 If sales tend to fluctuate widely‚ then cash flows and the ability to service fixed charges also will vary. Consequently‚ there is a relatively large risk that the firm will be unable to meet its fixed charges. As a result‚ firms in unstable industries tend
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Problems 2(a‚ b)‚ 4(a‚ c)‚ and 6 2. Ajax cleaning Products is a medium sized operating in an industry dominated by one large firm Tile King; Ajax produces a multi-headed tunnel wall scrubber that is similar to a model produced by Title King to avoid the possibility of price war. The price charged by Title King is $ 20‚000. Ajax has the following short-run cost curve: TC = 800‚000 - 5‚000Q + 100Q^2 a) Compute the marginal cost curve for Ajax answer: Marginal Cost (MC) = dTC/dQ
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starving nation to an exporter of food items; from being a nation of the uneducated‚ unemployed to being one of the largest talent pools and the world’s back-office; from a third world country to one of the three super powers of the future; India has earned it all. As a blossoming republic‚ India has emerged from the shadow of colonialism to evolve as one of the fastest growing world economies‚ transforming millions of lives in her wake. Always equated with snake charmers‚ elephants‚ half-naked fakirs
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