Questions from Corporate Finance

Q: TelTec Inc. has a patent that will expire in two years

TelTec Inc. has a patent that will expire in two years. The firm is expected to grow at 10 percent for the next two years and dividends will be paid at year end. It just paid a dividend of $1. After t...

Q: In Practice Problem 40, the correlation coefficient ρ AB is 0

In Practice Problem 40, the correlation coefficient ρ AB is 0.4 and the standard deviations of stock A and stock B are 28 percent and 15 percent, respectively. Calculate the standard deviation of the...

Q: INV Design Ltd. just paid a dividend of $4 and

INV Design Ltd. just paid a dividend of $4 and its current earnings per share is $6. The current T‐bill rate is 3.5 percent and INV ’ s risk premium is 10 percent. The net profit margin, asset turnove...

Q: Dillon Mechanical Ltd.’ s preferred shares have a par value

Dillon Mechanical Ltd.’ s preferred shares have a par value of $50, a dividend rate of 7 percent, and trade at a price of $70. Sherwood Inc.’s preferred shares have a par value of $60, have a dividend...

Q: Apex Financial Ltd. is interested in investing in Scion Systems Inc

Apex Financial Ltd. is interested in investing in Scion Systems Inc. Scion’s current dividend is $5.50 and its shares are selling for $40. The required rate of return for firms like Scion is 8 percent...

Q: As part of your duties at Apex Financial Ltd. you have

As part of your duties at Apex Financial Ltd. you have been asked to review the analysis carried out by a rival company—Prime Group—of the WX Media Company. WX has had a constant P/E ratio for the pas...

Q: Selkirk Inc. has an expected profit margin of 10 percent,

Selkirk Inc. has an expected profit margin of 10 percent, turnover ratio of 1.8, and a leverage ratio of 0.3. The leading EPS is $2.50 and the firm uses a dividend payout ratio of 35 percent. The requ...

Q: Apex Financial Ltd. has completed a fundamental analysis of Spark Energy

Apex Financial Ltd. has completed a fundamental analysis of Spark Energy Inc. Spark Energy is a young company and expects to invest heavily in facilities and research and development during the next f...

Q: Global Systems Inc. has just paid $2.40 in

Global Systems Inc. has just paid $2.40 in dividends D0 $2.40 . The firm is expected to continue paying dividends in perpetuity. a. Suppose that the dividends are constant (Di = $2.40 for all i) . Wh...

Q: Barchuk Mining Inc.’s share is currently selling for $120

Barchuk Mining Inc.’s share is currently selling for $120. The current dividend is $5 and the required rate of return is 10 percent. What is the expected dividend growth rate?