Questions from Corporate Finance

Q: In the previous problem, instead of a perpetual growth rate in

In the previous problem, instead of a perpetual growth rate in adjusted cash flow from assets, you decide to calculate the terminal value of the company with the price-sales ratio. You believe that Ye...

Q: You have looked at the current financial statements for J&R

You have looked at the current financial statements for J&R Homes, Co. The company has an EBIT of $3.35 million this year. Depreciation, the increase in net working capital, and capital spending were...

Q: In the previous problem, suppose you believe that sales in five

In the previous problem, suppose you believe that sales in five years will be $45.5 million and the price-sales ratio will be 2.15. What is the share price now? Problem 26: You have looked at the cur...

Q: Landman Corporation (LC) manufactures time series photographic equipment. It

Landman Corporation (LC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .60. It’s considering building a new $73 million manufacturing facility. Th...

Q: Stock in Jansen Industries has a beta of 1.05.

Stock in Jansen Industries has a beta of 1.05. The market risk premium is 7 percent, and T-bills are currently yielding 3.5 percent. The company’s most recent dividend was $2.45 per share, and dividen...

Q: Suppose Wacken, Ltd., just issued a dividend of $2

Suppose Wacken, Ltd., just issued a dividend of $2.73 per share on its common stock. The company paid dividends of $2.31, $2.39, $2.48, and $2.58 per share in the last four years. If the stock current...

Q: Savers has an issue of preferred stock with a stated dividend of

Savers has an issue of preferred stock with a stated dividend of $3.85 that just sold for $87 per share. What is the bank’s cost of preferred stock?

Q: Sunrise, Inc., is trying to determine its cost of debt

Sunrise, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 96 percent of face value. The issue makes semiannual payments...

Q: Jiminy’s Cricket Farm issued a 30-year, 4.5

Jiminy’s Cricket Farm issued a 30-year, 4.5 percent semiannual bond three years ago. The bond currently sells for 104 percent of its face value. The company’s tax rate is 22 percent. a. What is the p...

Q: In the previous problem, what would the risk-free rate

In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced? Problem 18: Stock Y has a beta of 1.2 and an expected return of 11.5 percent. Stock Z has...