Questions from Financial Management

Q: What’s the difference between a call for sinking fund purposes and a

What’s the difference between a call for sinking fund purposes and a refunding call?

Q: Last year Clark Company issued a 10-year, 12%

Last year Clark Company issued a 10-year, 12% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 4 years at a price of $1,060 and it sells for $1,100. a. What are...

Q: You plan to invest in the Kish Hedge Fund, which has

You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Kish’s beta coefficient can be found as a weighted average of its stocks&...

Q: Welch Company is considering three independent projects, each of which requires

Welch Company is considering three independent projects, each of which requires a $5 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presente...

Q: Assume that today is December 31, 2008, and that the

Assume that today is December 31, 2008, and that the following information applies to Vermeil Airlines: ● After-tax operating income [EBIT(1 – T)] for 2009 is expected to be $500 million. ● The deprec...

Q: A Treasury bond that matures in 10 years has a yield of

A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 8%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premiu...

Q: a. Given the following graphs, calculate the total fixed costs

a. Given the following graphs, calculate the total fixed costs, variable costs per unit, and sales price for Firm A. Firm B’s fixed costs are $120,000, its variable costs per unit ar...

Q: Assume that it is now January 1, 2009. Wayne-

Assume that it is now January 1, 2009. Wayne-Martin Electric Inc. (WME) has developed a solar panel capable of generating 200% more electricity than any other solar panel currently on the market. As a...

Q: A bond that pays interest forever and has no maturity is a

A bond that pays interest forever and has no maturity is a perpetual bond. In what respect is a perpetual bond similar to a no-growth common stock? Are there preferred stocks that are evaluated simila...

Q: Warr Corporation just paid a dividend of $1.50 a

Warr Corporation just paid a dividend of $1.50 a share (that is, D0 = $1.50). The dividend is expected to grow 7% a year for the next 3 years and then at 5% a year thereafter. What is the expected div...