I want someone to tutor me to show what formula I should use
to get the answers. I don't only need
the answer key.
Assume you are given the following
relationships for the Clayton Corporation:
Return on assets (ROA)
Return on equity (ROE)
1.Calculate Clayton's profit margin.
Round your answer to two decimal places.
2.Calculate Clayton's debt ratio. Round
your answer to two decimal places.
Stock R has a beta of 1.8, Stock S has
a beta of 0.65, the expected rate of return on an average
13%, and the risk-free rate is 4%. By how much does the
return on the riskier stock exceed the required return on
stock exceed that on the less risky stock?
Wilson Wonders's bonds have 7 years
remaining to maturity. Interest is paid annually, the bonds
$1,000 par value, and the coupon interest rate is 9%. The
at a price of $1,095. What is their yield to maturity? Round
answer to two decimal places
Thress Industries just paid a dividend
of $4.00 a share (i.e., D0 = 4.00). The dividend is expected
5% a year for the next 3 years and then at 11% a year
What is the expected dividend per share for each of the next
Round your answers to the nearest cent.
a.D1 = $
PREFERED STOCK RATE OF RETURN
What will be the nominal rate of return
on a perpetual preferred stock with a $100 par value, a
dividend of 8% of par, and a current market price of (a)
$85, (c) $95, and (d) $134? Round the answers to two decimal
Assume that the average firm in your
company's industry is expected to grow at a constant rate of
that its dividend yield is 8%. Your company is about as
risky as the
average firm in the industry, but it has just successfully
some R&D work that leads you to expect that its earnings
dividends will grow at a rate of 50% [D1 = D0(1 + g) =
year and 20% the following year, after which growth should
the 6% industry average. If the last dividend paid (D0) was
what is the value per share of your firm's stock? Round your
to the nearest cent. Do not round your intermediate
CONSTANT GROWTH VALUATION)
#7 REPAYING A LOAN
While Mary Corens was a student at the
University of Tennessee, she borrowed $12,000 in student
loans at an
annual interest rate of 8.10%. If Mary repays $1,500 per
long (to the nearest year) will it take her to repay the
#8 CASH FLOWS
The Moore Corporation had operating
income (EBIT) of $950,000. The company's depreciation
$237,500. Moore is 100% equity financed, and it faces a 40%
1. What is the company's net income?
2. What is its net cash flow?
#9 PRICE EARNING RATION
Needham Pharmaceuticals has a profit
margin of 5.5% and an equity multiplier of 2.5. Its sales
million and it has total assets of $60 million. What is its
Round your answer to two decimal places.
#10 INCOME STATEMENT
Pearson Brothers recently reported an
EBITDA of $7.5 million and net income of $1.5 million. It
million of interest expense, and its corporate tax rate was
was its charge for depreciation and amortization?
#11 PRESENT VALUE OF A SINGLE PAYMENT
What is the present value of a security
that will pay $10,000 in 5 years if securities of equal risk
PUT CALL PARITY
The current price of a stock is $32,
and the annual risk-free rate is 6%. A call option with a
price of $29 and 1 year until expiration has a current value
$7.30. What is the value of a put option written on the
the same exercise price and expiration date as the call
your answer to the nearest cent.
#13 DEFAULT RISK
A Treasury bond that matures in 10
years has a yield of 5%. A 10-year corporate bond has a
yield of 10%.
Assume that the liquidity premium on the corporate bond is
is the default risk premium on the corporate bond?
#14 EXPECTED RATE OF RETURN
Washington-Pacific invests $5 million
to buy a tract of land and plant some young pine trees. The
be harvested in 10 years, at which time W-P plans to sell
at an expected price of $10 million. What is W-P's expected
return? Round your answer to two decimal places.
#15 yield to maturity
You just purchased a bond that matures
in 15 years. The bond has a face value of $1,000 and has an
coupon. The bond has a current yield of 8.37%. What is the
yield to maturity? Round your answer to two decimal places.
#16 number of period
for a maturity
You have $48,564.75 in a brokerage
account, and you plan to deposit an additional $2,500 at the
every future year until your account totals $400,000. You
earn 9.4% annually on the account. How many years will it
reach your goal?
#17 required of return
Assume that the risk-free rate is 3.5%
and that the expected return on the market is 10%. What is
required rate of return on a stock that has a beta of 0.8?
Assume you have been given the
following information on Purcell Industries:
Current stock price = $16
Strike price of option = $11
Time to maturity of option = 2 months
Risk-free rate = 6%
Variance of stock return = 0.15
d1 = 0.28449
N(d1) = 0.48652
d2 = 0.0532
N(d2) = 0.64298
According to the Black-Scholes option
pricing model, what is the option's value? Round your answer
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