FINANCE
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:
Sales/total assets
1.8
Return on assets (ROA)
4%
Return on equity (ROE)
8%
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.
%
#2
Stock R has a beta of 1.8, Stock S has
a beta of 0.65, the expected rate of return on an average
stock is
13%, and the riskfree rate is 4%. By how much does the
required
return on the riskier stock exceed the required return on
the riskier
stock exceed that on the less risky stock?
#3
Wilson Wonders's bonds have 7 years
remaining to maturity. Interest is paid annually, the bonds
have a
$1,000 par value, and the coupon interest rate is 9%. The
bonds sell
at a price of $1,095. What is their yield to maturity? Round
your
answer to two decimal places
#4
DPS CALCULATION
Thress Industries just paid a dividend
of $4.00 a share (i.e., D0 = 4.00). The dividend is expected
to grow
5% a year for the next 3 years and then at 11% a year
thereafter.
What is the expected dividend per share for each of the next
5 years?
Round your answers to the nearest cent.
a.D1 = $
B
C
D
#5
PREFERED STOCK RATE OF RETURN
What will be the nominal rate of return
on a perpetual preferred stock with a $100 par value, a
stated
dividend of 8% of par, and a current market price of (a)
$57, (b)
$85, (c) $95, and (d) $134? Round the answers to two decimal
places.
#6
Assume that the average firm in your
company's industry is expected to grow at a constant rate of
6% and
that its dividend yield is 8%. Your company is about as
risky as the
average firm in the industry, but it has just successfully
completed
some R&D work that leads you to expect that its earnings
and
dividends will grow at a rate of 50% [D1 = D0(1 + g) =
D0(1.50)] this
year and 20% the following year, after which growth should
return to
the 6% industry average. If the last dividend paid (D0) was
$2.25,
what is the value per share of your firm's stock? Round your
answer
to the nearest cent. Do not round your intermediate
computations.(NON
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
year, how
long (to the nearest year) will it take her to repay the
loan?
#8 CASH FLOWS
The Moore Corporation had operating
income (EBIT) of $950,000. The company's depreciation
expense is
$237,500. Moore is 100% equity financed, and it faces a 40%
tax rate.
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
are $100
million and it has total assets of $60 million. What is its
ROE?
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
had $1.875
million of interest expense, and its corporate tax rate was
40%. What
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
pay 9.2%
annually?
#12
PUT CALL PARITY
The current price of a stock is $32,
and the annual riskfree rate is 6%. A call option with a
strike
price of $29 and 1 year until expiration has a current value
of
$7.30. What is the value of a put option written on the
stock with
the same exercise price and expiration date as the call
option? Round
your answer to the nearest cent.
$
#13 DEFAULT RISK
PREMIUM
A Treasury bond that matures in 10
years has a yield of 5%. A 10year corporate bond has a
yield of 10%.
Assume that the liquidity premium on the corporate bond is
0.8%. What
is the default risk premium on the corporate bond?
#14 EXPECTED RATE OF RETURN
WashingtonPacific invests $5 million
to buy a tract of land and plant some young pine trees. The
trees can
be harvested in 10 years, at which time WP plans to sell
the forest
at an expected price of $10 million. What is WP's expected
rate of
return? Round your answer to two decimal places.
#15 yield to maturity
and current
yield
You just purchased a bond that matures
in 15 years. The bond has a face value of $1,000 and has an
8% annual
coupon. The bond has a current yield of 8.37%. What is the
bond's
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
end of
every future year until your account totals $400,000. You
expect to
earn 9.4% annually on the account. How many years will it
take to
reach your goal?
#17 required of return
Assume that the riskfree rate is 3.5%
and that the expected return on the market is 10%. What is
the
required rate of return on a stock that has a beta of 0.8?
%
18
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
Riskfree 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 BlackScholes option
pricing model, what is the option's value? Round your answer
to the
nearest cent.
$
attachement
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