( TCO D ) A stock has just declared an annual dividend of $ 2.25 to be paid one year from today . The dividend is expected to grow at a 7 % annual rate . The return on equity for similar stocks is 12 %. What is P0 ? ( Points : 20 )
( TCO D ) A particular bond has 8 years to maturity . It has a face value of $ 1,000 . It has a YTM of 7 % and the coupons are paid semiannually at a 10 % annual rate . What does the bond currently sell for ? ( Points : 10 )
( TCO D ) A bond currently sells for $ 1,000 and has a par of $ 1,000 . It was issued two years ago and had a maturity of 10 years . The coupon rate is 7 % and the interest payments are made semiannually . What is its YTM ? ( Points : 10 )
( TCO D ) Using examples , explain the difference between systematic risk and nonsystematic risk . Explain why the distinction is important for both investors and issuers of stock .( Points : 30 )
( TCO E ) A company has 10 million shares outstanding trading for $ 7 per share . It also has $ 300 million in outstanding debt . If its equity cost of capital is 15 %, and its debt cost of capital is 9 %, and its effective corporate tax rate is 40 %, what is its weighted average cost of capital ? ( Points : 30 )
( TCO A ) Relate how the job of the financial manager can be explained using the balance sheet . ( Points : 25 )
( TCO H ) Other things being equal , would a firm prefer a longer or shorter Cash Conversion Cycle ? What are some examples of ways a firm could attain this ? ( Points : 30 )
( TCO F ) A company has the opportunity to do any of the projects for which the net cash flows per year are shown below . The company has a cost of capital of 12 %. Which should the company do and why ? You must use at least two capital budgeting methods . Show your work