DEVRY FIN 516 Week 4 Midterm
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FIN 516 Week 4 Midterm
1. Question:( TCO C) Pate & Co. has a capital budget of $ 3,000,000. The company wants to maintain a target capital structure that is 15 percent debt and 85 percent equity. The company forecasts that its net income this year will be $ 3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment?
2. Question:( TCO F) The following data applies to Saunders Corporation ' s convertible bonds: Maturity: 10 Stock price: $ 30.00 Par value: $ 1,000.00 Conversion price: $ 35.00 Annual coupon: 5.00 % Straight-debt yield: 8.00 % What is the bond ' s straight-debt value?( a) $ 684.78