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23. The Wintergrass Company has an ROE of 13.2 percent and a payout ratio of 30
percent.
What is the company’s sustainable growth rate?
24. The most common means of financing a temporary cash deficit is a:
25. The length of time between the acquisition of inventory and its sale is called
the:
26. Here are the most recent balance sheets for Country Kettles, Inc. Excluding
accumulated depreciation, determine whether each item is a source or a use of
cash, and the amount.
27. Consider the following financial statement information for the Rivers
Corporation:
Calculate the operating and cash cycles.
28. The nominal rate of return on a bond is 7.28 percent while the real rate is 3.09
percent. What is the rate of inflation?
29. Unique Stores common stock pays a constant annual dividend of $1.75 a share.
What is the value of this stock at a discount rate of 13.25 percent?
30. How much are you willing to pay for one share of stock if the company just
paid an annual dividend of $1.03, the dividends increase by 3 percent annually, and
you require a rate of return of 15 percent?
31. The relationship between nominal rates, real rates, and inflation is known as
the:
32. Titan Mining Corporation has 9.5 million shares of common stock outstanding
and 390,000 5 percentsemiannual bonds outstanding, par value $1,000 each. The
common stock currently sells for $43 per share and has a beta of 1.25, and the
bonds have 15 years to maturity and sell for 114 percent of par. The market risk
premium is 8.3 percent, T-bills are yielding 4 percent, and the company’s tax rate
is 36 percent.
a.
What is the firm's market value capital structure?
b.
If the company is evaluating a new investment project that has the same
risk as the firm's typical project, what rate should the firm use to discount the
project's cash flows?
33. Filer Manufacturing has 8.9 million shares of common stock outstanding. The
current share price is $59, and the book value per share is $4. The company also
has two bond issues outstanding. The first bond issue has a face value of $71.2
million and a coupon rate of 7.6 percent and sells for 107.7 percent of par. The
second issue has a face value of $61.2 million and a coupon rate of 8.1 percent and
sells for 110.1 percent of par. The first issue matures in 8 years, the second in 27
years.
Suppose the company’s stock has a beta of 1.2. The risk-free rate is 3.7 percent,
and the market risk premium is 7.6 percent.