Calculate the real risk-free rate of return

30-day T-bills are currently yielding 8 percent. Current interest rate premiums: Inflation premium: 5% Liquidity premium: 1% Maturity risk premium: 2%: Default risk premium: 2% Calculate the real risk-free rate of return.

External financing question

Company X expects sales next year = $5,000,000. Inventory and accounts receivable will increase $900,000 to accommodate this sales level. The firm has a steady profit margin of 20% and 40% dividend payout. How much external financing will the firm have to seek?

What is the yield on a Treasury bond that matures in 12 years?

The market expects that inflation will be 3% percent each year for the next 5 years and then the following years will average 5% percent a year. The maturity risk premium is estimated to be MRPt = 0.1(t - 1)%. Maturity risk premium on a two year security is 0.1 percent or 0.001. Real risk-free rate of interest is 3% ...continues

Yield on an 8-year corporate bond

Real risk-free rate of interest is 2%. Market expects that inflation will 3% each year for the next 5 years. Average 5% a year following Maturity risk premium is estimated to be MRPt = 0.1(t - 1)%. In other Maturity risk premium on a 2 year security is 0.1 %. 10 year corporate bond yields 8.6%. What is the yield on a ...continues

Yield on a Treasury bond

The market expects that inflation will be 3% percent each year for the next 5 years and then the following years will average 5% percent a year. The maturity risk premium is estimated to be MRPt = 0.1(t - 1)%. Maturity risk premium on a two year security is 0.1 percent or 0.001. Real risk-free rate of interest is 3%. W ...continues

Indifference Curve

A web-based company stocks and ships after-market auto parts. The company employs several workers to put together packages for shipment based on customers' online orders, and each worker assembles on average 4 packages per hour. Workers are unsupervised and earn $4.00 for each order they assemble. An inspector checks each ord ...continues

Sustainable growth rate: Atlantic Transportation Co. has a payout ratio of 60 percent, debt-equity ratio of 50 percent, return on equity of 16 percent, and an assets-sales ratio of 175 percent. a. What is its sustainable growth rate? b. What must its profit margin be in order to achieve its sustainable growth rate?

Atlantic Transportation Co. has a payout ratio of 60 percent, debt-equity ratio of 50 percent, return on equity of 16 percent, and an assets-sales ratio of 175 percent. a. What is its sustainable growth rate? b. What must its profit margin be in order to achieve its sustainable growth rate?

College

You are saving for the college education of your two children.They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today.You estimate your children's college expenses to be $21,000 per year per child, payable at the end of each school year.The annual interest rate is ...continues

Concentration Ratio & Herfindahl-Hirschman index

I'm having a problem with calculations. Please assist and show steps. An industry consists of 5 firms, with sales of $100,000, $500,000, $400,000, $300,000, and $200,000. Now, suppose the largest and smallest firms merge. -Calculate the four-firm concentration ratio (C4) before the merger. -Calculate the Herfindahl-Hirs ...continues

Lerner Index

What is a Lerner index? If a manufacturing company has a rather unique product that sells for $15 per unit, and the marginal cost is $7.50 what is the Lerner index? Does this index indicate market power? Please step me through this.