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Finance Decision-Making : Contribution Margin Ratio CVP ( Cost-Volume-Profit ), Incone Statement Equation, Bonds, Coupon Interest Rate, Cash Flow, Risk Management and WACC
Under what circumstances would you choose one over the other?
WACC Problem #1
Copernicus, Inc. has determined that its target capital structure will be 60% debt, 10% preferred stock, and 30% common stock.
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Practice Questions in Finance
If you purchase the stock at the market price, what is your expected rate of return?
3. The target capital structure for Jowers Manufacturing is 50 percent common stock, 15 percent preferred stock, and 35 percent debt.
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Bond Valuation: Financial Statement Analysis
It appears the annual payment required to reach your target is more than you can afford. If the most you can afford to invest each year is $2,000 what average annual rate of return must you earn in order to reach your target?
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Calculating Return on stock
The stock pays an annual dividend of $0.80 per share, and after one year, you are able to sell it for $65. Calculate your return on the stock. Then, calculate the return on the stock if you had used only personal funds to make the purchase.
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Stocks or Bonds Over Time Periods
Once you are aware of the debt and equity (outstanding stock), you can determine if you want to use a one, five, or twenty-five year stock or bond to purchase an asset and what return (interest) you'll need to make (stock) or issue (bond) based on the
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Cost of equity, IRR, retained earnings break point
Coba Company is considering the purchase of a new machine to replace an existing one. The old machine was purchased 5 years ago at a cost of $20,000, and it is being depreciated on a straight line basis to zero salvage value over a 10-year life.
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Stock Price
If you are planning on buying 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 9% at the time of your purchase?
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Control premium percentage, total transaction value
$25,000,000
Hence,
Percent control premium 41.67%
2) Given that,
Purchase price $20,000,000
Required rate of return on retained earning 12%
Yield on debt 8%
Weight of retained earning in the capital 25.00%
Weight
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Percentage of return on a stock
126142 Percentage of return on a stock You purchased a stock one year ago at $42 per share. The stock just paid a dividend of $2.40 per share. Today, you sold the stock at 31$ per share. What is the percentage return on this stock?