Fin331

FIN331 Fall 2010 Extra Credit Dr. Rhee 1.Which one (s) is (argon) an immaterial financial backing and has the flotation cost? a. Retained earnings b. Bonds c. Preferred melodic phrase d. a & b e. b & c help: e Retained earnings argon versed source of fund. Issuing bonds, preferred behaves, and common stocks ar external source of fund, which have the floation cost. 2.The costs of financing from dissimilar sources are as follows: IEF = 5%, EEF=6%, cost of debt in forward tax = 5%, tax post=20%, the appear of retained earnings=$30m. The capital structure is: We=40% and Wd=60%. Determine the WAMCC before and after the break point. a. 4.4% 4.8% b. 4.4% 5.2% c. 4.6% 4.8% d. 4.6% 5.2% e. 4.8% 5.2% Answer: a 5%*(1 0.2)*0.6 + 5%*0.4 = 4.4%, 5%*(1 0.2)*0.6 + 6%*0.4 =4.8% 3.Given D1 = $1.00 and K=10%, what is the value of the stock at 8% growth rate? If the current price of the stock is $50, would you buy it? a. $55, buy b. $54, Buy c. $55, slangt d. $54, Dont e. $50, Indifferent Answer: e PV=D1/(k-g)=1.00/(0.10 - 0.08) = $50. Since the price=PV, you are indifferent. 4.For a preferred stock with the dividend amount of $2.00 each quarter, what is the PV of it with an annual discount rate of 8%?

If the price of the preferred stock is $80, what is the yield (ROI, APR) of this security? a. $60, 8% b. $80, 8% c. $60, 10% d. $80, 10% e. $100, 10% Answer: e V0 = D/k = 8/0.08 = $100. ROI = (80+8)/80 = 10% 5.I study the Microsoft stock price at 9:12am this morni ng. It was $24.88. The last 12 month trailin! g (ttm) net earnings is $14.58 billion with 9 billion mete outs. What is the 12 month trailing EPS and P/E ratio? a. $1.62, 15.36 b. $2.26, 13.31 c. $1.26, 17.88 d. $2.32, 12.21 e. $1.18, 20.33 Answer: a EPS = NE/Shares Outstanding = $14.58/9 = $1.62 P/E = Price per share/Earnings per share = $24.88/$1.62 = 15.36 6....If you inadequacy to get a full essay, order it on our website: BestEssayCheap.com

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