Fundamentals of Corporate Finance by Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Gordon S. Roberts | 9780071051606 | 71051600 | Holooly

Fundamentals of Corporate Finance [EXP-49900]

199 SOLVED PROBLEMS

Question: 17.1

“Ex” Marks the Day The board of directors of Divided Airlines has declared a dividend of $2.50 per share payable on Tuesday, May 30, to shareholders of record as of Tuesday, May 9. Cal Icon buys 100 shares of Divided on Tuesday, May 2, for $150 per share. What is the ex date? Describe the events

Verified Answer:

The ex date is two business days before the date o...

Question: 9.4

“I Think, Therefore I Know How Many IRRs Th ere Can Be.” We’ve seen that it’s possible to get more than one IRR. If you wanted to make sure that you had found all of the possible IRRs, how could you tell?

Verified Answer:

The answer comes from the great mathematician, phi...

Question: 21.1

A yen for Fast Cars Suppose you have CAD 1,000. Based on the rates in Figure 21.1, how many Japanese yen can you get? Alternatively, if a Porsche costs EUR 100,000, how many Canadian dollars will you need to buy it? (EUR is the abbreviation for euros.)

Verified Answer:

The exchange rate for yen is given in Canadian dol...

Question: 14.3

Aimia’s Cost of Preferred Stock On May 09, 2012, Aimia Inc.’s preferred stock (AIM.PR.A) traded on the TSX with a dividend of $1.63 annually and a price of $26.00. What is Aimia’s cost of preferred stock?

Verified Answer:

The cost of preferred stock is:

R_{P} = D/...

Question: 6.SP.3

Annuity Present Value You are looking into an investment that will pay you $12,000 per year for the next 10 years. If you require a 15 percent return, what is the most you would pay for this investment?

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The most you would be willing to pay is the presen...

Question: 14A.1

Applying APV Trans Canada Industries is considering a scale-enhancing project. The market value of the firm’s debt is $100 million, and the market value of the firm’s equity is $200 million. The debt is considered riskless. The corporate tax rate is 34 percent. Regression analysis indicates that

Verified Answer:

We can answer this question in two steps. 1. Deter...

Question: 6.S-T.4

APR versus EAR The going rate on student loans is quoted as 8 percent APR. The terms of the loans call for monthly payments. What is the effective annual rate (EAR) on such a student loan?

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A rate of 8 percent APR with monthly payments is a...

Question: 6.SP.4

APR versus EAR The going rate on student loans is quoted as 8 percent APR. The terms of the loans call for monthly payments. What is the effective annual rate (EAR) on such a student loan?

Verified Answer:

A rate of 8 percent APR with monthly payments is a...

Question: 14B.1

Assume the following figures for the International Trade Corporation EBIT = $2.5 billion TC = 0.4 rwacc = 11% Total capital contributed = Total debt + Equity = $10 billion + $10 billion = $20 billion

Verified Answer:

Now we can calculate International Trade’s EVA: [l...

Question: 9.SP.3

Average Accounting Return You are looking at a three-year project with a projected net income of $2,000 in Year 1, $4,000 in Year 2, and $6,000 in Year 3. The cost is $12,000, which will be depreciated straight-line to zero over the three-year life of the project. What is the average accounting

Verified Answer:

Here we need to calculate the ratio of average net...

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