ABC, Inc., has an unfunded pension liability of $554 millionthat must be paid in 16 years. To assess the value of thefirm's stock, financial analysts want to discount this liabilityback to the present. If the relevant discount rate is 8.01percent, what is the present value of this liability? Answer in$ millions to two decimals-ie, if you get 12,345,678 dollars,you should enter 12.34.< PreviousNext >

Present value refers to the current value of the liability or the amount that is required to pay in…

Answered: ABC, Inc., has an unfunded pension…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Am. 355.
Cline Corporation deposits $75,000 every quarter in a savings account (beginning at the end of the current quarter) for the next six years so that it can purchase a new piece of machinery at the end of six years. The interest rate is 4%. How much money will Cline Corporation have at the end of six years? (Use spreadsheet software or a financial calculator to calculate your answer. Do not round any intermediary calculations, and round your final answer to the nearest dollar.) Group of answer choices $2,043,240 $2,023,010 $2,931,195 $1,126,935
If you require a return of 12 percent on this stock, what will you pay for a share today?
This morning, you borrowed $14,700 at an APR of 8.9 percent. If you repay the loan in one lump sum three years from today, how much will you have to repay? $15,514.47 $18,984.58 O $19,022.33 $15,324.60 O None of these answers are correct
Please answer the following showing detailed working: Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 31 percent. Given the above information; a) Complete the table given below for varying levels of debt below by using a mix of the given information and using your own computations. EBIT $100,000.00 Cost of debts 11% cost of equity when unlevered 18% Tax rate 31% Debts $0 $10,000.00 $20,000.00 $30,000.00 Cost of Equity when levered Equity D/E Vu VL WACC b) Plot the results from the table into the following two graphs:i) Value of the firm vis-à-vis- Total debtii) Cost of capital of the firm vis-à-vis D/E ratio.iii) Which MM propositions have you demonstrated?
JJ Industries will pay a regular dividend of $3.10 per share for each of the next four years. At the end of four years, the company will also pay out a liquidating dividend. If the discount rate is 11 percent, and the current share price is $67, what must the liquidating dividend be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
It is January 2023 and you are the CFO of Metrix Systems the firm does not reinvest any of its eamings it will expect to achieve Corp. The firm only 5 points Save Ansa pays dividends. The firm is expecting earnings per share (EPS) of $10 at the end of this year. If the same EPS of $10 each year in perpetuity. You are considering changing the dividend policy of the payout rate of 60% each year. The firm's return on new investment is 18% and its cost of equity capital (r) is 12%. Calculate the best one. firm. Specifically, you want the firm to target a the share price under the proposed payout policy. Select the best one $ 98.33 $166.67 $83.33 $223.33 $125
Suppose a life insurance company sells a $250,000 one-year term life insurance policy to a 24-year-old female for $360. The probability that the female survives the year is 0.999477. Compute and interpret the expected value of this policy to the insurance company. The expected value is $ (Round to two decimal places as needed.) Which of the following interpretation of the expected value is correct? O A. The insurance company expects to make an average profit of $32.71 on every 24-year-old female it insures for 1 month. O B. The insurance company expects to make an average profit of $359.81 on every 24-year-old female it insures for 1 year. O C. The insurance company expects to make an average profit of $20.84 on every 24-year-old female it insures for 1 month. O D. The insurance company expects to make an average profit of $229.25 on every 24-year-old female it insures for 1 year.
XYZ corporation is expecting free cash flow of $100 million next year, and it will grow by 3% per year indefinitely afterward. XYZ’s discount rate is 12%. XYZ has $300 million worth of long term bonds outstanding, and 10 million shares of stock outstanding. What is a fair value for a share of XYZ? Do not include the $ sign and answer to the nearest $0.01.

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