Compute the equity dividend rate for the following investment: • Acquisition price $1,500,000 • First-year gross potential income of $300,000 Vacancy and collection losses equal to 15% of PGI • Operating expenses 40% of EGI • Capital expenditures 5% of EGI • Mortgage with 75% LTV at 7% interest rate, amortized over 25 years with monthly %3D payments 37.40% 11.96% Something else

Compute the equity dividend rate for the following investment: • Acquisition price $1,500,000 • First-year gross potential income of $300,000 Vacancy and collection losses equal to 15% of PGI • Operating expenses 40% of EGI • Capital expenditures 5% of EGI • Mortgage with 75% LTV at 7% interest rate, amortized over 25 years with monthly %3D payments 37.40% 11.96% Something else

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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Banque Langenberg holds $400 million of interest-sensitive assets and $325 million of interest-sensitive liabilities. Total assets are $500 million. Interest-sensitive assets (millions) Interest-sensitive liabilities (millions) $400.0 $325.0 Total assets $500.0 $ interest sensitive gap Relative interest sensitive gap $75.00 15.00% Interest sensitive ratio 1.23 What is the initial $ interest-sensitive gap? What is the initial relative interest-sensitive gap?
A firm after -tax operating income ( after-tax EBIT)$90,000 in 2018. The value of depreciation is $8000 in 2018. Operating working capital increased by $20,000, and the firm purchased $30,000 of assets. The firm's free cash flow is Given the rate information in the table belowCan you calculate the maturity risk premium? 3 month T-bill = 2.5% (risk-free rate), 30 years Bonds-5.0%, 30year corporate bonds 7.0% Inflation Rate- 3.6% and the liquidity risk premium is 0.03%
The firm is contemplating the following (base case): Vehicle acquisition cost $ 48,000 Years of useful life (economic life) 1 Tax rate 25% Required rate of return on equity 11% Required return on debt 6% Debt ratio 40% Annual revenues $ 175,000 Operating expenses (excluding depreciation) $ 115,000 1.Depreciate straight-line over the year of useful life, down to $0 over one year. The maximum dividend is paid at year end. Ignore any working capital effects. Capital charge will be based on the assets at the beginning of each year. What's the P&L?
Calculate the end-of-year return for the following investment purchased for $14 at the beginning of 202X. Distributions and Prices Changes 202X Per-share income distributions: $0.20 Per-share capital gains distributions: $0.40 Year-end NAV: $15.25 Year-end market price: $15.00 If required, round your answer to two decimal places. a. 10.67% b. 11.43% c. 10.49% d. 13.21%
Consider a CDO with a total notional of $500 million, consisting of three tranches: Senior (75%), Mezzanine (15%), and Equity (10%). The underlying portfolio has a total expected loss of 6%. a. Calculate the expected losses for each tranche, assuming they follow the standard tranche subordination rules. b. If the actual realized losses are 30%, determine the losses allocated to each tranche. c. Plot a graph that shows how the payoff of the holders to the Mezzanine tranche owners varies with the value of the assets in the mortgage pool at the time of maturity. d. Represent this payoff as a combination of payoffs of options and risk-free debt for Mezzanine tranche. e. Suppose the CDO manager decides to create a fourth tranche, called the Super- Senior tranche, which has the highest priority in the cash flow waterfall. If the Super-Senior tranche is sized at 50% of the total notional, recalculate the expected losses for all tranches. (hint: Super- Senior tranche is created out of Senior…
A company has EBITDA of $100m. If a private equity fund acquires this company in a Leveraged Buy-Out for an EBITDA multiple of 3x, borrowing 50% of the purchase price, and sells the company for a multiple of 5x when the company's EBIDTA has increased to $150m, what will be the value of the equity investment in the company upon exit? What is it as a multiple of the initial equity investment? 8)
Problem: Happy realized income of P97.000 before interest and income taxes, with Assets of ..P517.000 Liabilities 220,000 SE 297,000 os Income Tax Rate 32% he corporation want to have additional capital of P300.000 in order to add its operating incom y P150.000. Two options are presented: 1) Obtain P300.000 loan having interest of 30%. 2) Additional of 1270 shares of capital stocks with market price of P 1200 10,000 (Par value P100) Compute: both options 1) Net Income 2) Earnings per share 3) Rate of return on Owner's Equity 4) Which option is advantageous to Happy Corporation?
typing only
Table 9.1 A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Source of Capital Long-term debt Preferred stock Common stock equity Target Market Proportions OA. 8.13 percent OB. 4.67 percent OC. 8 percent O D. 3.25 percent 20% 10 70 Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $960. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was $1.50. It is expected that to sell, a new…
TYU Inc. is considering liquidating the business. Given the facts below, calculate the appropriate firm value. Expected FCF to Firm next year P5,000,000 Constant growth rate Cost of capital -4% 16% Assets, book value Assets, market value P24,000,000 P28,000,000
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Firm Valuation Through Excess Returns ApproachThe incorporation of XYZ Inc. was completed through the raising of funds. These funds include net proceeds from debt and from equity at P5,000,000 and P20,000,000 respectively. The after-tax costs of debt and of equity are 9% and 15% in order. If the actual return of XYZ is forecasted to be 17% annually over the firm’s 10-year life, compute the firm value.

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