DEP stock is currently at $100 and it is expected to either go up or down by 10%. A call option was written with an exercise price of $105. The risk free rate is 4.5%. The intrinsic value of the stock would be? YUP stock is currently at $50 and it is expected to either go up or down by 15%. The expected price of the stock after one period is exercise price of $54. The risk free rate is 5%. The intrinsic value of the stock would be? RID Corporation announced a net income of $2 million after deducting all expenses that includes non-cash expenses and interest expense amounting to $400,000 and $250,000 respectively. The tax rate is 30%. The balance sheet shows an increase in current assets (except cash) amounting to $300,000 and an increase in current liabilities (except loans) amounting to $400,000. The firm had also acquired long-term asset amounting to $600,000. The FCFF of the firm would be? Use #3. The firm expects that the FCFF will grow by 6% continuously. The firm’s WACC is 15%. The value of operation would be? Use #4. Assume that the market value of debt and preferred equity is $4 million and $6 million respectively. While the number of common shares outstanding is 1 million. The value per share would be? (Hint: Deduct market value of debt and preferred equity from the value of operation and afterwards, divide by the number of common shares outstanding).
DEP stock is currently at $100 and it is expected to either go up or down by 10%. A call option was written with an exercise price of $105. The risk free rate is 4.5%. The intrinsic value of the stock would be? YUP stock is currently at $50 and it is expected to either go up or down by 15%. The expected price of the stock after one period is exercise price of $54. The risk free rate is 5%. The intrinsic value of the stock would be? RID Corporation announced a net income of $2 million after deducting all expenses that includes non-cash expenses and interest expense amounting to $400,000 and $250,000 respectively. The tax rate is 30%. The balance sheet shows an increase in current assets (except cash) amounting to $300,000 and an increase in current liabilities (except loans) amounting to $400,000. The firm had also acquired long-term asset amounting to $600,000. The FCFF of the firm would be? Use #3. The firm expects that the FCFF will grow by 6% continuously. The firm’s WACC is 15%. The value of operation would be? Use #4. Assume that the market value of debt and preferred equity is $4 million and $6 million respectively. While the number of common shares outstanding is 1 million. The value per share would be? (Hint: Deduct market value of debt and preferred equity from the value of operation and afterwards, divide by the number of common shares outstanding).
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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- DEP stock is currently at $100 and it is expected to either go up or down by 10%. A call option was written with an exercise price of $105. The risk free rate is 4.5%. The intrinsic value of the stock would be?
- YUP stock is currently at $50 and it is expected to either go up or down by 15%. The expected price of the stock after one period is exercise price of $54. The risk free rate is 5%. The intrinsic value of the stock would be?
- RID Corporation announced a net income of $2 million after deducting all expenses that includes non-cash expenses and interest expense amounting to $400,000 and $250,000 respectively. The tax rate is 30%. The balance sheet shows an increase in current assets (except cash) amounting to $300,000 and an increase in current liabilities (except loans) amounting to $400,000. The firm had also acquired long-term asset amounting to $600,000. The FCFF of the firm would be?
- Use #3. The firm expects that the FCFF will grow by 6% continuously. The firm’s WACC is 15%. The value of operation would be?
- Use #4. Assume that the market value of debt and preferred equity is $4 million and $6 million respectively. While the number of common shares outstanding is 1 million. The value per share would be? (Hint: Deduct market value of debt and preferred equity from the value of operation and afterwards, divide by the number of common shares outstanding).
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