Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow. To draw: A time line for $100 cash flow at the end 2 nd year.

Question

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Answer 1

Question

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

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Compute Ke and Kn under the following circumstances: a. D1= $5, P0=$70, g=8%, F=$7 b. D1=$0.22, P0=$28, g=7%, F=2.50 c. E1 (earnings at the end of period one) = $7, payout ratio equals 40 percent, P0= $30, g=6%, F=$2,20. Note: D1 is the earnings times the payout rate. d. D0 (dividend at the beginning of the first period) = $6, growth rate for dividends and earnings (g)=7%, P0=$60, F=$3. You will need to calculate D1 (the dividend after the first period).

Terrier Company is in a 45 percent tax bracket and has a bond outstanding that yields 11 percent to maturity. a. What is Terrier's after-tax cost of debt? b. Assume that the yield on the bond goes down by 1 percentage point, and due to tax reform, the corporate tax falls to 30 percent. What is Terrier's new aftertax cost of debt? c. Has the after-tax cost of debt gone up or down from part a to part b? Explain why.

The Squeaks Cat Rescue, which is tax-exempt, issued debt last year at 9 percent to help finance a new animal shelter in Rocklin. a. If the rescue borrowed money this year, what would the after-tax cost of debt be, based on its cost last year and the 25 percent increase? b. If the receipts of the rescue were found to be taxable by the IRS (at a rate of 25 percent because of involvement in political activities), what would the after-tax cost of debt be?

Answer 2

Question

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

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Answer 3

Question

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Answer 6

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

Answer 7

Chapter 4, Problem 1MC

a)

Summary Introduction

Case summary:

Person X is consider as nearing graduation and he is trying to get a jo in the local bank. For the purpose of this he has been take an examination including several techniques of financial analysis. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for $100 cash flow at the end 2^nd year.

Answer 8

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Answer 9

b)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Answer 10

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Answer 11

c)

Summary Introduction

To draw: A time line for ordinary annuity of $100 per year for 3 years.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4 - Prob. 2Q Ch. 4 - An annuity is defined as a series of payments of a...Ch. 4 - If a firm’s earnings per share grew from $1 to $2...Ch. 4 - Prob. 5Q Ch. 4 - If you deposit 10,000 in a bank account that pays...Ch. 4 - What is the present value of a security that will...Ch. 4 - Your parents will retire in 18 years. They...Ch. 4 - Prob. 4P Ch. 4 - You have $42,180.53 in a brokerage account, and...Ch. 4 - What is the future value of a 7%, 5-year ordinary...

Solution Summary: The author explains that Person X is nearing graduation and trying to get a jo in the local bank. The initial section of the test address is considering as analysis of discounted cash flow.

To draw: A time line for ordinary annuity of $100 per year for 3 years.

To draw: A time line for ordinary annuity of $100 per year for 3 years.

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Chapter 4 Solutions