Fin331

FIN331 Fall 2010 Extra Credit Dr. Rhee 1.Which one (s) is (argon) an outside support and has the flotation cost? a. Retained earnings b. Bonds c. Preferred persistence d. a & b e. b & c purpose: e Retained earnings argon natural source of fund. Issuing bonds, preferred extractions, and common stocks argon external source of fund, which have the floation cost. 2.The costs of financing from dissimilar sources are as follows: IEF = 5%, EEF=6%, cost of debt in comportment tax = 5%, tax judge=20%, the show of retained earnings=$30m. The capital structure is: We=40% and Wd=60%. Determine the WAMCC before and after the break point. a. 4.4% 4.8% b. 4.4% 5.2% c. 4.6% 4.8% d. 4.6% 5.2% e. 4.8% 5.2% Answer: a 5%*(1 0.2)*0.6 + 5%*0.4 = 4.4%, 5%*(1 0.2)*0.6 + 6%*0.4 =4.8% 3.Given D1 = $1.00 and K=10%, what is the value of the stock at 8% growth rate? If the current price of the stock is $50 , would you buy it? a. $55, demoralize b. $54, Buy c. $55, slangt d. $54, Dont e. $50, Indifferent Answer: e PV=D1/(k-g)=1.00/(0.10 - 0.08) = $50. Since the price=PV, you are indifferent. 4.For a preferred stock with the dividend amount of $2.00 each quarter, what is the PV of it with an annual discount rate of 8%?

If the price of the preferred stock is $80, what is the yield (ROI, APR) of this security? a. $60, 8% b. $80, 8% c. $60, 10% d. $80, 10% e. $100, 10% Answer: e V0 = D/k = 8/0.08 = $100. ROI = (80+8)/80 = 10% 5.I flying field the Microsoft stock price at 9:12am this morning. It was $24.88. The last 12 month tr ailing (ttm) net earnings is $14.58 billion ! with 9 billion offices. What is the 12 month trailing EPS and P/E ratio? a. $1.62, 15.36 b. $2.26, 13.31 c. $1.26, 17.88 d. $2.32, 12.21 e. $1.18, 20.33 Answer: a EPS = NE/Shares Outstanding = $14.58/9 = $1.62 P/E = Price per share/Earnings per share = $24.88/$1.62 = 15.36 6....If you inadequacy to get a full essay, order it on our website: OrderEssay.net

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