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EP Enterprises has the following income statement. How much net operating profit after taxes (NOPAT) does the firm have?   Sales $1,800.00 Costs 1,400.00 Depreciation      250.00 EBIT $   150.00 Interest expense        70.00 EBT $     80.00 Taxes (40%)        32.00 Net income $     48.00    

The Wei Company’s last dividend was $1.75. The dividend growth rate is expected to be constant at 1.50% for 2 years, after which dividends are expected to grow at a rate of 8.00% forever. Wei’s required return (rs) is 12.00%. What is Wei’s current stock price?

If D1 = $2, g (which is constant) = 5%, and P0 = $50, the stock’s expected dividend yield is ____________ and capital gains yield is _________________?

A firm with a 10 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$13,000 $6,900 $5,600 $6,000 Project Y: -$14,000 $5,500 $6,000 $6,600 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

If a firm’s beta is 1.6, the risk-free rate is 4.5%, and the expected return on the market is 10.5%, what will be the firm’s cost of equity using the CAPM approach?

A firm with a 12 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$5,000 $2,400 $2,200 $2,400 $2,200 Calculate the project’s profitability index (PI).

Kiev Corporation’s outstanding bonds have a $1,000 par value, a 13 percent semiannual coupon, 10 years to maturity, and an 11.5 percent yield to maturity (YTM).  What is the bond’s price?

Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

Li & Associates’ common stock currently trades at $45 a share.  It is expected to pay an annual dividend of $2.48 a share at the end of the year (D1 = $2.48), and the constant growth rate is 7.8 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

Martinez Motors’ bonds have 8 years remaining to maturity.  Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7 percent; and the yield to maturity is 9.5 percent.  What is the bond’s current market price?