Blog

To estimate the company’s WACC, Ditto Inc. recently hired you as a consultant.  You have obtained the following information.  (1) The firm’s bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,000.00. (2) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.0.  (3) The company’s tax rate is 40%.  (4) The target capital structure consists of 35% debt and the 65% common equity.  The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares.  What is its WACC?

Which of the following would be the best example of the potential for inaccurate observations in the criminal justice system?

A full citation for a journal article includes which of the following?

 If a burglar breaks into a house, rapes one of the occupants, and flees in the owners’ car, which crime(s) will be counted in congruence with the hierarchy rule?

Suppose you pay 24% as a nominal annual rate on your credit card.  If you make monthly payments with monthly compounding, what is your effective annual rate?

All else equal, the fair (or intrinsic) price of a stock should fall if the market risk premium decreases according to the CAPM model.

Meacham Enterprises’ bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?

A 15-year bond has an annual coupon rate of 8%.  The coupon rate will remain fixed until the bond matures.  The bond has a yield to maturity of 6%.  Which of the following statements is CORRECT?

Your bank is willing to lend you $35,000 on a 72 month loan having an Annual Percentage Rate (APR) of 3% compounded monthly. What will be the monthly payment on this loan?

If $1000 is placed in an account that earns a nominal 16 percent, compounded quarterly, what will it be worth in 5 years?