FIN4424 Final Exam Review

What is the present value of a perpetuity of $100 per year if the appropriate discount rate is 7%? If interest rates in general were to double and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity?

$1,428.57 & $714.2857 100/0.07= 1,428.57 100/0.14= 714.2857

Firm ABC has an unlevered firm value of $50 million. The unlevered cost of equity is 12%. If firm ABC chooses to issue $10 million debt at the cost of debt is 8% and fund the remaining $40 million from equity. What is the cost of equity now with this new capital structure? (Assume there are no corporate or personal taxes) a. 9% b. 14% c. 15% d. 13%

13%

What is the standard deviation from the above example? a. 29.4% b. 25.2% c. 18.6% d. 26.1%

26.1%

What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

$1,292.10 Use financial calculator FV=5,000 N=20 I/Y=7 CPT PV

An unlevered firm has a value of $100 million. An otherwise identical but levered firm has $20 million in debt and a 5% cost of debt. Assuming a corporate tax rate of 35%, and a personal tax rate of 30%, long-term capital gain tax rate of 12% and financial distress cost of 10% of debt. What is the value of the levered firm? a. $108.5 millions b. $95.7 millions c. $101.6 millions d. $103.3 millions e. $84.9 millions

$101.6 millions

If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?

$16,105.1 Use financial calculator PV=10,000 I/Y=10 N=5 CPT FV

An unlevered firm has a value of $200 million. An otherwise identical but levered firm has $80 million in debt and $120 million in equity. No growth is expected. Assuming a corporate tax rate of 40%, a tax rate on debt income is 25%, and a tax rate on stock income is 15%, what is the value of the levered firm? (Assume no bankruptcy costs) a. $225.6 million b. $200.0 million c. $237.6 million d. $232.0 million

$225.6 million

You work for Ace Company, a constant growth firm which will pay a dividend of $1.90 (D1=$1.90). Ace just announced it is investing in a risky project that will increase the firm's growth rate and its cost of equity to be 4%, and 12%, respectively. What should be the firm's stock price now? a. $27.50 b. $26.25 c. $28.35 d. $23.75 e. $25.00

$23.75 =1.90/(0.12-0.04)

Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated. The used equipment can be sold today for $4 million, and its tax rate is 40%. What is the equipment's after-tax net salvage value? a. $3.36 million b. $2.40 million c. $4.00 million d. $3.6 million

$3.6 million

Garden-Grow Products is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3.)

$30,069.50

Firm A is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life and will be using MACRS Three Year for the depreciation. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the year 1 cash flow? Equipment cost (depreciable basis) $65,000 Sales Revenue, each year $60,000 Operating Costs (excl. deprec.) $25,000 Tax Rate 35.0% a. $30,333 b. $28,595 c. $29,427 d. $31,770

$30,333

Shultz Business Systems is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years, it will be depreciated on a straight-line basis, and there will be no salvage value. This is just one of many projects for the firm, so any losses can be used to offset gains on other firm projects. What is the project's expected NPV?

$30,610

Century Roofing is thinking of opening a new warehouse, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new warehouse. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)

$31,254.07 - Opportunity Cost - Equipment Revenue - Opt. Cost - depreciation=(equip./years) EBIT After-tax EBIT=(EBIT *(1-T) +Depreciation NPV = NPV(0.1,CF)+ opportunity cost + equipment

Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 4% per year. If D0 = $6 and rs = 14%, what is the estimated value of Brushy Mountain's stock?

$32 g = -0.04 D1 = 6*(1-0.04) = 5.76 P0 = 5.76 / (0.14+0.04) = 32

Kasper Film Co. is selling off some old equipment it no longer needs because its associated project has come to an end. The equipment originally cost $22,500, of which 75% has been depreciated. The firm can sell the used equipment today for $6,000, and its tax rate is 25%. What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, the firm will receive a tax credit as a result of the sale.

$5,906 cost = 22,500 depreciate = 75% BV = 22,500*(1-0.75)= 5,625 SV = 6,000 tax = (6000-5625)*25% = 93.75 after-tax SV=6000-93.75 = 5,906

A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, and then at a constant rate of 7% thereafter. The company's stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price? (Hint: rs is not directly given. But you can use CAPM model to calculate it. CAPM model: 𝑟s =𝑟f +𝛽×(𝑟m −𝑟f), 𝑤h𝑒𝑟𝑒 𝑟m −𝑟f 𝑖𝑠 𝑐𝑎𝑙𝑙𝑒𝑑 𝑚𝑎𝑟𝑘𝑒𝑡 𝑟𝑖𝑠𝑘 𝑝𝑟𝑒𝑚𝑖𝑢𝑚)

$50.53 have to get cash flows to find npv rs = rf + B*(rm-rf) = 0.0075+1.2(0.04) = 12.3% D0 = 2 D1 = 2.4 D2 = 2.88 D3 = 3.08 P2 = 3.08 / (12.3%-7%) = 58.1433 CF 1 = 2.40 CF 2 = 58.1433+2.88 = 61.02 P0 = excel function NPV(12.3%,2.40,61.02) = 50.53

Pendant Publishing is buying a new printing press. The machine's depreciable basis is $250,000, and it will be depreciated using the MACRS 3-year rates (33%, 45%, 15%, and 7%). The firm is interested in salvage value cash flows if it sells the machine before its usable life is done. The salvage value after 1 year is $150,000, and it will decrease by $40,000 each year thereafter. If the firm has a tax rate of 30%, what would the salvage value cash flow be if it sells the machine after 3 years of use? a. $50,400 b. $54,250 c. $47,600 d. $60,900 e. $80,000

$54,250

EMC Corporation has never paid a dividend. Its current free cash flow of $400,000 is expected to grow at a constant rate of 5%. The weighted average cost of capital is WACC = 12%. Calculate EMC's estimated value of operations.

$6,000,000 CF Year 1 = 400,000*(1+0.05) = 420,000 Val OP = 420,000 / (0.12-0.05) = 6,000,000

The following data (in millions) apply to Firm CNG: Value of Operations $20,000 Short-term investments $5,000 Debt $6,000 Number of shares 300 The company plans on distributing $1,000 million through dividend. Assuming the dividend distribution does not signal new information, what will be the intrinsic stock price per share after the dividend distribution? a. $60 b. $68 c. $52 d. $63

$60

The following data (in millions) apply to Hill's Hiking Equipment: Value of operations $20,000 Short-term investments $5,000 Debt $6,000 Number of shares 300 The company plans on distributing $900 million through dividend. Assuming the dividend distribution does not signal new information, what will be the intrinsic stock price per share after the stock dividend distribution? a. $52.50 b. $60.33 c. $48.33 d. $50.00 e. $47.50

$60.33

GE is planning to issue a 30- year bond with a 5% coupon rate, paid annually. Suppose the YTM of the bond is 7%, and the face value is $1,000. what price will the bond be selling at? a. $815 b. $705 c. $895 d. $920 e. $752

$752 =PV(7%,30,50,1000,0) = 751.82

You are purchasing a T-bill with a maturity of 13 weeks and a face value of $10,000. If the YTM is 5% (Annual Rate), what is a fair value of such T-bill? a. $9,878.77 b. $9,867.04 c. $9,523.81 d. $9,123.45

$9,878.77

The CEO of Harding Media Inc. has asked you to help estimate its cost of common equity. You have obtained the following data: D0=$0.85; P0=$22.00; gL= 6% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the dividend growth model, by how much would the cost of common from reinvested earnings change if the stock price changes as the CEO expects?

-1.84% D0 = 0.85 P0 = 22 P1 = 40 g = 6% re = 0.85*(1+0.06)/22+0.06 = 10.10% re = 0.85*(1+0.06)/40+0.06 = 8.25% 8.25%-10.10% = -1.84%

Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the project's IRR? Year0 1 2 3 4 5 Cash Flows -11,500 2,000 2,025 2,025 2,075 2,100 a. 2.82% b. -3.78% c. 2.31% d. 3.10% e. 2.57%

-3.78 =IRR function

Cigna Corporation has a levered beta of 1.40, its capital structure consists of 70% debt and 30% equity, and its tax rate is 40%. What would Cigna's beta be if it used no debt, i.e., what is its unlevered beta? a. 1.10 b. 0.88 c. 0.79 d. 0.82 e. 0.58

0.58 Bu=Bl/[1+(1-T)*Wd/We)] =1.4 / [1+(1-.4)*.7/.3)] =0.58

WMT has a levered beta of 1.20, its capital structure consists of 30% debt and 70% equity, and its tax rate is 35%. What would WMT's beta be if it used no debt, i.e., what is its unlevered beta? a. 0.94 b. 0.86 c. 0.90 d. 1.53

0.94

Ingram Electric Products is considering a project that has the following cash flow and cost of capital data. What is the project's profitability index? Cost of capital: 11.00% Year 0 1 2 3 Cash flows -$800 $350 $400 $450 a. 1.21 b. 0.21 c. 1.32 d. 0.98

1.21

Firm ABC uses no debt, its beta is 1.10 and its tax rate is 400%. However, the CFO is considering moving to a capital structure with 30% debt and 70% equity. If the risk-free rate is 5.0% and the market risk premium is 6.0%, by how much would the capital structure shift increase the firm's cost of equity? a. 1.70% b. 13.3% c. 11.6% d. 5%

1.70%

As a consultant to Basso Inc., you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 8.00% (constant). What is the cost of common from reinvested earnings based on the dividend growth approach?

10.44% = D1 / P0 + g = 0.67 / 27.5+8% = 0.1044

If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money?

11.01 Use financial calculator PV= -1,000 (use 1,000 when no value is given) I/Y=6.5 FV=2,000 CPT N

Adams Inc. has the following data: rRF=5%; RPM=6%; and b=1.05. What is the firms cost of common equity based on the CAPM?

11.30% = B*RPM+rRF = 1.05*6%+5% = 0.1130

As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common equity?

11.84% = D0*(1+g)/P0+g = 0.8*(1+0.08)/22.5+0.08 = 0.1184

If MSFT stock return standard deviation was 5% over the last month. What is its annualized standard deviation? a. 17.3% b. 15.6% c. 60% d. 12.8%

17.3%

Simon Software Co. is trying to estimate its optimal capital structure. Right now, Simon has a capital structure that consists of 30% debt and 70% equity, based on market values. The risk-free rate is 5% and the market risk premium, RM - Rrf, is 5%. Currently the company's cost of equity, which is based on the CAPM, is 12% and its tax rate is 40%. What would be Simon's estimated cost of equity if it were to change its capital structure to 70% debt and 30% equity? (Hint: a firm's beta is a function of its leverage) a. 15.60% b. 14.72% c. 18.36% d. 13.00% e. 14.35%

18.36%

Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 13%. What is the estimated value per share of Boehm's stock?

21.4286 = D1 / (rs - g) D1 = 1.50 rs = 13% g = 6% P0= 1.50 / (0.13-0.06)= 21.4286

Exxon Mobil Corp pays quarterly dividend of $0.91 per share. Its current stock price is $113 per share. What is XOM's dividend yield? a. 2.1% b. 3.6% c. 5.4% d. 2.7% e. 3.2%

3.2%

Exxon Mobil Corp pays quarterly dividend of $0.88 per share. Its current stock price is $98 per share. What is XOM's dividend yield? a. 3.59% b. 0.90% c. 2.33% d. 5.26%

3.59%

Wendy has invested in bank that pays 3.8% annually. How long will it take for her funds to quadruple? a. 37.17 years b. 37.98 years c. 35.26 years d. 43.99 years

37.17 years

Assume company ABS issued 1 million of commons shares with book price of $30 per share. The current stock price is $40 per share. They recently issue $60 million bond with rD = 5%. Tax rate is 35%. rf = 4%, expected market return = 9%, equity beta = 0.85, taxes = 35% and rD = 5%. What is the firms overall WACC? a. 5.25% b. 7.00% c. 6.25% d. 6.5%

5.25%

Below are the possible percentage returns for Alta and Repo for different future states, along with the probabilities of those states occurring. You hold a portfolio consisting of 40% of Alta and 60% of Repo. What is the expected return (%) on your portfolio? Future Economy Probability Alta Repo Recession 10% -22% -28% Below Average 20% -2% -15% Average 40% 20% 0% Above Average 20% 35% 10% Boom 10% 50% 20% a. 6.74% b. 7.5% c. 8.94% d. 5.92% e. 7.21%

5.92%

Suppose your parents will retire in 10 years. They currently have $560,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? a. 5.97% b. 8.36% c. 7.78% d. 8.01% e. 9.28%

5.97% PV = -560,000 N = 10 FV = 1,000,000 CPT I/Y

Prologis Inc. is considering a new project, which has the data shown below. The project would have a 4-year economic life. The project's equipment would be depreciated using the MACRS 4-year rates (33%, 45%, 15%, and 7%) and would have no salvage value. Net working capital would need to be increased at the beginning of the project (in year 0), but it could be recovered at the end of the project's life (in year 4). Revenues and other operating costs are expected to be constant over the project's life, and there is no inflation. What is the net cash flow in Year 4? Equipment $80,000 Initial increase in net working capital $25,000 Annual sales revenues $90,000 Annual operating costs (excl. depreciation) $25,000 Tax rate 35.0% a. 74,092 b. 69,210 c. 57,035 d. 49,093 e. 44,543

69,210

TJX has 10 million shares of common stock outstanding. The book value is $62 per share and its current market price is $58 per share. The firm just paid a dividend of $1.80, and its expected dividend constant growth rate is 6%. The corporate tax rate is 35%. The firm just issued a 400 million bonds at a cost of 6%. What's the firm's WACC? a. 6.85% b. 6.93% c. 7.55% d. 7.09% e. 7.90%

7.09%

MDLZ issued a bond with a maturity of 10 years, a par value of $1,000, and a coupon rate 5% with annual payments. The yield to maturity (YTM) is 8%. If the interest rate changes by 1%, how much will such a bond price change? a. 6.5% b. 4.6% c. 4.2% d. 7.3% e. 5.2%

7.3%

Consider a bond with a 10% quarterly coupon and 12 years to maturity. Suppose the bond is currently selling at $1,200. What is the YTM of the bond? a. 7.46% b. 1.87% c. 8.59% d. 9.24%

7.46%

WDC's stock sells for $52. It just paid a dividend (D0) of $2.00, and its expected constant dividend growth rate is 4%. WDC is not expected to repurchase any stock. Aldabra's stock is thought to be in equilibrium, so its expected and required rates of return are equal. Based on these assumptions, what is its estimated DCF cost of common equity? a. 8.0% b. 7.8% c. 8.2% d. 6.5%

8.0%

Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?

8.01% Use financial calculator FV= -1,000,000 N=18 PV=250,000 CPT I/Y

Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D1 = $2.50), and the dividend is expected to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from reinvested earnings?

8.18% cost of equity= 2.5/52.5+5.5% = 0.1026 WACC= 45%*7.5%*(1-25%)+55%*0.1026 = 0.08175

A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g?

9% g = rs - (D1 / P0) (4/80) - 0.14 = 0.09

BST Company's target capital structure is 40% debt, and 60% common equity. The cost of debt is 8.00%, and the cost of common equity is 12%. The firm will not be issuing any new stock and has a tax rate of 30%. You were hired as a consultant to help determine their cost of capital. What is its WACC? a. 7.12% b. 8.98% c. 9.44% d. 10.05% e. 8.16%

9.44%

A stock's return has the following distribution, what is its expected return? Probability 0.1 0.2 0.4 0.2 0.1 Return -50% -5% 12% 25% 58% a. 9.6% b. 10.2% c. 8.0% d. 10.6%

9.6%

A stock's return has the following distribution, what is its expected return? Probability 0.1 0.2 0.4 0.2 0.1 Return -50% -5% 12% 25% 58% a. 9.6% b. 8.0% c. 10.2% d. 10.6%

9.6%

A bond price tends to increase as interest rate increases a. True b. False

False

A bond with higher coupon rate is more sensitive to changes in interest rates than a lower coupon bond. a. True b. False

False

A conglomerate merger occurs when two firms with either a horizontal or a vertical business relationship combine. a. True b. False

False

Having the CEO serve as the chairman of the board of directors improves the corporate governance of a firm. a. True b. False

False

According to pecking order theory, what is the hierarchy of financing choices? a. First debt, then external equity, then internal equity b. First internal equity, then external equity, then debt c. First internal equity, then debt, then external equity d. First external equity, then internal equity, then debt

First internal equity, then debt, then external equity

Which of the following does not improve the corporate governance of a firm? a. A larger fraction of independent directors on the board. b. Having the CEOO serve as the chairman of the board of directors. c. Block ownership by an active institutional investor who is trying to maximize shareholder wealth. d. Having CEO Compensation aligning with the firm shareholders.

Having the CEO serve as the chairman of the board of directors.

Which of the following statements is CORRECT regarding Mergers and Acquisitions? I) In vertical mergers, target's industry buys or sells to the acquirer's industry. II) It is not possible to increase EPS using M&As if there is no synergy. III) The announcement returns are usually significantly positive for Target's stocks. a. I and II only b. I and III only c. I only d. II only e. III only

I and III only

Consider the Modigliani and Miller (M&M) tradeoff theory of capital structure. Assume there are taxes but no bankruptcy costs. Which of the following statements is / are correct? I) Firm value always increases as more debt is added II) Firm value stays constant as more debt is added III) WACC always decreases as more debt is added IV) WACC always increases as more debt is added V) WACC stays constant as more debt is added a. I only b. I and IV only c. None of the statements are correct d. II and III only e. II and V only

I only

Which of the following should you include when estimating a project's cash flows? I. Financing costs such as debt interest payments and dividend II. Externalities III. Net working capital IV. Sunk costs V. Opportunity costs a. II, III, and V b. I, II, and V c. I, II, III, and V d. II, III, and IV

II, III, and V

Which of the following statements is CORRECT? I) One advantage of dividends over share repurchases is that dividends provide financial managers with more flexibility. II) After share repurchases, a firm's share price tends to decrease. III) After announcing a share repurchase program, a firm is not required to repurchase any of the shares it intended to buy back. a. I only b. II only c. III only d. I, II, and III

III only

Woidtke Manufacturing's stock currently sells for $22 a share. The stock just paid a dividend of $1.20 a share (i.e., D0 = $1.20), and the dividend is expected to grow forever at a constant rate of 10% a year. What stock price is expected 1 year from now? What is the estimated required rate of return on Woidtke's stock (assume the market is in equilibrium with the required return equal to the expected return)?

P1 = 24.2 rs = 16% D1 = D0*(1+g) = 1.20*(1+0.1) = 1.32 rs = (D1/P0) + g = (1.32/22)+0.1 = 16% D2 = D1*(1+g) = 1.32*(1+0.1) = 1.4520 P1 = D2/(rs-g) = 1.450/(0.16-0.1) = 24.2

Los Pollos Hermanos is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, and have a cost of capital of 9%. Your boss, Gus Fring, asks you which project should the firm take. What do you respond? Year 0 1 2 3 4 CFS-1,500 400 500 600 750 CFL-1,100 500 700 780 900 a. Both projects S & L b. Neither projects S nor L c. either projects S or L d. Project L e. Project S

Project L =NPV(9%,CF1-5)+CF0 Higher number is accepted

When comparing two firms' levels of risk, which of the following statements is / are always CORRECT? a. The firm with the lower stand-alone risk will have more systematic risk. b. None of the statements are correct. c. The firm with the higher stand-alone risk will have more diversifiable risk. d. Systematic risk could not be diversified away. e. The firm with the higher stand-alone risk will have more systematic risk.

Systematic risk could not be diversified away.

Which of the following statements is CORRECT? (Assume that the projects being considered have conventional cash flows, with one outflow followed by a series of inflows.) a. The NPV and IRR methods usually yield consistent conclusions. b. If a project has conventional cash flows and its IRR exceeds its WACC, then the project's NPV must be negative.. c. The IRR calculation takes into account the differences in the sizes of projects. d. None of the statements are correct. e. The IRR calculation does not take into account the time value of money.

The NPV and IRR methods usually yield consistent conclusions.

A larger fraction of independent directors on the board improves the corporate governance of a firm. a. True b. False

True

A long-term bond is more heavily affected by an increase in interest rates than a short-term bond. a. True b. False

True

A manager/shareholder agency conflict arises when the manager's actions aren't in the company's best interest. a. True b. False

True

Bond prices and interest rates (YTM) must move in opposite directions. a. True b. False

True

Defensive mergers are designed to make a company less vulnerable to a takeover. a .True b. False

True

Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have below average payout ratios. a. True b. False

True

Having CEO compensation aligning with the stock shareholders improves the corporate governance of a firm. a. True b. False

True

If a firm's marginal tax rate is decreased, this would, other things held constant, increase the cost of debt used to calculate its WACC. a. True b. False

True

In a merger with true synergies, the post-merger value exceeds the sum of the separate companies' pre-merger values. a. True b. False

True

The default risk is generally lower for investment grade bonds than that for junk bonds. a. True b. False

True

Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7% rate. Dozier's weighted average cost of capital is WACC = 13%. a. What is Dozier's terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) b. What is the current value of operations for Dozier? c. Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share?

a. $713.33 b. $527.89 c. $43.79

Consider a firm with a $20 share price. It announces a dividend of $1 per share. Assuming no other value-related information, the stock price will ______ by _____ on the _____ date? a. fall; $1; ex-dividend b. fall; $1; declaration date c. increase; $1; ex-dividend d. increase; $1; payment date

fall; $1; ex-dividend

Consider a firm with a $80 share price. It announces a dividend of $1 per share. Assuming no other value-related information, the stock price will _____ by _____ on the _____ date. a. the price will remain constant b. fall; $1; ex-dividend c. fall; $1; declaration date d. increase; $1; payment date e. fall; $1; payment date

fall; $1; ex-dividend