Published on December 1, 2015
For more classes visit www.snaptutorial.com 1) Bond prices and yields Assume that the Financial Management Corporation’s $1,000-per-value bond has a 7.100% coupon, matures on May 15, 2023, has a current price quote of 94.464 and yield to maturity(YTM) of 8.241%. 2) Common stock value –Constant growth Use the contrast-growth model (Golden model) to find the value of the firm. 3) Degree of operating leverage Grey Products has fixed operating costs of $382,000, variables operating costs of $15.61 per unit, and selling price of $62.91 per unit. 4) Degree of financial leverage North western Savings and Loan has a current capital structure consisting of $230,000 of 15% (annual interest) debt and 1,000 shares of common stock. The firm pays taxes at the rate of 30%. 5) Various Capital Structures Character Enterprises currently has $1.5 million in total assets and is totally equity financed. It is contemplating a change in its capital structure. Compute the amount of debt and equity that would be outstanding is the firm were to shift to each of the following debt ratios: 10%, 20%, 30%, 40%, 50%, 60%, and 90%.