Fin 300 - Study guides, Class notes & Summaries

FIN 300 A firm receives a cash flow from an investment that will increase by 10 percent an FIN 300 A firm receives a cash flow from an investment that will increase by 10 percent annually for an infinite number of years. This cash flow stream is called O a growing perpetuity. O a growing annuity. O an annuity due. O an ordinary annuity.

FIN 300 Bonds sell at a discount off the par value when market rates for similar bonds are FIN 300 Bonds sell at a discount off the par value when market rates for similar bonds are O equal to the bond's coupon rate. O greater than the bond's coupon rate. O less than the bond's coupon rate. O Market rates are irrelevant in determining a bond's price.

FIN 300 Billy Goat is interested in a 10-year bond issued by Builtrite that pays an annual FIN 300 Billy Goat is interested in a 10-year bond issued by Builtrite that pays an annual coupon rate of 10 percent. The current price of this bond is $1,175. If Billy buys this bond, what would be his yield to maturity? O 8.4% —‹ 8% —‹ 7% O 7.4%

FIN 300 Owners of preferred stock O All of the statements provided are true. O usually rec FIN 300 Owners of preferred stock O All of the statements provided are true. O usually receive fixed dividend payments. O usually do not have voting rights. O are given priority treatment over common stock with respect to dividends payments and the claims against the firm's assets in the event of bankruptcy or liquidation.

FIN 300 Jay Aquire is considering the purchase of the following: a Builtrite, $1000 par, 6 FIN 300 Jay Aquire is considering the purchase of the following: a Builtrite, $1000 par, 6 5/8% coupon rate, 15 year maturity bond which is currently selling for $1020. If Jay's required return is 10%, what would he be willing to pay for the Builtrite bond? O $724 O $705 O $743 O $762  What is the answer?

FIN 300 Builtrite Furniture is considering sells bonds for a plant expansion. Currently, B FIN 300 Builtrite Furniture is considering sells bonds for a plant expansion. Currently, Builtrite believes that it could sell 20-year maturity, $1000 par value, 5 3/8% coupon bonds after flotation costs for $1040.  If Builtrite is in the 34% marginal tax bracket, what is the after-tax cost for the bonds?Group of answer choices0.03680.03330.03060.0291

FIN 300 Reading a stock quote, you see that Builtrite pays a $2.00 dividend and has a PE o FIN 300 Reading a stock quote, you see that Builtrite pays a $2.00 dividend and has a PE of 16. You also note that Builtrite pays out half of its earnings as dividends. What is the price of Builtrite's stock? O $120 O $40 —‹ $56 O $64

FIN 300 Which ONE of the following statements is true about secondary markets? O An active FIN 300 Which ONE of the following statements is true about secondary markets? O An active secondary market causes firms to sell their new debt or equity issues at a higher cost of funds. O In secondary markets, outstanding shares of stock are bought and sold among investors. O All of the statements provided are true O For an investor, the function of secondary markets is to provide profitability for the ...

FIN 300 Builtrite has estimated their cost of capital is 15% and they are considering the FIN 300 Builtrite has estimated their cost of capital is 15% and they are considering the purchase of a machine with the following capital budget: Initial Investment $65,000 RATFCF Year 1 $28,000 RATFCF Year 2 $34,000 RATFCF Year 3 $32,000 What is the machine™s NPV? Group of answer choices $6,120 $5,983 $5,336 $4,987