## A firm has current assets that could be sold for their book value

Question A firm has current assets that could be sold for their book value of $12 million. The book value of its fixed assets is $50 million, but they could be sold for $80 million today. The firm has total debt with a book value of $30 million, but interest rate declines have caused the market value of the debt to increase to $40 million. What is this firm’s market-to-book ratio? (Round your answer to 2 decimal places.)

## Miltmar Corporation will pay a year-end dividend of $4, and dividends

Question Miltmar Corporation will pay a year-end dividend of $4, and dividends thereafter are expected to grow at the constant rate of 3% per year. The risk-free rate is 5%, and the expected return on the market portfolio is 14%. The stock has a beta of 0.65.a. Calculate the market capitalization rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)b. What is the intrinsic value of the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

## The risk-free rate of return is 4%, the required rate of return on

Question The risk-free rate of return is 4%, the required rate of return on the market is 10%, and High-Flyer stock has a beta coefficient of 2.0. If the dividend per share expected during the coming year, D1, is $3.30 and g = 5%, at what price should a share sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

## Nike has just purchased a put option on Reno LTD. The share is currently

Question Nike has just purchased a put option on Reno LTD. The share is currently trading on the JSE at R58 per share . The put option has a strike price of R50 and an option premium of R3. The option is currently _______________ and the break-even price on this option for Nike is _________.A) Out of the money R47B) In the money R61C) Out of the money R53D) Out of the money R55E) In the money R55

## Get Answer Question 1. Plain Vanilla Interest Rate Swap (20 marks)

Incredible Inc., a manufacturer of children’s toys, enters into

Question Get Answer Question 1. Plain Vanilla Interest Rate Swap (20 marks)

Incredible Inc., a manufacturer of children’s toys, enters into a two-year plain vanilla interest rate swap, in which the corporation will receive a fixed rate and pay a floating rate of LIBOR. The notional amount on this swap is $75 million. Swap payments will be netted every 180 days, and the LIBOR requires the assumption of a 360-day year. The term structure of LIBOR on the swap initiation date is as follows:DaysRate (%)1803.503603.555403.607203.70 a. What is the fixed rate determined on the swap initiation date? (6 marks)b. Calculate the swap value on the initiation date. (1 mark)c. What is the first net payment on the swap? Who makes this payment, Incredible Inc. or the swap dealer? (1 mark)d. Assume that it is now 120 days into the life of the swap. The new term structure of LIBOR is as follows:DaysRate (%)603.602403.704203.806003.90Calculate the value of the swap on Day 120. (6 marks)e. Assume that it is now 360 days into the life of the swap. The new term structure of LIBOR is as follows:DaysRate (%)1803.853603.905403.957204.00Calculate the net payment on the swap on Day 540, and the value of the swap on Day 360. (6 marks)