ABC, Inc. has 6 percent bonds outstanding that mature in 20 years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $814 each
1) ABC, Inc. has 6 percent bonds outstanding that mature in 20 years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $814 each. What is the firm's after-tax cost of debt if the tax rate is 27%? 2) Suppose the nominal rate is 21.9% and the inflation rate is 5.3%. Solve for the real rate. Use the Fisher Equation to get your answer. 3) The common stock of ABC Industries is valued at $26.7 a share. The company increases their dividend by 7.4 percent annually and expects their next dividend to be $2.56. What is the required rate of return on this stock? 4) You have observed the following returns on ABC's stocks over the last six years: 19.2%, 3.2%, 13.6%, -4.6%, 14.2%, -2.9% What is the geometric average returns on the stock over this six-year period. 5) The beta of the risk-free asset is: a)0 b)1 c)1.5 d)2 6) The spot rate for the pound is £0.6673 = $1 and the spot rate for the Canadian dollar is C$1.2369 = $1. What...