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Date Posted: 16:04:14 04/27/01 Fri
Author: Gabe Jonas
Subject: Can you please correct these problems for another final exam

T/F
1T
2T
3T
4T
5T
6T
7F
SA
1put,owner long, potential shareholders short, firm's price
put,producer long, consumers short, revenues
call, producer long, consumers short, increased revenues
2set of contracts - view of the company as a set of obligations among its explicit & implicit stakeholders.
3Moral Hazard - actions taken by the agent that are unseen & give personal benefit but maybe costly to principal
4?
5The point where investment opportunity schedule intersects w/ marginal cost of capital. Why?
6?
MC
1B
2A
3B
4B
5B
6B
7D
Problems
1 leverage = 23.22%
cost of debt = 6.9%
cost of R.E = 18.42%
costof R.E. WACC = 15.33%
* assumed tax rate was 40%
2 Acquirer Acquiree Combined
Stck Pr 2 6 2
# Shrs 10,000,000 7,000,000 31,000,000
NI 800,000 4,200,000 5,000,000
P/E 25 10 12.4
EPS .08 .6 .161
MC 20,000,000 42,000,000 62,000,000
4 .9386
Exam 3
5 a)10.63%
b)$3,998.12
c)10.63%
d)$8.5
e)100%
1 I do not know how to do this one
3 a)31.5
b)20.53
c)38.5

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