9/8/2019 Assignment Print View
1/3
Points
%
Score
:
6
/
6 100
9/8/2019 Assignment Print View
2/3
1
.
Award
:
6 out of 6
.
00 points
a. The price of Entergy stock has risen to $90. What is the market value of the firm’s equity if the
number of outstanding shares does not change? (Enter your answer in billions rounded to 3
decimal places.)
Consider the table given below to answer the first question (shares and market values in millions).
Consider the table given below to answer the first question (shares and market values in millions).
b. The rating agency has revised Catalytic Concept’s bond rating to A (use Table 2.2). What interest
rate, approximately, would the company now need to pay on its bonds? (Enter your answer as a
percent rounded to 2 decimal places.)
c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live
cattle in the future at a fixed price, and the other agrees to sell. Which one sells?
A farmer
rev: 11_06_2017_QC_CS-108373
Market
value
Interest rate
$
Callaway Golf (ELY)
Alaska Air Group (ALK)
Entergy (ETR)
Yum! Brands (YUM)
General Electric (GE)
Callaway Golf (ELY)
Alaska Air Group (ALK)
3.03
24.615
%
Number of
Shares
93.8
124.7
273.5
408.7
9,331.0
Number of
Shares
93.8
24.7
×
×
×
×
×
×
×
×
×
Stock Price=
$8.76 = $80.77
= $75.92 =
$77.77 =
$30.34 =
Stock Price=
$8.76 = $80.77
=
Market
Capitalization
$821
$ 10,074
$ 20,763
$ 31,875
$ 283,091
Market
Capitalization
$821
$ 10,074
9/8/2019 Assignment Print View
3/3
Interest rate
Market value
Entergy (ETR)
Yum! Brands (YUM)
General Electric (GE)
$ 24.615
3.03 %
273.5
408.7
9,331.0
×
×
×
$75.92
$77.77
$30.34
=
=
=
$ 20,763
$ 31,875
$
283,091
a. The price of Entergy stock has risen to $90. What is the market value of the firm’s equity if the
number of outstanding shares does not change? (Enter your answer in billions rounded to 3
decimal places.)
273.50 million × $90 = $24.615 billion
c.
The farmer sells cattle since he raises them. The meat packer buys cattle because it needs beef for
processing.
b. The rating agency has revised Catalytic Concept’s bond rating to A (use Table 2.2). What interest
rate, approximately, would the company now need to pay on its bonds? (Enter your answer as a
percent rounded to 2 decimal places.)
c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live
cattle in the future at a fixed price, and the other agrees to sell. Which one sells?
A farmer
rev: 11_06_2017_QC_CS-108373
a.
+/-0.01%
Explanation
:
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