If GP issues $276 million of new stock to buy back the debt, the expected return is

Global Pistons (GP) has common stock with a market value of $410 million and debt with a value of
$276 million. Investors expect a 12% return on the stock and a 6% return on the debt. Assume perfect
capital markets.

12+276(.06)/276

12+41.94*.06/41.94

If Restex's free cash flow is expected to be $10 million one year from now and will grow at a
constant rate, what expected future growth rate is consistent with Restex's current market value?

If Restex's free cash flow is expected to be $10 million one year from now and will grow at a
constant rate, what expected future growth rate is consistent with Restex's current market value?
If Restex's free cash flow is expected to be $10 million in one year, the expected future growth rate is -%

The stock of Harford Inc. is about to pay $0.22 dividend. It will pay no more dividends for the next month.
Consider call options that expire in one month. If the interest rate is 5% APR (monthly compounding),
what is the maximum strike price where it could be possible that early exercise of the call option
is optimal? The maximum strike price is

Suppose the current exchange rate is $ 1.76 divided by pound$1.76/, the interest rate in the United
States is 5.34 %5.34%, the interest rate in the United Kingdom is 3.79 %3.79%, and the volatility of the $/
exchange rate is 10.8 %10.8%.
Use the Black-Scholes formula to determine the price of a six-month European call option on the British
pound with a strike price of $ 1.76 divided by pound $1.76/.

When you analyze the duration of loans, you find that the duration of the auto loans is 2.2 years, while the
mortgages have a duration of 7.2 years. Both the cash reserves and the checking and savings accounts
have a zero duration. The CDs have a duration of 1.9 years, and the long-term financing has a 9.7-year
duration. What is the duration of Acorn's equity?