DEVRY FIN 516 Week 4 Midterm
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FIN 516 Week 4 Midterm
1 . Question : ( TCO C ) Pate & Co . has a capital budget of $ 3,000,000 . The company wants to maintain a target capital structure that is 15 percent debt and 85 percent equity . The company forecasts that its net income this year will be $ 3,500,000 . If the company follows a residual dividend policy , what will be its total dividend payment ?
2 . Question : ( TCO F ) The following data applies to Saunders Corporation ' s convertible bonds : Maturity : 10 Stock price : $ 30.00 Par value : $ 1,000.00 Conversion price : $ 35.00 Annual coupon : 5.00 % Straight-debt yield : 8.00 % What is the bond ' s straight-debt value ? ( a ) $ 684.78