The assignment has 10 corporate finance numerical questions.

Question 1: DX Technologies is a privately held developer of advanced security systems based in Chicago. As part of your business development strategy, in late 2022 you initiate discussions with IDX's founder about the possibility of acquiring the business at the end of 2022. Estimate the value of IDX per share using a discounted FCF approach and the following data: Debt: $ 39 million Excess cash: $ 105 million Shares outstanding: 50 million Expected FCF at the end of 2023: $ 45 million. Expected FCF at the end of 2024: $ 50 million. Future FCF growth rate beyond 2024: 4 % Weighted -average cost of capital: 9.4 % . The enterprise value at the end of 2022 is $_______ million . (Round to the nearest integer.) The equity value is $_________million. (Round to the nearest integer.) The value of IDX per share is $__________. (Round to the nearest cent.) Question 2: Pembina Pipelines paid its last quarterly dividend 1 month(s) ago and the amount was $ 1.49 per share. If you expect Pembina's dividends to have a growth rate of 1.65 % per quarter , what should be its current price per share if its equity cost of capital is 10.2 % EAR ? The price per share is $__________. (Round to the nearest cent.) Question 3: Summit Systems will pay a dividend of $1.66 one year from now. If you expect Summit's dividend to grow by 5.9 % per year, what is its price per share if its equity cost of capital is 11.1%? The price per share is $______. (Round to the nearest cent.) Question 4: Suppose Acap Corporation will pay a dividend of $ 2.86 per share at the end of this year, and $ 2.99 per share next year. You expect Acap's stock price to be $ 51.22 in two years. If Acap's equity cost of capital is 11.2 % : a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years? b. Suppose instead you plan to hold the stock for one year. What price would you expect to be able to sell a share of Acap stock for in one year? c. Given your answer in part ( b), what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for one year? How does this compare to your answer in part ( a)? Note : It is best not to round intermediate calculations - make sure to carry at least four decimal places in intermediate calculations. Question 5: Anle Corporation has a current price of $ 27 , is expected to pay a dividend of $2 in one year, and its expected price right after paying that dividend is $35. a. What is Anle's expected dividend yield? b. What is Anle's expected capital gain rate? c. What is Anle's equity cost of capital? Question 6: Assume Evco, Inc., has a current stock price of $49 and will pay a $1.75 dividend in one year; its equity cost of capital is 14%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its cu rrent price? The expected price is $ ________ . (Round to the nearest cent.) Question 7: The Isabelle Corporation rents prom dresses in its stores across eastern Canada. It has just issued a five -year zero -coupon corporate bond at a price of $64 (assume a $100 face value bond). You have purchased this bond and intend to hold it until maturity. a. What is the yield to maturity of the bond? b. What is the expected return on your investment (expressed as an EAR) if there is no chance of default? c. What is the expected return (expressed as an EAR) if there is a 100% probability of default and you will recover 90% of the face value? d. What is the expected return (expressed as an EAR) if the probability of default is 50% , the likelihood of default is higher in bad times than good times, and, in the case of default, you will recover 90% of the face value ? e. For parts ( b-d), what can you say about the five -year risk -free interest rate in each case? Question 8: The following table summarizes yields to maturity on several 1-year, zero -coupon securities: Security Yield Treasury Bill 3.14 % AAA Corporate 3.59 % BBB Corporate 4.18 % B Corporate 4.70 % a. What is the price of a 1-year, zero -coupon corporate bond with a AAA -rating and a face value of $1,000 ? b. What is the credit spread on AAA -rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? Question 9: Grummon Corporation has issued zero -coupon corporate bonds with a 55 -year maturity (assume $100 face value bond). Investors believe there is a 35% chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 60 cents per dollar they are owed. If investors require a 6% expected return on their investment in these bonds, what will be the price and yield to maturity on these bonds? Note : Assume annual compounding. The price of the zero -coupon corporate bonds will be $ ______ (Round to the nearest cent.) Suppose you purchase a 30 -year, zero -coupon bond with a yield to maturity of 9 %. You hold the bond for five years before selling it. a. If the bond's yield to maturity is 9% when you sell it, what is the internal rate of return of your investment? b. If the bond's yield to maturity is 10% when you sell it, what is the internal rate of return of your investment? c. If the bond's yield to maturity is 8% when you sell it, what is the internal rate of return of your investment? d. Even if a bond has no chance of default, is your investment risk -free if you plan to sell it before it matures? Explain. e. Note : Assume annual compounding. Question 10 : Suppose a 10 -year, $1,000 bond with a 7% coupon rate and semi -annual coupons is trading for a price of $936.55. a. What is the bond's yield to maturity (expressed as an APR with semi -annual compounding)? b. If the bond's yield to maturity changes to 9% APR, what will the bond's price be?