2. GreshakCorp. was recently in the news for fraudulent financial reporting committed by its Chief Financial Officer (CFO).The market has becomeconcerned about the company's ability to continue as an operating entity.The company has a $1,000par value bond issue outstanding with 25 years remaining to maturity and a coupon rate of 5.5%, paid semiannually. The required nominal rate on this debt has now risen in the market to 12.5%. What is the current market value foreach bond (rounded)?

Select one:

a. $467

b. $470

c. $823

d. $830

e. $1,285

4. GreshakCompany's stockhas a beta coefficient of 1.4 and a required rate of return of 14%. The equityrisk premium is currently 5%. If the inflation premium increases by 1.0%, and Greshak acquires new assets which increase its beta by 50%, what will be the company's new required equity rate of return?

Select one:

a. 18.50%

b. 13.50%

c. 22.80%

d. 15.25%

e. 17.00%

5. GreshakCorp. forecasts its dividends to be$2.00 per share next year, $3.00 per share the year after, and $4.00in 3 years. Thereafter, its dividends areprojected to grow at a constant rate of 4.0% per year forever. If the required rate of return on Greshak's equityis 14%, what is theestimated per share value of the company's stock?

Select one:

a. $34.84

b. $28.68

c. $30.55

d. $36.40

e. $38.22

7. Greshak Corp. is looking to raise additional long-term capital by issuing Original Issue Discount (OID or Zero Coupon) debt with a face value of $3.0 millionwhich will be due in 30 years.Assuming the market requires a rate of return of 14.5% on debt similar to Greshak's, how much funding will the company raise from this bond issue?

Select one:

a. $51,636

b. $322,832

c. $195,655

d. $162,345

e. $286,145

8. Greshak Corp.had sales of $50 million,operating income of $7.5 million,total assets of $40.0 million, total debt/liabilities of $8.0 million,stockholders' equity of $32.0 million, and its return on equitywas 18.75%. Given this information, what must Greshak's after-tax profit margin have been?

Select one:

a. 12.0%

b. 25.0%

c. 18.0%

d. 10.0%

e. 8.0%