Accounting question and answers for November 28, 2023
- Q 4. Stocks that don't pay dividends yet Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is...
- Q Calculate the present value of a perpetuity with the following characteristics: the interest rate = 9.470% and the payment = $1,052.31.
- Q What proportion of a firm is equity financed if the WACC is 14%, the after-tax cost of debt is 7%, the tax rate is 35%, and the required return on...
- Q The Federal Reserve does all but which one of the following functions?
- Q Your parents will retire in 29 years. They currently have $230,000 saved, and they think they will need $1,350,000 at retirement. What annual interest rate must they earn to reach...
- Q 15) Arbitrage is the dominant force that determines the price of an option. A. true B. false 16. An American put option allows the holder to A)...
- Q (i) You hold a portfolio consisting of a long position of 1 share of stock A. The stock price today is S0 = $100. The daily log returns X1, X2,...
- Q The 13-year, $1,000 par value bonds of Waco Industries pay 11 percent interest annually. The market price of the bond is $915, and the market's required yield to maturity on...
- Q You are trying to value a company using the relative valuation approach. Suppose comparable companies are trading at an average trailing EV/EBITDA multiple of 8.7. The company you are valuing...
- Q Explain what is capital budgeting 300 words
- Q The percent-of-sales method assumes that all accounts on the balance sheet change in some fixed proportion to changes in sales. TRUE or FALSE
- Q 4points Print References Question-1A Chuck, a single taxpayer, earns $78,000 in taxable income and $13,300 in interest from an investment in City of Heflin bonds. (Use the U.S tax...
- Q By my definition of "unique securities," a corn futures contract is no different than a lean hog futures contract. A small cap mutual fund is no different than a large...
- Q Jungle, Inc., has a target debtequity ratio of 0.88. Its WACC is 12 percent, and the tax rate is 32 percent. (Do not include the percent...
- Q Suppose the risk-free is 5 %, the average investor has a risk aversion co-efficient of A = 2, and the standard deviation of the market portfolio is 20 %. What...
- Q Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 34%. The T-bill rate is 5.5%. Your risky...
- Q A portfolio has an expected rate of return of 0.21 and a standard deviation of 0.4. The risk-free rate is 5 percent. An investor has the following utility function: U...
- Q Assume that the corporate tax rate is 21%, the personal tax rate on income from equity is 15% and the personal rate on interest income is 36%. The effective tax...
- Q Grapevine Ltds Accounts payables amounts to $50,000 and they have just renegotiated their credit terms with the supplier. The credit terms being offered are 3/10 net 60. The company however...
- Q On Jan 2, 2020 Albert Aloysius Zander Equipment, Inc. (AAZEQ) and Mole Excavating (MOLEX) entered into a four-year lease contract for an IVAN-84D, which AAZEQ also offered for sale at...
- Q Cullumber Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $21,500 each year for the next five years. If the company uses...
- Q Q4. Using the values below, answer the questions that follow: (1mark) Amount of annuity: $500 Interest rate: 9% N=10 years Calculate the future value of...
- Q Why is it important to distinguish between fixed and variable costs?
- Q Which of the following statements regarding capital budgeting analysis is not most correct? NPV assumes reinvest at the opportunity cost of capital....
- Q Meyer & Co. expects its EBIT to be $115,000 every year forever. The firm can borrow at 9 percent. The company currently has no debt, and...
- Q Assuming a risk neutral world, in the Black-Scholes Merton model, N(d1) can be interpreted as the following (pick the best answer): Group of answer choices The estimate of how much...
- Q A company needs to decide whether to buy or lease new equipment. The equipment can be purchased for $800,000 or leased at an annual cost of $170,000. The equipment qualifies...
- Q Standard & Poors is in the business of rating corporate bonds. These ratings are very important to corporations because they provide a guide to the investing public as to...
- Q Problem 5-17 Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of...
- Q Lucy inherited a large sum of money from her aunt. She invested part of her inheritance into a fund earning 6% compounded monthly. She has arranged a systematic withdrawal plan...
- Q Decompose the ratio of operating working capital to sales for ShipCo into operating cash days, accounts receivable days, inventory days, accounts payable days, and accrued expenses days....
- Q According to Miller and Modigliani 1, if UHT plc is financed entirely by equity and has a cost of equity of 15%, which of the following will be...
- Q Company A has a beta of 0.80, while Company B's beta is 1.40. The required return on the stock market is 9.00%, and the risk-free rate is 2.00%. What is...
- Q The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial...
- Q What do you identify as clear first-mover advantages and late-mover disadvantages to a product being introduced to any African country? Please identify a specific African state to be profiled.
- Q Bruins R Us is a mature toy manufacturing firm. The company just paid a dividend of $9.53, but management expects to reduce the payout by 5% per year, indefinitely. If...
- Q True or False? If false, please explain. 1) The yield to maturity (YTM) is the discount rate used to calculate the fundamental value of a bond. (0.5 Mark) 2) An...
- Q As a jewelry store manager, you want to offer credit, with interest on outstanding balances paid monthly. To carry receivables, you must borrow funds from your bank at a nominal...
- Q which of the following refers to having a financial score above 20?
- Q Why would an investor choose a Mutual Fund of ETFs over purchasing the ETFs directly? A. Lower TER B. Only offered as no-load C. Dividend reinvestment D. Lower MER ...
- Q Tercer reports the following for one of its products. Direct materials standard (3 lbs....
- Q 5. Suppose you deposit $2,030.00 into an account today. In 14.00 years the account is worth $3,703.00. The account earned ____% per year.
- Q If 70% of convertible bond trading is by hedge funds, I would expect the profitability of that strategy to decline. Discuss the viewpoint.
- Q As we read in Chapters 6 &7, mergers & acquisitions are a major form of corporate diversification strategy. Using the lecture slides on Chapter 7, identify and discuss the top...
- Q You own a small manufacturing plant that currently generates revenues of $2 million per year. Next year, based upon a decision on a long-term government contract, your revenues will either...
- Q You've just bought 5 futures contract on corn at a futures price of 586 for delivery in 3 months. Each contract is for 5,000 bushels and is priced in cents...
- Q Let's assume you have $50,000 invested in a mutual fund that has an expected return of 12%, $45,000 invested in Treasury securities with an expected return of 2% and $250,000...
- Q You are considering purchasing two bonds (Bond X and Bond Y) issued by ABC Inc. Both bonds have 10 years remaining to maturity and $1,000 par value but carry different...
- Q Suppose that, at time t = 0 (now), 100 depositors (householders) deposit $3,000 each to a fictitious bank, call it OUR Bank. The deposits have one-year maturity and the bank...
- Q (Related to Checkpoint3.2)(Working with the balance sheet)The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for...
- Q Eligma has invested in new machinery at a cost of $1,150,000. This investment is expected to produce cash flows of $640,000, $750,000, $860,000, and $920,000 over the next four years....
- Q What is a firm's weighted-average cost of capital if the stock has a beta of 1.1, Treasury bills yield 4%, and the market portfolio offers an expected return of 16%?...
- Q A project requires capital expenditure of 1.5 million in new plant and machinery on 31 December 20X3. On completion of its useful economic life of four years, this plant...
- Q Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $300,000 Rolls-Royce Phantom. Jack currently has $27,250 that he may invest....
- Q Chen Aisen is eeking to accumulate $50,000 in 8 years to invest in areal estate venture. He can earn 5.35 percent annual interest with monthly compounding in private investment. How...
- Q Following the mine example in class, consider the modifications: A: suppose the price of copper in a good state is $1.20, and in a bad state $0.40, while everything else...
- Q Compute the weighted average cost of capital given the information below. Book Value of Debt $2,500,000,000 ...
- Q Use the following cash flow data of Haven Hardware for the year ended December 31, 2020. Cash Dividend $ 70,000 Purchase of...
- Q Which of these statements characterized corporate governance in the 1980s? Takeovers were hostile and the use of managerial defense mechanisms increased Management became more accountable for performance as...
- Q Griffin's Goat Farm, Incorporated, has sales of $714,000, costs of $395,000, depreciation expense of $40,000, interest expense of $33,000, and a tax rate of...
- Q The Wildcat Oil Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its oil exploration business. Management has decided that it must use...
- Q Headland Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the companys bikes....
- Q Calculate the contribution to total performance from currency, country, and stock selection for the manager in the example below. All exchange rates are expressed as units of foreign currency that...
- Q Shelton Company purchased a parcel of land six years ago for $868,500. At that time, the firm invested $140,000 in grading the site so that it would be usable. Since...
- Q Consider the following debt-free project for a machine: Physical Lifespan 5 years Capital Expense, Year 0 $13,000 EBITDA / Year $8,000 Cost of Capital 5.3% Tax Rate 22% Depreciation Life...
- Q TwitterMe, Inc., is a new company and currently has negative earnings. The companys sales are $2.4 million and there are 138,000 shares outstanding. a. If the benchmark price-sales ratio is...
- Q If a company purchased an asset with an installed cost of $6,000,000 and it qualifies for a 20% CCA rate, what is the beginning UCC for year 2?
- Q Given existing social problems such as drug addiction and disregard for certain laws, what are the alternatives to our current system of justice?
- Q "A rich donor gives a hospital $25000 one year from today. Each year after that, the hospital will receive a payment 3% larger than the previous payment, with the last...
- Q What are the advantages of the PI method of capital budgeting? How does the accounting rate of return (ARR) differ from the internal rate of...
- Q When conducting the financial statement analysis, which of the following statement is true? Select one: a. Banks prefer to lend to borrowers with higher Debt/Equity ratios. b. High level of...
- Q A companies pricing and credit policies impact which two financial statements? cash flow statement and pro forma earnings ratio and balance sheet balance sheet and owners equity balance sheet and...
- Q What would you pay for a bond that is trading today with a yield-to-maturity (ytm) of 7.5, an annual coupon rate of 6%, pays its coupons semi-annually, and matures in...
- Q A 4-year note with annual coupon payments has a face value of $1,000 and duration of 3.65. It sells for $985.85 and yields 6.17%. The average monthly change in the...
- Q A bond has a face value of $900 and 5% coupon rate, its current price is $840, and it is expected to increase to $870 next year. The current yield...
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