Finance question and answers for August 16, 2023
- Q Factor Models Suppose a factor model is appropriate to describethe returns on a stock. The current expected return on the stock is10.5 percent. Information about those factors is presented in...
- Q 1. Kramerica Industries has a capital structure consisting of65% debt and 35% common stock. The company’s CFO has obtained thefollowing information: o The before-tax YTM on the company's bondsis 8.5%....
- Q You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $290,000, and it wouldcost another $72,500 to modify the equipment for special use by...
- Q Question 1a. Simpkins Corporation does not pay any dividends because it isexpanding rapidly and needs to retain all of its earnings. However,investors expect Simpkins to begin paying dividends, with the...
- Q The Kretovich Company had a quick ratio of 1.1, a current ratioof 3.5, a days' sales outstanding of 32.0 days (based on a 365-dayyear), total current assets of $630,000, and...
- Q Interest Rate Swaps ABC Company and XYZ Company need to raisefunds to pay for capital improvements at their manufacturingplants. ABC Company is a well-established firm with an excellentcredit rating in...
- Q Sales-Related TransactionsMerchandise is sold on account to a customer for $8,000, termsFOB shipping point, 1/10, n/30. The seller paid the freight of$300.a. Determine the amount of the sale.$?b. Determine the...
- Q Please read the article, Money Unlimited, regarding the U.S.Supreme Court case, Citizens United v. Federal ElectionsCommittee. Please write a short paragraph on your impressionsof the case by March 1, 2019.Money...
- Q you are evaluating a stock for purchase. you estimate that thefirm will pay the following dividends in the coming years:Year 1: $2Year 2: $2.50Year 3: $3After the third year, the...
- Q Parramore Corp has $10 million of sales, $1 million ofinventories, $4 million of receivables, and $1 million of payables.Its cost of goods sold is 70% of sales, and it finances...
- Q The Book Store is considering a new four-year expansion projectthat requires an initial fixed asset investment of $2.8 million.The fixed asset will be depreciated straight-line to zero over itsfour-year life,...
- Q Here is the ORIGINAL data of the Sport Hotel project: 1.Projected outflows First year (Purchase Right, Land, and Permits)$1,000,000 Second Year (Construct building shell $2,000,000 ThirdYear: (Finish interior and furnishings)...
- Q You find the following corporate bond quotes. To calculate thenumber of years until maturity, assume that it is currently January15, 2016. The bonds have a par value of $2,000. Company...
- Q A-Rod Manufacturing Company is trying to calculate its cost ofcapital for use in making a capital budgeting decision. Mr. Jeter,the vice-president of finance, has given you the followinginformation and has...
- Q A futures contract on a share, which pays dividend at acontinuously compounded rate of 3%, is written when the share has aprice of $790, and the continuously compounded risk-free interestrate...
- Q You took a short futures position in 10 contracts, covering each100 ounces of gold at a price of $276.5 per ounce. The initial andthe maintenance margin requirement are respectively $1500...
- Q Assume that you own an annuity that will pay you $15,000 peryear for 13 years, with the first payment being made today. Youneed money today to start a new business,...
- Q Within the realm of capital budgeting the majority of projectsare not new product lines or major corporate acquisitions. They arereplacement projects or projects considered for efficiency gains.Projects taken on for...
- Q 10 Big Retailer (BR) follows a moderate current asset investmentpolicy, but is now considering a change, perhaps to a restricted ormaybe to a relaxed policy. BR’s annual sales are $1,400,000;...
- Q Royal Dutch Shell stock sells for some value X. The interestrate is 4%. A nine-month call option at 155 sells for 16.432, whilea nine month put option at 155 sells...
- Q Eastern Electric currently pays a dividend of about $1.86 pershare and sells for $26 a share.a.If investors believe the growth rate of dividends is 2% peryear, what rate of return...
- Q Consider the following table:ScenarioProbabilityStock Fund Rate of ReturnBond Fund Rate of ReturnSevere Recession0.10-43%-10%Mild Recession0.20-23%16%Normal growth0.4028%9%Boom0.3033%-6%a. Calculate the values of mean return and variance for thestock fund. (Do not round intermediate...
- Q 15.Paradise Retailers, Inc. (PRI) determined that $1,500,000 isneeded for cash transactions made during the next year. Each timePRI deposits money in its checking account, a charge of $12.95 isassessed to...
- Q Big City Manufacturing (BCM) is preparing its cash budget andexpects to have sales of $450,000 in January, $375,000 in February,and $555,000 in March. If 20% of the sales are for...
- Q 5 Whitson Co. is looking for ways to shorten its cash conversioncycle. It has annual sales of $45,625,000, or $125,000 a day on a365-day basis. The firm's cost of goods...
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