Finance question and answers for August 21, 2023
- Q Aligram Software Ltd has five million shares outstanding and itsmarket price is $61 per share. The company has only two bondsoutstanding. Bond A is a 15-year bond issued four years...
- Q You are considering whether to invest in a mutual fund thatholds a portfolio stocks versus directly investing in stocksyourself. Compared to investing directly in stocks, what is themain advantages of...
- Q You have a $2 million portfolio consisting of a $100,000investment in each of 20 different stocks. The portfolio has a betaof 1.05. You are considering selling $100,000 worth of one...
- Q Western Gas & Electric Company (WGC) can borrow funds at aninterest rate of 7.30% for a period of seven years. Its marginalfederal-plus-state tax rate is 45%. WGC’s after-tax cost of...
- Q 1. We find the following information on NPNG(No-Pain-No-Gain) Inc. (18 marks total)EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000These numbers are projected toincrease...
- Q You just got hired at a brand new hospital as a financialanalyst and the Board wants to buy an MRI machine but they areunsure if this makes financial sense. You...
- Q Bilateral/multilateral international flow of funds-effect of government restrictions on this.
- Q Eddy Ltd is considering investing in a project at a cost of N$3000 000. The estimated economic life of the project is 5 years. Thecompany will use the straight-line method...
- Q How can future appreciation/depreciation of the currencyof a parent company affect the value of a project established inanother country. Relative cost (Ignore possible exchange rateeffects.) (10marks)
- Q Is exchange rate is an important factor in capitaldecision making by Multinational Company?
- Q Your firm may purchase certain assets from a strugglingcompetitor. The competitor is asking $50,000,000 for the assets.Last year, the assets produced revenues of $15,000,000. Revenuesearned in the next year (i.e.,...
- Q What is the value of a semi-annual pay 9% coupon bond 2 yearsfrom now that was bought in 2019 and matures in 15 years if ratesgo to 10% in 2...
- Q On June 30, 2021, Georgia-Atlantic, Inc. leased warehouseequipment from Builders, Inc. The lease agreement calls forGeorgia-Atlantic to make semiannual lease payments of $545,210 overa 4-year lease term (also the asset’s...
- Q Capital Structure AnalysisThe Rivoli Company has no debt outstanding, and its financialposition is given by the following data:Assets (Market value = book value)$3,000,000EBIT$500,000Cost of equity, rs10%Stock price, Po$15Shares outstanding, no200,000Tax...
- Q Satriale uses 145,600 switches per year (or 2,800 per week) andcurrently orders 2,800 weekly (assume they are deliveredimmediately). If the carrying cost per switch is $6.20 and thefixed order cost...
- Q Explain the difference between the Dow Jones Industrial Averageindex, NASDAQ, and S&P 500 index. What is the current price foreach and how has each changed since the start of the...
- Q 6. You are considering the purchase of a $250,000 house using aregular fixed rate mortgage loan with a 20% down payment; what isthe monthly payment (not including taxes and insurance)...
- Q Maria Bakery is considering a 3-year project with an initialcost of $93,000. The project will not directly produce any salesbut will reduce operating costs by $31,000 a year. The equipment...
- Q Under what circumstances if any, can the Tax Court havejurisdiction over petitioner’s overpayment of tax? Explain how thiscan occur – give an example that you can see happening with aclient....
- Q The most likely outcomes for a particular project are estimatedas follows:Unit price:$80Variable cost:$60Fixed cost:$440,000Expected sales:40,000units per yearHowever, you recognize that some of these estimates are subjectto error. Suppose that each...
- Q Problem 16-11 (Algorithmic)In preparing for the upcoming holiday season, Fresh Toy Company(FTC) designed a new doll called The Dougie that teaches childrenhow to dance. The fixed cost to produce the...
- Q Calculation of individual costs and WACC: ??Dillon Labs hasasked its financial manager to measure the cost of each specifictype of capital as well as the weighted average cost of capital.The...
- Q Company Alpha ltd has a market value of N$6 billion and anissued share capital of 60 million shares. Company Beta ltd, acompany in the same industry as Company Alpha, has...
- Q 1. A(n)________________ mutual fund invests funds in short-term securitieslike Treasury bills, jumbo CDs, and commercial paper.A. REITB. hybrid fundC. closed-end investmentcompanyD. equity mutual fundE. money market mutual fund2. A(n)__________________ has...
- Q 1. In class, we address the importance of maximizingshareholders’ wealth. However, it seems like maximizing stockprices does not make sense, because investors focus on short-termresults and do not care about...
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