Finance question and answers for July 02, 2023
- Q A proposed cost- saving device has an installed costof $735,000. The device will be used in a five year project but isclassified as a three year MACR property for tax...
- Q You decided to go and apply for a credit card at your localfinancial institution. The Prime rate currently announced was 4.8%.You have an excellent credit history and FICO score. You...
- Q One year? ago, your company purchased a machine used inmanufacturing for $95,000.You have learned that a new machine is available that offersmany advantages and you can purchase it for $165,000today....
- Q You are considering purchasing a home that requires $300,000mortgage at 5.25%. The payment on the 30 year mortgage for thisamount is $1656.61 per month, the payment for a 15 year...
- Q Capital Budgeting Analysis - Use the information below toprepare for cash flow analysis in a table for bothscenariosPlease create your table from Colume L and keep thisstatement here as it...
- Q The MacCauley Company has sales of $200 million and totaloperating expenses (excluding depreciation) of $130 million.Straight-line depreciation on the company's assets is $15 millionover 4 years. The Upfront Cost equals...
- Q Financing DeficitGarlington Technologies Inc.'s 2018 financial statements areshown below:Balance Sheet as of December 31, 2018Cash$ 180,000Accounts payable$ 360,000Receivables360,000Notes payable156,000Inventories720,000Line of credit0Total current assets$1,260,000Accruals180,000Fixed assets1,440,000Total current liabilities$ 696,000Common stock1,800,000Retained earnings204,000Total assets$2,700,000Total liabilities and equity$2,700,000Income...
- Q Calculate the Internal Rate of Return of each of the followingpotential investments and recommend whether or not to include themin the upcoming capital budget given that the firm’s cost ofcapital...
- Q Determine the interest payment for the following three bonds.(Assume a $1,000 par value)4.35 percent coupon corporate bond (paid semiannually)5.00 percent coupon Treasury noteCorporate zero-coupon bond maturing in 10 years
- Q Company issues bonds at a price of $925 and a flotation cost of1%.The bond has an annual coupon rate of 5% and a maturity of 10years.The corporate tax rate is...
- Q 35. Describe the difference in fee structures between hedgefunds and mutual funds. Name two mutual fund complexes.37. What is the current 10-year treasury rate? What is thecurrent Federal Funds Rate...
- Q Bond J has a coupon rate of 7 percent and Bond K has a couponrate of 13 percent. Both bonds have 12 years to maturity, makesemiannual payments, and have a...
- Q Suppose your firm is considering investing in a project with thecash flows shown below, that the required rate of return onprojects of this risk class is 9 percent, and that...
- Q The W.C. Pruett Corp. has $600,000 of interest-bearing debtoutstanding, and it pays an annual interest rate of 11%. Inaddition, it has $800,000 of common stock on its balance sheet. Itfinances...
- Q W is an American multinational computertechnology company based in Tampa, Florida, United States, thatdevelops, sells, repairs, and supports computers and relatedproducts and services. Named after its founder, Michael Wahoo, thecompany...
- Q Suppose a company has two mutually exclusive projects, both ofwhich are three years in length. Project A has an initial outlay of$6,000 and has expected cash flows of $4,000 in...
- Q A company is considering a 6-year project that requires aninitial outlay of $30,000. The project engineer has estimated thatthe operating cash flows will be $3,000 in year 1, $6,000 in...
- Q Inregards to the CAPM pricing model, what happens if one variable ischanged? What way does the risk premium, risk free rate, and betamove? Explain why.
- Q The NYS Dormitory Authority issued bonds in 2007 to finance therenovation of a Building Hall. The bonds have a coupon of 5.5% anda maturity date of 2026. If the current...
- Q A firm is considering two mutually exclusive projects, X and Y,with the following cash flows:01234Project X-$1,000$110$280$370$650Project Y-$1,000$1,100$100$55$45The projects are equally risky, and their WACC is 8%. What isthe MIRR of...
- Q NPVlong dash—Mutuallyexclusive projects???Hook Industries is considering thereplacement of one of its old metal stamping machines. Threealternative replacement machines are under consideration. Therelevant cash flows associated with each are shown in...
- Q Since you are working on your MBA you have been asked to speakto the board of directors of your firm about various methods ofanalyzing the companies financial statements. One of...
- Q An investment bank agrees to underwrite an issue of 50 millionshares of stock for Looney Landscaping Corp.The investment bank underwrites the stock on a firm commitmentbasis, and agrees to pay...
- Q The Chung Chemical Corporation is considering the purchase of achemical analysis machine. Although the machine being consideredwill result in an increase in earnings before interest and taxes of$35,000 per year,...
- Q Find the EAR in each of the following cases (Use 365days a year. Do not round intermediate calculations and enter youranswers as a percent rounded to 2 decimal places, e.g.,32.16.):Stated...
- Q Caspian Sea Drinks is considering the purchase of a new waterfiltration system produced by Rube Goldberg Machines. This newequipment, the RGM-7000, will allow Caspian Sea Drinks to expandproduction. It will...
- Q According to Thomson Financial, last year the majority ofcompanies reporting profits had beaten estimates. A sample of 162companies showed that 96 beat estimates, 29 matched estimates, and37 fell short.(a)What is...
- Q The 2014 balance sheet of Jordan’s Golf Shop, Inc., showedlong-term debt of $6.4 million, and the 2015 balance sheet showedlong-term debt of $6.65 million. The 2015 income statement showedan interest...
- Q brandon wishes to accumulate 100,000 by making level monthly end ofmonth deposits for 30 years into an account that earns 5.4%interest convertible monthly. after 10 years the interest rateincreases to...
- Q A) We are evaluating a project that costs $115571, has aseven-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the life of the project. Sales...
- Q Explain in 200 words or less: What are reasonable guesstimatesfor the market risk premium and why?
- Q Suppose you have been hired as a financial consultant to DefenseElectronics, Inc. (DEI), a large, publicly traded firm that is themarket share leader in radar detection systems (RDSs). The companyis...
- Q Inefficient investment decisions made during (or prior to)bankruptcy is an example of:A. Indirect bankruptcy costsB. Direct bankruptcy costs______ 4. Fees paid to the firm’s bankruptcyattorney while the firm is going through...
- Q O'Brien Ltd.'s outstanding bonds have a $1,000 par value, andthey mature in 20 years. Their nominal yield to maturity is 8.75%,they pay interest semiannually, and they sell at a price...
- Q Restful RVs Inc. (RRV) is presently enjoying relatively highgrowth because of a surge in the demand for recreational vehicles.Management expects earnings and dividends to grow at a rate of 35%for...
- Q Getting an MBA is an investment in yourself, and it should beviewed through the same lens as any other investment decision. Solet's see if MBA is a good decision with...
- Q Assume markets are “perfect” asdescribed in Chapter 17. Firm U and Firm L have the exact sameassets (managed in exactly the same way). Firm U has no debt. Themarket value...
- Q Maya Lee and John Spencer are facing an important decision.After having discussed different financial scenarios into the weehours of the morning, the two computer engineers felt it was timeto finalize...
- Q InputsPresentValueCurrentstock Price$ 62.00RiskFree2.5%Beta1.1ExpectedMarket Return7.0%Dividendgrowth rate6.0%RequiredRate of ReturnPVDividendThis Year's DividendThis Year$ 0.80GrowthNext Year$ 0.9215%2$ 1.0615%3$ 1.2215%FutureStock Price36.0%Intrinsic ValueIntrinsic Value
- Q Explain the "Net Realisable Value" (NRV) methodapproach to allocate joint costs.[8 marks]
- Q Passive Stock Market Investor (PSMI) holds one stock marketindex ETF in his/her portfolio, but has learned that investing in abond market index ETF as well may reduce his/her portfolio risk...
- Q CF Estimation. Stanton Inc. is considering the purchase of a newmachine which will increase earnings before depreciation and taxesby $6,000 annually. Stanton will use the straightline method todepreciate the machine...
- Q Cabot Vineyards has been paying a regular cash dividend of $4.80per share each year for over a decade. The company is paying outall its earnings as dividends and is not...
- Q XYZ Inc. just paid a dividend of $2.50 per share on 100,000shares outstanding. Dividends are expected to grow at a constantrate indefinitely. The firm’s ROE is 12 percent, beta is...
- Q time value of money and term structure of interestrates : how to borrow in the market and how to invest in the marketwithout other risks and only considering the time...
- Q Given the information below for Seger Corporation, compute theexpected share price at the end of 2017 using price ratio analysis.Assume that the historical average growth rates will remain thesame for...
- Q Your company is evaluating apurchase of Skeksis Crystal Mining LLC. Skekis producedfree cash flow of $7.3m last year, and this is expected to growat 11% for the next fiveyears before...
- Q You want to purchase an office building in Brooklyn. Theproperty contains 32,100 square feet of rentable space and iscurrently occupied by multiple tenants each with differingmaturities on their respective leases....
- Q Submit a memo to the owner of a pizza restaurant that you workat. This is the format the teacher asked us to submit it as. Noclosing name at the end....
- Q You are interested in purchasing a $400,000 home. Interest ratesare currently about 4.0% for 30 year loan. Ignoring taxes,insurance, and any possible mortgage insurance, if you put down 5%,what will...
- Q 7. Suppose that you are planning to take a four-year loan of$200,000 for your program. The interest rate of this loan is 7% andits compounds annually. What would be the...
- Q Can I get it solved step by step please with work shownYou purchased a security on 10/30/2018 at a price of $93.45. Youredeemed the security on 03/27/ 2019 at a...
- Q In 2015, the Keenan Company paid dividends totaling $3,810,000on net income of $20 million. Note that 2015 was a normal year andthat for the past 10 years, earnings have grown...
- Q According to Michael Porter, organizations cannot simultaneouslypursue both a low-cost business level strategy and adifferentiation business level strategy. Illustrate why.
- Q Leisure Lodge Corporation is expected to pay the followingdividends over the next four years: $19.00, $10.00, $5.20 and$2.40. Afterwards, the company pledges to maintain a constant 3percent growth rate in...
- Q Below is a list of prices for zero-coupon bonds of variousmaturities.Maturity (Years)Price of $1,000 Par Bond(Zero-Coupon)1$945.802877.233803.34a. A 4.8% coupon $1,000 par bond pays an annualcoupon and will mature in 3...
- Q Yatta Net International has manufacturing, distribution, retail,and consulting divisions. Projects undertaken by the manufacturingand distribution divisions tend to be low-risk projects, becausethese divisions are well established and have predictable demand.The...
- Q Adams Manufacturing Inc. buys $11.4 million of materials (net ofdiscounts) on terms of 2/10, net 50; and it currently pays after 10days and takes the discounts. Adams plans to expand,...
- Q Starset, Inc., has a target debt-equity ratio of 0.71. Its WACCis 11.5 percent, and the tax rate is 34 percent.If the company's cost of equity is 16.5 percent, what is...
- Q You are interested in buying a share that paid its last annualdividend 9 months ago. You can assume that the next dividendpayment (3 months from today) will be €1.50. The...
- Q a. Show the formula you use to solve the problems, and thecorresponding numbers in the formula. Show all the steps.b. Show all the inputs and outputs.JetHair’searnings are $6 per share....
- Q REQUIREMENT-1:CF from operating activities - indirectmethodREQUIREMENT-2:CF from Investing Activities - indirectmethodCF from Financing Activities - indirectmethod12/31/202012/31/2019Cash$30,000$80,000Accounts Receivable, net160,000100,000Inventory100,00070,000Prepaid Rent20,00010,000Total Current Assets$310,000$260,000Equipment$400,000$200,000Accumulated Depreciation-60,000-50,000Total Assets$650,000$410,000Accounts Payable$50,000$40,000Salaries Payable40,00040,000Bonds Payable050,000Common Stock, $10 par350,000100,000Retained Earnings210,000180,000Total...
- Q Instalment loans require the periodic payment of principal andinterest. In most cases, a customer borrows to purchase durablegoods or cover extraordinary expenses and agrees to repay the loanin monthly instalments....
- Q Assume a market index represents the common factor and allstocks in the economy have a beta of 1. Firm-specific returns allhave a standard deviation of 41%. Suppose an analyst studies...
- Q You are a consultant to a large manufacturing corporationconsidering a project with the following net after-tax cash flows(in millions of dollars):Years from Now After Tax CF0 -381-9 1210 24The project's...
- Q Suppose you want to buy a $147,000 home. You found a bank thatoffers a 30-year loan at 5.1% APR. What will be your monthlypayment? How much would you end up...
- Q Tom Scott is the owner, president, and primary salesperson forScott Manufacturing. Because of this, the company's profits aredriven by the amount of work Tom does. If he works 40 hours...
- Q Precision Tool is analyzing two machines to determine which oneit should purchase. The company requires a 15 percent rate ofreturn and uses straight-line depreciation to a zero book valueover the...
- Q “The rate of interest represents the compensation to thelender for the administrative cost incurred, such as rent,salaries, air conditioner, and other costs. Also a compensation forthe risk of not recovering...
- Q Greta, an elderly investor, has a degree of risk aversion ofA = 3 when applied to return on wealth over a 3-yearhorizon. She is pondering two portfolios, the S&P 500...
- Q ECON350 Tue or False Practice Questions (week 5)1. It is often the case that purchasing a five-year bonds orfive one-year bonds always results in the same returns, henceinvestors are indifferent...
- Q A 30-year maturity bond making annual coupon payments with acoupon rate of 16.5% has duration of 11.19 years and convexity of180.9. The bond currently sells at a yield to maturity...
- Q A company has a proposed 2-year project with the cash flowsshown below and would like to calculate the NPV of this project sothat they can decide whether to pursue the...
- Q The following information is available for the preparation ofthe government-wide financial statements for the City of SouthernSprings as of April 30, 2017:Cash and cash equivalents, governmental activities$450,000Cash and cash equivalents,...
- Q You are working on a bid to build two city parks a year for thenext three years. This project requires the purchase of $185,000 ofequipment that will be depreciated using...
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