Finance question and answers for July 03, 2023
- Q A project that provides annual cash flows of $2,450 for nineyears costs $10,100 today.Requirement 1:At a required return of 9 percent, what is the NPV of theproject? (Do not round...
- Q You are trying to decide between a 48-month loan and a 60-monthcar loan. If the loan is for $22,000 at 6% APR, how much more permonth is the monthly payment...
- Q The IRR evaluation method assumes that cash flows from theproject are reinvested at the same rate equal to the IRR. However,in reality the reinvested cash flows may not necessarily generate...
- Q Guzman Trucking Company needs to acquire a new machine toexpand its operations. The machine can be leased or purchased. Thefirm is in the 40% tax bracket and its after-tax cost...
- Q Why does the designation matter from a tort liabilityperspective? How is the principal/employer liable depending on theclassification?
- Q For small-business owners, it’s not worth the time or effort tosecure intellectual property rights (Canadian and International).Explain why you agree or disagree with this statement usingsupporting facts, information and examples...
- Q 1) Your CEO has asked you to evaluate whether the firm shouldlaunch a new product. Information provided by the consultant is asfollows:$20,000 has been spent on doing a market survey,...
- Q Williamson Industries has $7 billion in sales and $1.4 billionin fixed assets. Currently, the company's fixed assets areoperating at 90% of capacity.What level of sales could Williamson Industries have obtainedif...
- Q Consider a project with a life of 4 years with the followinginformation: initial fixed asset investment = $380,000;straight-line depreciation to zero over the 4-year life; zerosalvage value; price = $28;...
- Q 2) Grey Products has fixed operating costs of $380,000, variableoperating costs of $18 per unit, and a selling price of $65 perunit.a.Calculate the operating breakeven point in units.b.Calculate the firm’s...
- Q You are choosing between two mutually exclusive projects:YearCash Flow (I)Cash Flow (II)0–$78,000 –$36,000 130,000 12,000 238,000 25,500 344,000 19,500 Requirement 1:(a)If the required return is 13 percent, what is the...
- Q Joker stock has a sustainable growth rate of 9 percent, ROE of15 percent, and dividends per share of $3.15. If the P/E ratio is19.7, what is the value of a...
- Q Consider the following cash flows: YearCash Flow0$-28,400 115,300 213,600 310,000 Requirement 1:What is the profitability index for the above set of cash flowsif the relevant discount rate is 8 percent?(Do not...
- Q Consider the following two mutually exclusive projects:YearCash Flow (A)Cash Flow (B)0–$429,000 –$42,000 142,000 20,800 264,000 12,900 381,000 20,600 4544,000 17,400 The required return on these investments is 11 percent.Required:(a)What is...
- Q A firm with a 13% WACC is evaluating two projects for thisyear's capital budget. After-tax cash flows, includingdepreciation, are as follows:012345Project M-$27,000$9,000$9,000$9,000$9,000$9,000Project N-$81,000$25,200$25,200$25,200$25,200$25,200Calculate NPV for each project. Round your answers...
- Q Anderson Corporation has 1 million shares of common stockoutstanding, 1/2 million shares of preferred stock, and 20,000 3.5%semiannual bonds outstanding. The common stock has a beta of 1.2.The corporate bond...
- Q Please compare. What is the tradeoff between taking on a lot ofdebt due to its low cost versus an increased probability offinancial distress when too much debt is used. How...
- Q What are the 3 basic functions of a finance manager?
- Q Suppose that you have two mutually exclusive projects. A and B.Project A has cash flows of CF0, CF1, CF2, CF3, CF4, CF5. (Years0-5). Project B has cash flow of CF0,...
- Q You just won the Johto Pokemon lottery and won 120 millionpokecoins! (Current foreign exchange rate is 1 pokecoin = 1 USdollar). You will get paid 1 million pokecoins per month...
- Q an advantage of going public is access to less expensivefinancing due to an active secondary market (without theentreprenuer having to give up control) true/false
- Q Zoysia University must purchase mowers for its landscapedepartment. The university can buy six EVF mowers that cost $7,900each and have annual, year-end maintenance costs of $1,775 permower. The EVF mowers...
- Q Zoysia University must purchase mowers for its landscapedepartment. The university can buy four EVF mowers that cost $7,600each and have annual, year-end maintenance costs of $1,675 permower. The EVF mowers...
- Q Zoysia University must purchase mowers for its landscapedepartment. The university can buy four EVF mowers that cost $7,800each and have annual, year-end maintenance costs of $1,635 permower. The EVF mowers...
- Q Describe CAPM and how it can be used to to manage portfoliorisk...?How is CAPM used by investors to manage portfolio risk as wellas how they can create portfolios tailored to...
- Q 8. The (net) cash flows of project C and D are shown below: NetCash Flow ($) Year Project C Project D 0 -2,000 -1,000 1 3,000 6502 125 1,500 a....
- Q Heller Airlines is considering two mutually exclusive projects,A and B. The projects have the same risk. Below are the cash flowsfrom each project: Project A Project B Year Cash Flow...
- Q You are considering making a movie. The movie is expected tocost 10.5 million up front and take a year to produce. After that,it is expected to make 4.9 million in...
- Q please explain how Freddie Mac trades mutlifamily securities
- Q TYPE ANSWERS1.Be able to identify and calculate different types of taxes, thetax system in the United States, and importanttax terminologyBe able to prepare a comprehensive budget, and know how toclassify...
- Q ) The cash flows for four projects are shown below, along withthe cost of capital for these projects. If these projects aremutually exclusive, which one should be taken? 28) A)...
- Q Great Lakes Packing has two bond issues outstanding. The firstissue has a coupon rate of 3.42 percent, a par value of $1,000 perbond, matures in 4 years, has a total...
- Q St. Johns River Shipyards' welding machine is 15 years old,fully depreciated, and has no salvage value. However, even thoughit is old, it is still functional as originally designed and can...
- Q Keller Construction is considering two new investments. ProjectE calls for the purchase of earthmoving equipment. Project Hrepresents an investment in a hydraulic lift. Keller wishes to usea net present value...
- Q A money manager is holding thefollowing portfolio: Stock AmountInvested Beta 1 $400,000 1.00 2 600,000 0.85 3 300,000 1.20 4 500,000 0.50 5 200,000 1.70 Therisk-free rate is 7 percent and the portfolio’s required rate ofreturn is 13.975 percent. The manager would like to sell all...
- Q It receives bids to buy shares from investors A through F. Thenumber of shares each would buy and the price they offer to pay isbelow:A: 100 shares $16/shareB: 300 shares...
- Q A firm with a 13% WACC is evaluating two projects for thisyear's capital budget. After-tax cash flows, includingdepreciation, are as follows:012345Project M-$30,000$10,000$10,000$10,000$10,000$10,000Project N-$90,000$28,000$28,000$28,000$28,000$28,000Calculate NPV for each project. Round your answers...
- Q The Campbell Company is considering adding a robotic paintsprayer to its production line. The sprayer's base price is$1,180,000, and it would cost another $20,500 to install it. Themachine falls into...
- Q NPVYour division is considering two projects with the followingcash flows (in millions):0 1 2 3-17 8 8 8-26 13 10 9What are the projects' NPVs assuming the WACC is 5%?...
- Q Sadik Industries must install $1 million of new machinery in itsTexas plant. It can obtain a 6-year bank loan for 100% of the costat a 14% interest rate with equal...
- Q Using the key concepts, you have learned in chapters 10 and 11,write a minimum of a 3 page paper on 1 of the following subjectsfrom the perspective of the CFO:1-You...
- Q You always need a printer-scanner-copier. You can go with aninkjet printer or a laser printer. The inkjet model costs $177 andlasts five years. Replacement ink costs $210, and you will...
- Q 7. Joe’s Pizza-In-A-Cup recently hired you as a consultant toestimate the company’s WACC. You have obtained the followinginformation. (1) The firm's noncallable bonds mature in 10 years,have an 6.00% annual...
- Q You've identified a project that would require an initialinvestment this year of $1500, and would generate cash flows ofeither $2400 or $1200 depending on the economy, with either beingequally likely....
- Q The cash flow in respect of two projects is given below. Thecost of capital is 8.5%.YearProject AProject B0(200)(300)165100265100365904607056070Answer the following question using the above information.I What is the NPV of Project...
- Q A mortgage broker is offering a 30 year $271,000 mortgage witha teaser rate in the first two years of the mortgage the borrowermakes monthly payments on only 3.7% APR interest...
- Q Howell Corporation produces an executive jet for which itcurrently manufactures a fuel valve; the cost of the valve isindicated below: Cost per Unit Variable costs Direct material $900Direct labor 600...
- Q It is January 2nd and senior management of Digby meets todetermine their investment plan for the year. They decide to fullyfund a plant and equipment purchase by issuing 75,000 shares...
- Q Doubleday Brewery is considering a new project. The companycurrently has a target debt–equity ratio of .45, but the industrytarget debt–equity ratio is .65. The industry average beta is 1.46.The market...
- Q Ifyou start making $160 monthly contributions today and continue themfor five years what’s their future value if the compounding rate is10.25% APR do not round intermediate calculations and round yourfinal...
- Q Question: Problem 16-18 Refunding decision [LO16-3] The RobinsonCorporation has $29 million of bonds outst... Problem 16-18Refunding decision [LO16-3] The Robinson Corporation has $29million of bonds outstanding that were issued at...
- Q Problem 5-55 Teaser Rate Mortgage (LG5-9) A mortgage broker isoffering a 25-year $180,900 mortgage with a teaser rate. In thefirst two years of the mortgage, the borrower makes monthlypayments on...
- Q Discuss the history of third-party reimbursement. Describe themost common reimbursement methodologies used in the past, and thendiscuss the methodologies that are most common today. Explain thelong-term implications for the health...
- Q The Chicago Hope Hospital purchased a MRI machine for $5 milliondollars, using a 6 year loan at 8% interest.a. The above MRI machine which costs 5 million comes with aservice...
- Q Western Textiles is considering an investment in a new weavingmachine. This machine is for a growth opportunity, so the newmachine will not replace an existing machine. The new machine ispriced...
- Q The Reformulating the Balance Sheet:1.All assets areeither operating or non-operating.Operating assets are used to generate sales whilenon-operatingassets aretypically excess monies that have not yet been invested inoperating assets or excess...
- Q You find the following information for a company: A corporationhas 8,000 bonds outstanding with a 12% annual coupon rate (payingsemi-annually), 8 years to maturity, a $1,000 face value, and a$1,250...
- Q A 4.40 percent coupon municipal bond has 10 years left tomaturity and has a price quote of 97.95. The bond can be called infour years. The call premium is one...
- Q Consider the following premerger information about Firm A andFirm B:Firm AFirm B Total earnings$2,000$1,000 Shares outstanding1,100250 Price per share$39$43Assume that Firm A acquires Firm B via an exchange of stock at aprice of...
- Q Lance Whittingham IV specializes in buying deep discount bonds.These represent bonds that are trading at well below par value. Hehas his eye on a bond issued by the Leisure Time...
- Q A firm is considering the following projects. Its opportunitycost of capital is 12%.Project 0 1 2 3 4A -8,500 +1,875 +1,875 +4,750 0B -4,500 0 +4,500 +3,750 +4,750C -8,500 +1,875...
- Q Consider a project with an initial outlay of $1,000 and yearlycash flows as follows: -300, -100, 200, 300, 300, 100, 100, 200,600, 400, and 100. Calculate the classical payback period...
- Q Consider a project with an initial outlay of $1,000 and yearlycash flows as follows: -300, -100, 200, 300, 300, 100, 100, 200,600, 400, and 100. Calculate the classical payback period...
- Q What are the three types of hedges a firm can use to protectitself from transaction exposure? Define them.
- Q Shinedown, Inc., wishes to maintain a growth rate of 12 percentper year and a debt–equity ratio of .6. Profit margin is 5.4percent, and the ratio of total assets to sales...
- Q 13.Dantzler Corporation is a fast-growing supplier of officeproducts. Analysts project the following free cash flows (FCFs)during the next 3 years, after which FCF is expected to grow at aconstant 7%...
- Q Consider the following information: Rate of Return if State Occurs State of EconomyProbability of State of EconomyStock AStock B Recession0.200.05-0.21 Normal0.600.090.17 Boom0.200.140.32 Required:(a)Calculate the expected return for Stock A. (Do not roundyour intermediate calculations.)(Click to select)9.20%8.85%10.91%11.03%8.32% (b)Calculate...
- Q In May of this year Newcastle Mfg.? Company's capital investmentreview committee received two major investment proposals. One ofthe proposals was put forth by the? firm's domestic manufacturing?division, and the other...
- Q 1. You have a $30,000 portfolio that consists of equal dollarinvestments in stocks A, B, and C, each with a current price of$25. After one year, stock A is worth...
- Q Assume that the average firm in your company's industry isexpected to grow at a constant rate of 5% and that its dividendyield is 8%. Your company is about as risky...
- Q Use Black/Scholes formula to calculate the theoretical price ofa call given the followinginfo: Stock Px –66 Exercise Px – 60 Variance – 0.4839 Std Dev ?Int Rate – 5% Time remaining – 219 daysln...
- Q we have encountered several firms that have either failed orcame close to collapsing during the Financial Crisis of 2007-2009(e.g., Bear Stearns, Lehman, AIG, Fannie Mae…).Select one of these firms and...
- Q If you look at stock prices over any year, you will find a highand low stock price for the year. Instead of a single benchmark PEratio, we now have a...
- Q onch Republic Electronics is a midsized electronics manufacturerlocated in Key West, Florida. The company president is ShellyCouts, who inherited the company. The company originally repairedradios and other household appliances when...
- Q You own a portfolio that has a total value of $245,000 and it isinvested in Stock D with a beta of .80 and Stock E with a beta of1.45. The...
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