Finance question and answers for July 04, 2023
- Q The common stock of GVK Ltd. is currently selling for Rs. 70 pershare. Dividend per share has grown from Rs. 2 to the current levelof Rs. 6 over the past...
- Q QUESTION 1The main issue in accounting for foreign currency transactionsis:how to distinguish between denomination currency or settlementcurrency.how to translate the financial statements of a foreignoperation.how to treat any foreign exchange...
- Q You are considering creating a new product line in warehousespace that originally cost you $48,997 9 years ago. The required machinery would cost $9,515, should last 13 years,after which could be...
- Q Suppose you are Chief Financial Officer at BeazleyConfectionery, Inc. and you purchase a large quantity of cocoa eachmonth. You are concerned about the price of cocoa one month fromnow. You...
- Q Discussion TopicMany types of bias exist when it comes to surveys, includingnonresponse bias, undercoverage, and poorly worded surveyquestions. Think about a survey you’ve been asked to participatein. Maybe it was...
- Q Thompson’s Tree Farm is considering the replacement of its largedelivery tractor and trailor. The old truck originally cost $60,000 when it was purchased one year ago.It is being depreciatedover a...
- Q EXERCISE 5The Quality Inspector of a bottle company checks a random sampleof 7 elements in two different processes that make the same productand checks the liquid in them.The results are:PROCESS1: 50 49.9 50.2 50.1 50 49.8 ...
- Q You are considering creating a new product line inwarehouse space that originally cost you $52,895 5 yearsago. The required machinery would cost $6,786, should last9 years, after which could be scrapped...
- Q Temporary Housing Services Incorporated (THSI) is considering aproject that involves setting up a temporary housing facility in anarea recently damaged by a hurricane. THSI will lease space in thisfacility to...
- Q The cash cycle is equal to the: inventory period minus theaccounts payable period. operating cycle plus the accounts payableperiod. operating cycle minus the accounts receivable period.accounts receivable period minus the...
- Q Why is the default risk higher (and debt/Investors are thereforerequiring higher returns as a result) when I increase thedebt/equity Ratio? Thanks a lot in advance.
- Q Assume you are the CFO of AIFS. Your analyst reports thefollowing information (Use the following information for theremainder of the assignment):Current exchange rate is $1.16/€.Forward rate is $1.185/€.Expected final sales...
- Q Mr. Gold is in the widget business. He currently sells 1.4million widgets a year at $8 each. His variable cost to produce thewidgets is $6 per unit, and he has...
- Q The Bowman Corporation has a bond obligation of $16 millionoutstanding, which it is considering refunding. Though the bondswere initially issued at 13 percent, the interest rates on similarissues have declined...
- Q Morgan Jennings, a geography professor, invests $89,000 in aparcel of land that is expected to increase in value by 13 percentper year for the next eight years. He will take...
- Q The Bowman Corporation has a bond obligation of $16 millionoutstanding, which it is considering refunding. Though the bondswere initially issued at 13 percent, the interest rates on similarissues have declined...
- Q Moerdyk Corporation's bonds have a 15-year maturity, a 5.25%coupon rate with interest paid semiannually, and a par value of$1,000. The nominal required rate of return on these bonds is7.25%. What...
- Q You are looking at the followinginformation: Debt:3,500 5.5 percent coupon bonds outstanding, $1,000 par value, 18years to maturity, selling for 103 percent of par; the bonds makesemiannual payments.Common stock:73,500 shares outstanding,...
- Q You are the pension fund manager for a consulting company. Yourworkers will begin to retire 10 years from now. You estimate thatyou will need $1.2 million exactly 10 years from...
- Q Briefly explain the following methods; the CAPM method, the DCFmethod, and the bond-yield-plus-risk-premium method
- Q you have been given the expected return data shown in the firsttable on threeassetslong dash—?F,?G, andH long dash—overthe period? 2016-2019:Expected ReturnYearAsset FAsset GAsset H201616?%17?%???14?%???201717?%16?%15?%201818?%15?%16?%201919?%14?%17?%Using these? assets, you have isolated the...
- Q can you briefly explain the following concepts; mutuallyexclusive project, independent project, multiple internal rates ofreturn, and cross-over rate.
- Q you have been given the expected return data shown in the firsttable on threeassetslong dash—?F,?G, andH long dash—overthe period? 2016-2019:Expected ReturnYearAsset FAsset GAsset H201616?%17?%???14?%???201717?%16?%15?%201818?%15?%16?%201919?%14?%17?%Using these? assets, you have isolated the...
- Q What is “Weighted Average Cost of Capital” and how is it used inequity valuation?Which is the better model for valuation when earnings quality isa major concern, DCF or ROPI? Explain.Discuss...
- Q Bombs Away Video Games Corporation has forecasted the followingmonthly sales: January$120,000 July$65000 February113000 August65000 March45000 September75000 April45000 October105000 May40000 November125000 June55000 December143000Total annual sales = $996,000Bombs Away Video Games sells the popular Strafe and Capturevideo game. It sells for $5 per unit...
- Q The Short-Line Railroad is considering a $180,000 investment ineither of two companies. The cash flows are as follows:YearElectric Co.Water Works1$80,000$30,000250,00070,000350,00080,0004 – 1020,00020,000a. Compute the payback period for both companies.(Round your...
- Q PROBLEM #2You are considering purchasing bonds to add to your investmentportfolio. BondA is a 15 year bond that pays a 12% annual coupon. Bond B is a 20year bond that...
- Q Q1.Whitson Co. is looking for ways to shorten its cashconversion cycle. It has annual sales of $45,625,000, or $125,000 aday on a 365-day basis. The firm's cost of goods sold...
- Q What are some of the differences in estimating the benefits forCRM investments versus determining the return on more traditionalinvestment situations?
- Q Q1. Big City Manufacturing (BCM) is preparing its cashbudget and expects to have sales of $450,000 in January, $375,000in February, and $555,000 in March. If 20% of the sales arefor...
- Q In some countries, such as Australia, it is common forcorporations to offer shareholder a dividend investment scheme.(a) Discuss the advantages of a dividend reinvestment plan fromthe point of view of...
- Q Use the Black-Scholes formula to find the value of a call optionbased on the following inputs. (Round your final answer to2 decimal places. Do not round intermediatecalculations.)Stock price$53.00Exercise price$51.00Interest rate5.00%Dividend...
- Q The standard deviation of Asset A returns is 36%, while thestandard deviation of Asset M returns in 24%. The correlationbetween Asset A and Asset M returns is 0.4. (a) The...
- Q The U.S. Department of Agriculture donates $125 million of riceto North Korea.This is recorded on the U.S. balance of payments asGroup of answer choicesCurrent transfers: creditGoods: creditCurrent transfers: debitGoods: debit
- Q Using the following 5 year data series, calculate thecorrelation between interest rates and US new home sales.YearHome sales (thousands)Interest rate (%)15208267353631345818565810The answer is -.263Please show how to get there
- Q Watt’s Lighting Stores made the following sales projection forthe next six months. All sales are credit sales.March$44,000June$48,000April50,000July56,000May39,000August58,000Sales in January and February were $47,000 and $46,000,respectively. Experience has shown that of...
- Q Caspian Sea Drinks is considering the purchase of a plum juicer– the PJX5. There is no planned increase in production. The PJX5will reduce costs by squeezing more juice from each...
- Q Dinklage Corp. has 10.1 million shares of common stockoutstanding. The current share price is $53, and the book value pershare is $4. The company also has two bond issues outstanding....
- Q Jenkins Company has decided to acquire office equipment(copiers, printers, etc.) that it will use at its headquartersbuilding for the next five years. The equipment would cost $500,000to purchase. Alternately, Jenkins...
- Q You hear on the news that the? S&P 500 was down 2.1% todayrelative to the? risk-free rate? (the market's excess return was -2.1 %) . You are thinking about your...
- Q Suppose Intel stock has a beta of 1.72?, whereas Boeing stockhas a beta of 0.78. If the? risk-free interest rate is 4.2% and theexpected return of the market portfolio is...
- Q Research the worldwide FDI trend and detect the top 3 FDIdestinations even though these countries have variouspolitical/country risk associated with them. Justify such FDIinflow. Use data/graphs/charts where applicable.
- Q Calculate the return for June 21st based on the data below: DateOpen High Low Close Dividend 20-Jun 13.2 15.4 12.8 14 21-Jun 13.315.8 12.2 15 0.6 22-Jun 14.8 17.5 14.5...
- Q Phone Home, Inc. is considering a new 4-year expansion projectthat requires an initial fixed asset investment of $3 million. Thefixed asset will be depreciated straightline to a zero book valueover...
- Q Stocks A and B have the following? returns:Stock A Stock B10.11 0.0620.06 0.0430.15 0.0440.03??? 0.015 0.07 -0.03a. What are the expected returns of the two?stocks?b. What are the standard deviations of...
- Q Delta Widget Corp. (DWC) is considering whether to purchase anew widget-producing machine at a cost of $900,000. The machinewould produce 100,000 widgets per year during its useful life ofthree years,...
- Q Problem 9-16Market Value Capital StructureSuppose the Schoof Company has this book value balancesheet:Current assets$30,000,000Current liabilities$10,000,000Fixed assets50,000,000Long-term debt30,000,000 Common stock (1 million shares)1,000,000Retained earnings39,000,000Total assets$80,000,000Total claims$80,000,000The current liabilities consist entirely of notes payable...
- Q 18. Discuss alternative ways of measuring value of privatelyheld corporations.
- Q Q1)Zemma Corp: is all equity financed with 20 million sharesoutstanding. Their shares trade at $15 per share. Now Zemma Corpwill change its capital structure by issuing 100 million in debt.The...
- Q Modelling Cost BehaviourMEW has been contracted by one of its customers to produce twonew components in the next year. The management accountant has beenasked to prepare costings for the two...
- Q Assume these are the stock market and Treasury bill returns fora 5-year period:YearStock Market ReturnT-Bill Return Year 1?35.733.10 Year 230.101.50 Year 315.56.21 Year 42.38.06 Year 518.26.08a.What was the risk premium on common stock in each...
- Q a. What are agency costs? Why do these tend to increase inseverity, as a company grows larger?b. Think back to the last time you ate at an expensiverestaurant where you...
- Q ?A(n) 10.5?%, ?25-year bond has a par value of? $1,000 and acall price of ?$1 comma 125. ?(The bond's first call date is in 5?years.) Coupon payments are made semiannually?...
- Q Sher Homes, a manufacturer of low-cost mobile housing, has$4,950,000 in assets. Temporary current assets$1,900,000 Permanent current assets1,545,000 Capital assets1,505,000 Total assets$4,950,000 Short-term rates are 9 percent. Long-term rates are 14 percent.(Note that long?term rates imply...
- Q Hamilton General Hospital needs a new MRI machine due toincreasing volume of outpatient MRI orders and the state of theexisting machine. The current machine is over 10 years old andbreaks...
- Q Why is it important to estimate a firm’s WACC? What is it usedfor?What should management do if none of the available projects earnan adequate WACC?Why do we use an after-tax...
- Q Jeff Bezos - AmazonBackground of early lifeWhat idea / creation / innovation is he known for?What made him successful initially?How has he remained successful?
- Q Need someone to solve these for IRR in ExcelAIRR = RATE(nper = 10, pmt = 1525000, pv = -860000, fv = 0,0)BIRR = RATE(nper = 10, pmt = 1100000, pv...
- Q Using the information below, compute the prices of the followingSEMI-ANNUAL payment bonds. Show your computation in every case.Per value Coupon Rate Yield to Maturity Years to Maturity$ 5,000 10 12%...
- Q what is a BCG matrix analysis of Toyota?
- Q Transaction exposure. ??International? Products, Inc. hasordered 20,000 leather coats from Argentina for delivery in 3months. The contracted cost of a coat is 148 pesos. InternationalProducts will pay for the coats...
- Q Blake and his housemates started an investment club, and it hasbeen going well. So far, Brett has presented a pharmaceuticalcompany with the potential of hitting it big with a drug...
- Q Define direct capitalization.List and briefly explain the two major techniques thatcapitalize income.Please keep it short and to the point!
- Q What is WACC for you firm? Based on everything you have done inthis assignment, give a hard estimate for the WACC. What would yousuggest managers use and why?Why is it...
- Q A construction projectis carried out by a general contractor with the followingdescriptions:Project Duration: 3 months(Start: May 1st; End: July 31st)Contract Amount:20,713+30,081+50,630+40,978+60,886+70,089+30,500+100,165+152,181Budget Amount:100,936+200,081+300,685Contract Terms and ConditionsMaterials: The constructioncompany pays material suppliers...
- Q Find an article relating to Cost of Capital or Capital Budgetingfrom any medium, briefly summarize the article, explain how youfound the article particularly useful or timely, and give yourpersonal reactions...
- Q Quantitative Problem: Sunshine Smoothies Company (SSC)manufactures and distributes smoothies. SSC is considering thedevelopment of a new line of high-protein energy smoothies. SSC'sCFO has collected the following information regarding the proposedproject,...
- Q A stock index is currently 1,500. Its volatility is 18%. Therisk-free rate is 4% per annum for all maturities and the dividendyield on the index is 2.5% (both continuously compounded).Calculate...
- Q A stock price is currently $50. Over each of the next two3-month periods it is expected to go up by 6% or down by 5%. Therisk-free rate is 5% per...
- Q what are the drawbacks of sensitivity analysis, scenario analysisand break-even analysis?are they reliable in open market conditons?
- Q You have been hired as a consultant for Pristine Urban-TechZither, Inc. (PUTZ), manufacturers of fine zithers. The market forzithers is growing quickly. The company bought some land threeyears ago for...
- Q Stock options prices are affected by a number of factors andarbitrage arguments are used to find the fair values of theseoptions.(1) Explain the three reasons why the early exercise of...
- Q 1) Consider two different hedge funds with the followingdata related to performance:Hedge fund Alpha BetaFund A 5% 1.6Fund B 3% 0.8Assuming that beta is consistent with the type ofinvesting we expected in both cases, which...
- Q IRR, investment? life, and cash inflows OakEnterprises accepts projects earning more than the? firm's 11?%cost of capital. Oak is currently considering a 13?-year projectthat provides annual cash inflows of ?$25,000...
- Q As treasurer of the Universal Bed Corporation, AristotleProcrustes is worried about his bad debt ratio, which is currentlyrunning at 7.0%. He believes that imposing a more stringent creditpolicy might reduce...
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