Finance question and answers for September 03, 2023
- Q you have looked at the current financial statements for reigiehomes co. the company has an ebit of 3130000 this year.depreciation the increase in net working capital, and capitalspending are expected...
- Q You just had your second child, and you expect her to go tocollege in 18 yrs. You plan that a four-year college will cost$33,000 each year. The payments are to...
- Q Suppose your company imports computer motherboards fromSingapore. The exchange rate is currently 1.5138 S$/US$. You havejust placed an order for 39,000 motherboards at a cost to you of231.20 Singapore dollars...
- Q Carlsbad Corporation's sales are expected to increase from $5million in 2018 to $6 million in 2019, or by 20%. Its assetstotaled $4 million at the end of 2019. Carlsbad is...
- Q When will a bond trade at a premium? Explain.Which bonds will be the most sensitive to changes in yields?Explain.
- Q You borrow $149000 to buy a house. The mortgage rate is 7.5% andthe loan period is 30 years. Payments are made monthly. What is themonthly mortgage payment.
- Q TheCullumber Products Co. currently has debt with a market value of$225 million outstanding. The debt consists of 9 percent couponbonds (semiannual coupon payments) which have a maturity of 15years and...
- Q A portfolio has a market beta of 0.8, a factor loading of 1 toSMB and a sensitivity of -2 to HML. The portfolio has earned 16%return. What was the abnormal...
- Q Problem 18-01 Profit or Loss on New Stock Issue Security BrokersInc. specializes in underwriting new issues by small firms. On arecent offering of Beedles Inc., the terms were as follows:...
- Q How is the Dodd Frank Act impacting OTCderivativesCompare and contrast Credit Default Swaps and Asset Swaps
- Q Bulldog Memorabilia, a small screen printing firm, isconsidering investing in new technology that allows customers todesign their own products online, then they are automaticallyprinted and shipped with only minimal labor...
- Q Austin Grocers recently reported the following 2019 incomestatement (in millions of dollars):Sales$700Operating costs including depreciation500EBIT$200Interest40EBT$160Taxes (25%)40Net income$120Dividends$40Addition to retained earnings$80For the coming year, the company is forecasting a 30% increasein...
- Q CAPITAL BUDGETING CRITERIA: ETHICALCONSIDERATIONSAn electric utility is considering a new power plant in northernArizona. Power from the plant would be sold in the Phoenix area,where it is badly needed. Because...
- Q The McDonald Group purchased a piece of property for $1.5million. It paid a down payment of 20% in cash and financed thebalance. The loan terms require monthly payments for 15...
- Q OceanGate sells external hard drives for $288 each. Its totalfixed costs are $45 million, and its variable costs per unit are$173. The corporate tax rate is 41%. If the economy...
- Q Suppose that you are a manager of a department, which uses 6000boxes of rivets per year. The supplier quotes you a price of $10per box for an order size of...
- Q If you deposit $3700 today into an account earning an annualrate of return of 11 percent, what would your account be worth in30 years? (assuming no further? deposits)? In 35...
- Q You just received a bonus of $3000.a. Calculate the future value of $3000, given that it will beheld in the bank for 8 years and earn an annual interest rate...
- Q Consider a Cash Balance sheet where the beginning cash balanceis $710,000, the cash inflows from operations is $840,000, and thecash outflows from operations is $620,000Using the figures above, identify the...
- Q Blitz Industries has a debt-equity ratio of 1.25. Its WACC is8.3 percent, and its cost of debt is 5.1 percent. The corporate taxrate is 21 percent. a.What is the company’s cost...
- Q In 20X8 ABC Corporation had sales of $3,482 (in millions), EBITof $638 (in millions), and net income of $189 (in millions). ItsDOL, DFL, and DCL are 5.46, 3.38 and 18.42,...
- Q Scenario Analysis Shao Industries is considering a proposedproject for its capital budget. The company estimates the project'sNPV is $12 million. This estimate assumes that the economy andmarket conditions will be...
- Q Investment Timing Option: Decision-Tree Analysis The Karns OilCompany is deciding whether to drill for oil on a tract of landthat the company owns. The company estimates the project would cost$14...
- Q Explain the following terms and set them in the context of thefinancial crisisLehman paper“Breaking the buck”Initial public offeringMarket maker
- Q Some people talk about the use of Debt as a source of financingas if it were evil and should be avoided at all costs. Does thismake sense to you? Under...
- Q Discuss a circumstance where you have been exposed to a will andany unusual provisions that were discovered in the will.
- Q Young Corporation expects an EBIT of $25,250 every year forever.The company currently has no debt, and its cost of equity is 12percent. The corporate tax rate is 35 percent. a.What is...
- Q 8. Factors that influence dividend policyDividend distribution decisions are complicated and involve theunderstanding of critical strategic factors that affect the policyand value of a firm. Thus, the management of any...
- Q The future earnings, dividends, and common stock price ofCallahan Technologies Inc. are expected to grow 7% per year.Callahan's common stock currently sells for $26.25 per share; itslast dividend was $2.00;...
- Q Complete the balance sheet and sales information in the tablethat follows for J. White Industries using the following financialdata: Total assets turnover: 2.8 Gross profit margin on sales:(Sales - Cost...
- Q FCOJ, Inc., a prominent consumer products firm, is debatingwhether to convert its all-equity capital structure to one that is30 percent debt. Currently, there are 5,800 shares outstanding, andthe price per...
- Q Suppose we observe the three-year Treasury security rate(1R3) to be 11 percent, the expected one-yearrate next year E(2r1) to be 4 percent, andthe expected one-year rate the following yearE(3r1) to...
- Q Situational Software Co. (SSC) is trying to establish itsoptimal capital structure. Its current capital structure consistsof 25% debt and 75% equity; however, the CEO believes that the firmshould use more...
- Q Serendipity Inc. is re-evaluating its debt level. Its currentcapital structure consists of 80% debt and 20% common equity, itsbeta is 1.60, and its tax rate is 25%. However, the CFO...
- Q How do shareholders mitigate agency costs with respect to firmmanagers?
- Q Pennewell Publishing Inc. (PP)Pennewell Publishing Inc. (PP) is a zero growth company. Itcurrently has zero debt and its earnings before interest and taxes(EBIT) are $80,000. PP's current cost of equity...
- Q Laramie Trucking's CEO is considering a change to the company'scapital structure, which currently consists of 25% debt and 75%equity. The CFO believes the firm should use more debt, but the...
- Q Mr. Sam Golff desires to invest a portion of his assets inrental property. He has narrowed his choices down to two apartmentcomplexes, Palmer Heights and Crenshaw Village. After conferringwith the...
- Q Many companies paid dividends in 20YY and these payouts wereattributed to the large cash build-up relative to the market valuesof many firms. Starbucks was an example of this phenomenon. Aftertwo...
- Q you invest 2500 in your child's college fund at the end of eachyear for the next 12 years. at that time your kid will withdrawequal amounts at the end of...
- Q Find the convexity of a seven-year maturity, 8.6% coupon bondselling at a yield to maturity of 9.4%. The bond pays its couponsannually. (Do not round intermediate calculations. Roundyour answer to...
- Q TheLavish Carpet Manufacturing Co. has decided acquire a new machinethat has an economic life of 10 years, with no residual value. Themachine can be purchased for $75,000, and the supplier...
- Q 1. From this partial advertisement:Used car$93.38 per month for 60 monthsCash price $4,200Down payment $50a. Calculate the amount financed.b. Calculate the finance charge. (Donot round intermediate calculations. Round your answer...
- Q what factors would you consider when developing a swap strategy tomanage interest rate risk
- Q Pat Radigan is planning to buy a Toyota hybrid for $18,889 with$1,900 down and plans to finance the car. Citizens’ Financial Bankquoted a finance charge at 8% for 48 months;...
- Q Suppose you plan to purchase a $250,000 home. You plan to put 5%down, and take a loan from the bank for the remaining amount. Thebank has offered you a 30-year...
- Q Create a scenario in which you attempt to breach the company’sinformation system in order to commit financial fraud. Explain howand why your scheme might work. Identify two internal controls, onepreventative...
- Q Assume that the continuously compounded zeros rates for T=1, 2,3, 4 (years) are 4.5%, 5.2%,5.7%, 6.3% respectively. A market maker offers, through forwardrate agreements (FRAs), thefollowing rates; 6.078% for the...
- Q Suppose you short-sell 100 shares of IBM, now selling at $178per share.a.What is your maximum possible loss? Maximum possible loss are(Click to select)178unlimited0b.What happens to the maximum loss if you simultaneously...
- Q 1) What is a common weakness of Jensen’s alpha and the Treynorratio?2) What is one advantage and one disadvantage of the Sharperatio?
- Q You've borrowed $22,000 on margin to buy shares in Disney, whichis now selling at $44 per share. Your account starts at the initialmargin requirement of 50%. The maintenance margin is...
- Q You have been asked by the president of your company to evaluateproposed project involving a spectrometer. The equipment's baseprice is $140,000, and it would cost another $30,000 to modify itfor...
- Q A firm’s 2016 balance sheet showed current assets of$1,700 and current liabilities of $800. Its 2017 balance sheetshowed current assets of $2,500 and current liabilities of $4,000.What was the firm’s...
- Q Assume $1 is currently equal to $19.33 Mexican peso in the spotmarket. Assume the expected inflation rate in Mexico is 5.58percent while it is 2.80 percent in the U.S. What...
- Q 31. The speed of college tennis player Jaron Jackson’s firstserve averages 125 mph, with a standard deviation of 4 mph. If thedistribution of service speeds is normal, what proportion ofJaron’s...
- Q Question 1: Why are banks regulated and protected bygovernment?Question 2: In the past 3 years, briefly summarize one majorBank Fraud example?
- Q you want to buy a refrigerator for $5300 using a credit cardthat has interest of 14.99% APR. How long will it take you to payoff your sofa with regular monthly...
- Q Discuss the major causes of fraud over the last few years. Whatareas have increased and what areas have decreased? Why is this thecase? Have the costs of fraud increased or...
- Q The MoMi Corporation’s cash flow from operations before interestand taxes was $2.5 million in the year just ended, and it expectsthat this will grow by 5% per year forever. To...
- Q 1. Given the following information andignoring taxes, what is the annual cash revenue that will make thenet present value equal to zero (i.e., the annual cash revenue thatwill cause us...
- Q TOPIC:Why is the concept of timevalue of money and the discounted cash flow valuation so importantto financial managers, corporations, and many other users of theseconcepts?
- Q McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $865 per set and have a variable cost of $425per set. The company has...
- Q MIRR unequal lives. Singing Fish Fine Foods has ?$2,080,000 forcapital investments this year and is considering two potentialprojects for the funds. Project 1 is updating the? store's delisection for additional...
- Q 2. Vogel AG is expected to pay a dividend next year (t=1) of D1=€3.00 per share. The stock has an equity cost of capital orrequired return of 10% per year....
- Q For the year ending Dec. 31, 2018, MLH Corp. had EBITDA = $8million, and Net Income = $4 million. At the time, MLH had debt of$4 million, excess cash of...
- Q State and explain the three specific ethical finance issuesregarding this situation Trigon Blue Cross/Blue Shield (Copayments)When most people are told they owe a coinsurance payment on amedical bill, they simply...
- Q Kolby Corp. is comparing two different capital structures. PlanI would result in 35,000 shares of stock and $100,500 in debt. PlanII would result in 29,000 shares of stock and $301,500...
- Q Suppose the current, zero-coupon, yield curve for risks free bondsis as follows.Maturity years 1 YTM 5.00%, Maturity Years 2 YTM 5.50%,Maturity years 3 YTM 5.75%, Maturity Years 4 YTM 5.95%,...
- Q Corp is looking at the effect of change in the working capitalin a project that will last 5 years. the working capital willincrease by $125,000 in the first year, and...
- Q A pension fund manager is considering three mutual funds. Thefirst is a stock fund, the second is a long-term government andcorporate bond fund, and the third is a T-bill money...
- Q Bellinger Industries is considering two projects for inclusionin its capital budget, and you have been asked to do the analysis.Both projects' after-tax cash flows are shown on the time linebelow....
- Q GreenLawns provides a lawn fertilizing and weed control service.The company is adding a special aeration treatment as a low-costextra service option, which it hopes will help attract newcustomers. Management is...
- Q Prepare a balance sheetPlace the appropriate account in the balance sheet and theappropriate amount.If the item does not belong on a balance sheet do not put theitem on the balance...
- Q Campbell Corporation is planning to add a new machine to itscurrent plant. There are two machines it is considering, with cashflows as follows:MachineA 0 1 2 3 4 -10,000 4000 4000 4,000 4000 MachineB 0 1 2 3 -5,000 3,000 3,000 3,000 Which machine should Campbell choose?Assume...
- Q You have a $55,000 portfolio consisting of Intel, GE, and ConEdison. You put $22,000 in Intel, $14,000 in GE, and the rest inCon Edison. Intel, GE, and Con Edison have...
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