Finance question and answers for September 04, 2023
- Q If you were to set-up an informational interview, how would yougo about this? What would be your first step? Who would you contactand why? What questions would you ask?
- Q Are the markets efficient? If the markets were completelyefficient, how would you explain the dot-com bubble of the late1990s and the subsequent bear market? Compare and contrast thisepisode with the...
- Q You are interested in purchasing a bond with three years tomaturity and semiannual interest payments. The bond has a 7% couponrate and a 9% yield to maturity. The bond has...
- Q Company A isconsidering the purchase of a new machine.The new machine is notexpected to affect revenues, but pretax operating expenses will bereduced by $12,700 per year for 10 years.The old...
- Q discuss the implications of EMH. If investors subscribe to theEMH market model, could they beat the market? Consider this morethan 95% of mutual funds managers are unable to beat the...
- Q Assume the current interest rate on a 1-year Treasury bond (1R1)is 6.50 percent, the current rate on a 2 year treasury bond (1R2)is 7.25 percent and the current rate on...
- Q discuss and provide some examples of emotional decision makingof market participant.
- Q PQR stock is selling for $38 a share. A $40 call on this stockis priced at $1.00. What is your maximum profit and maximum loss ifyou buy the stock and...
- Q Suppose you purchase 6 put contracts on Testaburger Co. stock.The strike price is $35, and the premium is $1.50. If, atexpiration, the stock is selling for $31 per share, what...
- Q 12. What is the value of each share of stock if the FCF thisyear is 20 million, the growth rate is 5%, the WACC is 8%, theamount of debt and...
- Q Project L costs $50,000, its expected cash inflows are $14,000per year for 12 years, and its WACC is 14%. What is the project'sNPV? Round your answer to the nearest cent....
- Q Use the following information to answerquestions 1-7Consider the following abbreviated financial statements forBoathead Enterprises:BOATHEAD ENTERPRISES2014 and 2015 Partial Balance SheetsAssets Liabilities and Owners’ Equity2014 2015 2014 2015Current assets$ 946$ 1,008Current liabilities$ 385$ 404Net...
- Q A firm must choose from six capital budgeting proposalsoutlined below. The firm is subject to capital rationing, has acapital budget of $1,000,000 and the firm’s cost of capital is 15percent....
- Q Project L costs $40,055.10, its expected cash inflows are $9,000per year for 9 years, and its WACC is 14%. What is the project'sIRR? Round your answer to two decimal places.
- Q Please discuss the return of a stock holder assumingfirst the stock pays stable dividends with zero or positive growthrates, and next, assume another stock that pays no dividend now andhas...
- Q PROJECT CASH FLOWColsen Communications is trying to estimate the first-year cashflow (at Year 1) for a proposed project. The financial staff hascollected the following information on the project:Sales revenues$15 millionOperating...
- Q DEPRECIATION METHODSCharlene is evaluating a capital budgeting project that shouldlast for 4 years. The project requires $400,000 of equipment. Sheis unsure what depreciation method to use in her analysis,straight-line or...
- Q NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $107,000, and shipping and installation costs wouldadd another $16,000. The machine falls into the...
- Q NEW PROJECT ANALYSISYou must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $240,000, and it wouldcost another $36,000 to modify the equipment for special...
- Q Suppose you are long 8 gold futures contracts, established at aninitial settle price of $1,325 per ounce. Each contract represents100 troy ounces. The initial margin to establish the position is$4,950...
- Q 1. Ifan employer does not pay the taxes withheld from employees to thegovernment, is the employee responsible?2. Isa defined benefit or a defined contribution plan better for anemployee? for an...
- Q Erma’s Beauty Supply is considering expanding the existingstore. Erma wants to lease the office space next door to herbusiness. Erma must spend, $120,000 on equipment to expand. Theequipment is expected...
- Q Lee, Inc. is considering the production of a new line of softdrinks at its Springfield, IL plant. The CFO of Lee, Inc. isprovided with the following information on the new...
- Q Ruff Motors needs to select an assembly line for producing theirnew SUV. They have two options:Option A is a highly automated assembly line that has a largeup-front cost but low...
- Q Please explain Cost of Capital and what is the formula tocalculate.
- Q The Sisyphean Company is planning on investing in a new project.This will involve the purchase of some new machinery costing $ 350comma 000. The Sisyphean Company expects cash inflows from...
- Q Pagemaster Enterprises is considering a change from its currentcapital structure. The company currently has an all-equity capitalstructure and is considering a capital structure with 40 percentdebt. There are currently 2,500...
- Q A prospective MBA student earns $60,000 per year in her currentjob and expects that amount to increase by 14% per year. She isconsidering leaving her job to attend business school...
- Q Minion, Inc., has no debt outstanding and a total market valueof $422,400. Earnings before interest and taxes, EBIT, areprojected to be $55,000 if economic conditions are normal. If thereis strong...
- Q Click here to read the eBook: The Optimal Capital BudgetOPTIMAL CAPITAL BUDGETHampton Manufacturing estimates that its WACC is 12.5%. Thecompany is considering the following seven investment projects:ProjectSizeIRRA$750,00014.0%B1,250,00013.5C1,250,00013.2D1,250,00013.0E750,00012.7F750,00012.3G750,00012.2Assume that each of...
- Q Richard Miyashiro purchased a condominium and obtained a 30-yearloan of $199,000 at an annual interest rate of 8.40%(a) What is the mortgage payment?$ (b) What is the total of the payments...
- Q 5: Consider a $10,000 machine that willreduce pretax operating costs by $3,000 per year over the next fiveyears. The machine will be depreciated straight-line to zero in 5years. It will...
- Q we have studied the concept of risk and return - so we know thefundamentals. To assume additional risk, investors will require theopportunity to receive additional return. Additionally, someinvestors by nature...
- Q Consider a bond with the following characteristics. Par: $1,000Two coupon payments per year (i.e., coupons are paid semi-annually)Coupon rate: 7.50% Years to maturity: 40 Bond price: $965 Supposethat the annual...
- Q Pepsi is struggling as a corporation. Many critics argue that idshouldn’t have sold some of its assets .- post the latest Pepsi corporate earnings ?- how is Pepsi doing financially-...
- Q The Morris Corporation has $800,000 of debt outstanding, and itpays an interest rate of 10% annually. Morris's annual sales are $4million, its average tax rate is 30%, and its net...
- Q Halliburton Co. currently has a bond outstanding with a couponrate of 8.513%. Par is an integral multiple of $1,000. Couponpayments are twice a year. What is the semi-annual coupon paymenton...
- Q You have been working at a local CPA firm for the last 2 years.At the beginning of the year, you passed the last section of theCPA Exam. Last week, your...
- Q Suppose you manage a $3.87 million fund that consists of fourstocks wuth the following investments:Stock/Investment/BetaA $300000 1.50B 300000 -0.50C 1020000 1.25D 2250000 0.75If market's required rate if return is 12%...
- Q Prof. Business has a self-managed retirement plan through herUniversity and would like to retire in 8 years and wonders if hercurrent and future planned savings will provide adequatefutureretirement income. Here’s...
- Q Firms that carry preferred stock in their capital structure wantto not only distribute dividends to common stockholders but alsomaintain credibility in the capital markets so that they can raiseadditional funds...
- Q youcan afford a 1400$ per month mortage payment. youve found a 30 yearloan at a 6% interest.youcan afford a 1400 per month mortage payment. you found a 30 yearloan at...
- Q I. If a firm cannot invest retained earnings to earn a rate ofreturn (less than/greater than or equal to) therequired rate of return on retained earnings, it should returnthose funds...
- Q You expect to receive $9,000 at graduation in two years. Youplan on investing it at 12 percent until you have $110,000. Howlong will you wait from now? (Do not round...
- Q General equilibrium models of asset pricing allow us todetermine the relevant measure of risk for any asset and therelationship between expected return and risk.Two of these models have been subject...
- Q Question 6: ABC Co. is considering replacing an old computerwith a new one. The old one was purchased 1 year ago for $600,000.It is depreciated strait-line to zero over 6...
- Q You are evaluating two different silicon wafer milling machines.The Techron I costs $261,000, has a 3-year life, and has pretaxoperating costs of $70,000 per year. The Techron II costs $455,000,has...
- Q PORTFOLIO REQUIRED RETURNSuppose you are the money manager of a $4.72 million investmentfund. The fund consists of four stocks with the followinginvestments and betas:StockInvestmentBetaA$ 460,000 1.50B440,000 (0.50)C1,220,000 1.25D2,600,000 0.75If the market's required rate of return...
- Q Series A funding round post-money valuation: $6,234,680Series B funding round pre-money valuation: $5,000,000Valuation step-up: -19.8%How does the Series B pre-money valuation of this businesscompare with its Series A post-money valuation?...
- Q suppose you want to have 700,000 for retirement in 35 years. youraccount earns 9% interest.a how much would you need to deposit in the account eachmonth?b how much interest will...
- Q youdeposit 400$ each month into an account earning 2% interestcompounded monthly.a) how much will you havein the account in 35 years?b) how much money will you put into the account?c)...
- Q You want to buy a car for cash 5 years from now. Thecar price at that time will be 20000 dollars. To this end you wantto make an annuity deposit...
- Q A. The (before-tax cost of debt/after-tax cost ofdebt) is the interest rate that a firm pays on any newdebt financing.B. Perpetualcold Refrigeration Company (PRC) can borrow funds atan interest rate...
- Q A company is analyzing two mutually exclusive projects, S and L,with the following cash flows: 0 1 2 3 4 Project S -$1,000 $885.08$260 $5 $5 Project L -$1,000 $5...
- Q 1. Which asset classes generally offer higher average rates ofreturns? Why?2. You have $100 in cash. The prevailing interest rate is 20% perannum. You have two investment choices: a) Project...
- Q *Excel formulas needed* A U.S.-based firm is considering a six-year project in Colombia. The following information is availableabout the project: Initial investment. The initial investment ofUSD 750,000 is used to...
- Q 7-3 Describe the changes in balance sheet accounts that wouldconstitute sources of funds. What changes would be considered usesof funds?
- Q Exercise A3-20(Algorithmic)Future Values of an AnnuityUse Future ValueTables or your calculator to complete the requirements below.On December 31, 2020,you sign a contract to make annual deposits of $5,200 in aninvestment...
- Q Haunted Forest, Inc.is selling fog machines. Use the followinginformation about Haunted Forest, Inc. to answer the followingquestions. Average selling price per unit $344. Variable cost perunit $191 Units sold 349...
- Q What is the purpose of a financial ratio analysis? Identify anddefine a financial ratio for each of the following categories: oLiquidity Ratios o Leverage Ratios o Activity Ratios oProfitability Ratios...
- Q The Wet Corp. has an investment project that will reduceexpenses by $30,000 per year for 3 years. The project's cost is$35,000. If the asset is part of the 3-year MACRS...
- Q Suppose that I ask you to lend me $200 for one year at a 5%promised interest rate. You believe that I will fully pay you the$210 with 95% probability; that...
- Q Discuss the reason why capital investment projects should beevaluated for risk in the present, and how risk might be involvedin future planning and/or forecasting. Pick a typical healthcareproject to evaluate...
- Q You are evaluating a project for The Ultimate recreationaltennis racket, guaranteed to correct that wimpy backhand. Youestimate the sales price of The Ultimate to be $440 per unit andsales volume...
- Q Based on the following information: State of EconomyProbability ofState of EconomyReturn onStock JReturn onStock K Bear.30?.015.039 Normal.65.143.067 Bull.05.223.097 Calculate the expected return for each of the stocks.(Do not round intermediate calculations and enter youranswers as a...
- Q *Excel formulas needed* A U.S.-based firm is considering a six-year project in Colombia. The following information is availableabout the project: Initial investment. The initial investment ofUSD 750,000 is used to...
- Q Suppose you are going to receive $9,000 per year for 6 years.The appropriate interest rate is 9 percent.a. What is the present value of the payments if they are in...
- Q Use the option quote information shown here to answer thequestions that follow. The stock is currently selling for $85. Calls PutsOption Expiration StrikePrice Volume Last Volume LastRWJ March 80 230 2.80 160 0.80 April 80 170 6.00 127 1.40 July 80 139 8.50 43 3.90 October 80 60 10.20 11 3.65A) Are the call options in the money? What is the...
- Q Use the option quote information shown here to answer thequestions that follow. The stock is currently selling for $40. Calls PutsOption Expiration StrikePrice Volume Last Volume LastMicrosoft Feb 38 85 2.35 37 0.24 March 38 61 3.15 22 0.93 May 38 22 4.87 11 2.44 August 38 3 6.15 3 3.56A) Suppose you buy 10 contracts of the February 38 call...
- Q On a firm's income statement, you likely will see two entriesfor earnings per share (EPS): basic and diluted EPS. Basic EPS isthe firm's net income available to shareholders divided by...
- Q you have just returned from a long trip to Europe. He startedthe trip with $6,300 in his pocket. He spent 2,120 travelingthroughout euroland, 4,900NKr in Norway, and £1,760 in the...
- Q You are given the following information: State ofEconomyReturn onStock AReturn onStock B Bear.119?.062 Normal.098.165 Bull.090.250 Assume each state of the economy is equally likely tohappen. Calculate the expected return of each of the following stocks.(Do not...
- Q theus central bank has the stated goal of promoting sustainableeconomic growth, maintaining stable price level and promoting maxemployment. if the federal reserve believes that us economy isbeginning to grow to...
- Q You have just been hired as a financial analyst for BarringtonIndustries. Unfortunately, company headquarters (where all of thefirm's records are kept) has been destroyed by fire. So, your firstjob will...
- Q RTF stock is expected to return 11 percent in a normal economyand lose 15 percent in recession. The probability of a recession is33 percent while the probability of a booming...
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