Finance question and answers for August 02, 2023
- Q Hi,I was wondering if anyone couldexplain what capital asset pricing is? My homework suggests thatthe capital asset pricing model considers the relationship betweenthe fluctuations in a security’s returns versus the...
- Q Holding period returns can be confused with annual returns. Howeverthe only time a hpr should be compared to annual returns is whenthe holding period is actually one year . In...
- Q a)The term value has various meaning and expressions. Discussthe following expressions of valuei.Fair Market Valueii.Intrinsic valueiii.Going concrn valueeiv.Book valueb)Explain the concept of ‘Efficient Capital Market’ stating itsrelevance in valuationc)List and...
- Q ?Benson Designs has prepared the following estimates for a?long-term project it is considering. The initial investment is?$44,850?, and the project is expected to yield? after-tax cashinflows of ?$9,000 per year...
- Q Please solve and explain:After paying $3 million for a feasibility study, Stanley wrote aproposal with the following cash flow estimates for a 25-yearcapital project. Equipment cost: $34 million, Shipping costs:...
- Q 2. What are the advantages and disadvantages of the friendlyversus hostile approaches to a corporate takeover? Be specific
- Q Goonline and look at Netflix latest corporate earnings:1- what do you think of the performance of Netflix ?2- what do you think of the expansion of Netflix from astreaming busines...
- Q 4. Assume you own and operate a hotel near a busyinternational airport. Your property caters directly to businesstravelers. Assume also that your historical records indicate acomplete room’s sellout every Tuesday...
- Q Select four stocks of your choice that are diversified acrossfour different sectors or industries.In your initial post, label your selected stock as “choice,” thecompetitor stock as “peer,” the industry information...
- Q Acompany’s bonds have a 15-year maturity, a 6% coupon rate paidsemi-annually, and a par value of $1000. The nominal yield isquoted as 6% in the financial press. What is the...
- Q The mission of Humpty Dumpty Preschool is to become the premierprovider of childcare for children from ages 2 through 5. At thetime of the review process, management needs to be...
- Q Which government regulation on the advertising industry is themost consumer-friendly?
- Q 23)Use the following data about a fixed coupon corporate bond toanswer the following question. The yield to maturity of the bond isgreater than 8% settlement 11/14/2016 maturity 11/14/2026 rate 10%price...
- Q 34) Subprime assets lost value rapidly between 2007 and 2009.This lowered the value of banks that had exposure to these assetsand financial institutions that had exposure to banks that wereexposed...
- Q Using the following information toanswer questions (short answer)Below are the 2017 and 2018 year-endbalance sheets for firm AAA:Assets: 2018 2017 Cash -------- 158,000Accountsreceivable 864,000 700,000Inventories 2,000,000 1,400,000Total currentassets $3,064,000 $2,270,000Net fixedassets 6,000,000 5,600,000Totalassets --------- -----------Liabilities and equity:Accountspayable $1,400,000 $1,090,000Notespayable 1,600,000 1,800,000Total currentliabilities $3,000,000 $2,890,000Long-termdebt 2,400,000 2,400,000Commonstock 3,000,000 2,000,000Retainedearnings 664,000 580,000Total commonequity $3,664,000 $2,580,000Total liabilities andequity ------------- ---------------Assume sales in 2017...
- Q Cansomeone please explain in simple terms 1. the impact of compoundingfrequency and 2. the difference between annual percentage rate andthe effective annual rate.PLEASE ANSWER BOTH 1 AND 2 FOR ME
- Q From the same Texas Department of Insurance data onclosed claims for medical malpractice liability insurance referredto in Problem 1, we can estimate the number of claims in each yearof injury...
- Q NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $153,000, and shipping and installation costs wouldadd another $7,000. 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 $170,000, and it wouldcost another $42,500 to modify the equipment for special...
- Q Assume the return on a market index represents the common factorand all stocks in the economy have a beta of 1. Firm-specificreturns all have a standard deviation of 48%.Suppose an...
- Q Stark industries has just issued bonds with $1,000 par value, a$30 coupon paid semiannually (SA), and a 20-year maturity. Thismeans the original issue yield was 6% (($30 * 2) /...
- Q Hollywood Shoes would like to maintain their cash account at aminimum level of $52,000, but expect the standard deviation in netdaily cash flows to be $4,200; the effective annual rate...
- Q Zeta, Inc., has identified the following two mutuallyexclusive projects:Year01234Cash Flow A-$20,50010,50015,500Cash Flow B-$20,5005,70010,50012,00015,500Use both the equal lives method and the equivalentannuity method to determine which project the company shouldimplement.Discount Rate:...
- Q OPTIMAL CAPITAL BUDGETMarble Construction estimates that its WACC is 10% if equitycomes from retained earnings. However, if the company issues newstock to raise new equity, it estimates that its WACC...
- Q Describe the typical organization of a private equity firm. Whatare the main motivating factors that result in this type oforganization?What are the three main traits required of an analyst? What...
- Q How are hedge fund expenses different from mutual fund expenses?What are hurdle rates and high water marks at a hedge fund? Why arethese used?
- Q NEW PROJECT ANALYSISYou must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $200,000, and it wouldcost another $30,000 to modify the equipment for special...
- Q On May 1, 2018, Hecala Mining entered into an agreement with thestate of New Mexico to obtain the rights to operate a mineral minein New Mexico for $9.7 million. Additional...
- Q Describe the typical organization of a private equity firm. Whatare the main motivating factors that result in this type oforganization?What are the three main traits required of an analyst? What...
- Q REPLACEMENT ANALYSISThe Bigbee Bottling Company is contemplating the replacement ofone of its bottling machines with a newer and more efficient one.The old machine has a book value of $650,000 and...
- Q Robert Campbell and Carol Morris are senior vice-presidents ofthe Mutual Chicago Insurance Company. They are co- directors of thecompany’s pension fund management division, with Campbell havingresponsibility for fixed income securities...
- Q Tom and Debbie are starting to take their retirement planningseriously. They are both 46 and plan to retire in 20 years at theage of 66. They expect to live 15...
- Q Consider the followingprojects:Cash Flows ($)ProjectC0C1C2C3C4C5A?2,8002,8000000B?5,6002,8002,8005,8002,8002,800C?7,0002,8002,50002,8002,800If the opportunitycost of capital is 12%, which project(s) have a positive NPV?Positive NPV ProjectsCalculate the paybackperiod for each project.Project AyearsProject B yearsProject C yearsWhich project(s)...
- Q 1. You need a 20-year,fixed-rate mortgage to buy a new home for $200,000. Your mortgagebank will lend you the money at a 7 percent APR for this 240-monthloan. However, you...
- Q Dickson, Inc., has adebt-equity ratio of 2.5. The firm’s weighted average cost ofcapital is 11 percent and its pretax cost of debt is 9 percent. Thetax rate is 22 percent. a.What...
- Q Modigliani & Miller show thatdividend policy can also be considered irrelevant. Yet, unexpectedincreases in dividends are often closely followed by priceincreases, why?To clarify, when a firm pays a dividend the...
- Q If you deposit money today in an account that pays 13% annualinterest, how long will it take to double your money? Round youranswer to two decimal places.3 and a half...
- Q Assume there are three companies that in the past year paidexactly the same annual dividend of $1.28 a share. In addition, thefuture annual rate of growth in dividends for each...
- Q You have $10636 to invest in a stock portfolio. Your choices areStock X with an expected return of 13.35 percent and Stock Y withan expected return of 10.69 percent. If...
- Q 4) What happens to the value of the dollar if the EuropeanCentral Bank (ECB) tightens its money supply and raises interestrates? How will this impact the value of the dollar,...
- Q Changing Levels of Current LiabilitiesFirm B has the following levels of assets, liabilities, andequity:Assets Liabilities and EquityCurrent Assets $20,000 Current Liabilities $10,000Fixed Assets 42,000 Long-term Debt 37,000Total 62,000 Equity 15,000Total...
- Q Timothy is considering an investment of $10,000. This investmentis supposedly going to provide him with cash inflows of $2,500 inthe first year and $6,000 a year for the following 2...
- Q 3. The percentage discount offered by suppliers if the customeror buyer pays early is known as the _____________discount.4. The average length of time between the point in which a firmoriginally...
- Q 6) Evidence on IPO underpricing is provided in several empiricalstudies, including a seminal paper by Loughran and Ritter (2004).7) On average, IPOs traded at a premium and one reason can...
- Q Four years ago, XYZ company paid a dividend of $0.80 per share.Today XYZ paid a dividend of $1.66 per share. It is expected thatthe company will pay dividends growing at...
- Q To decrease production costs, a company suggests replacing oneof its manufacturing equipment with a newer, more efficient model.This four year project will result in reduced manufacturing costswhich, in turn, would...
- Q Sam's Sports Bar wants to expand their facility. The expansionwill require $330,000 in building improvements, which will bedepreciated on a straight-line basis over a 20-year period. Theexpanded area is expected...
- Q Your boss has asked you to analyze a potential new product, andto recommend if the company should produce and sell the product.Specifically, your boss wants you to prepare a spreadsheet...
- Q A bond pays 7% annual interest in semi-annual payments for 10years. The current yield on similar bonds is 9%. To determine themarket value of this bond, you must find the...
- Q You are considering the following two mutually exclusiveprojects. Project A Project B Year 0 -$10,000 -$20,000 Year 1 $3,000 $ 5,000 Year 2 $ 8,000 $ 7,000 Year 3 $...
- Q Deer and Doe purchased $120,000 of equipment six years ago. Theequipment is 7-year MACRS property. The firm is selling thisequipment today for $24,500. What is the after-tax cash flow fromthis...
- Q Your company has two? divisions: One division sells software andthe other division sells computers through a direct sales? channel,primarily taking orders over the internet. You have decided thatDell Computer is...
- Q Quisco Systems has 6.1 billion shares outstanding and a shareprice of $ 18.02. Quisco is considering developing a new networkingproduct in house at a cost of $ 500 million.? Alternatively,...
- Q 1 pts Consider the following information on Stocks A, B, C andtheir returns (in decimals) in each state: State Prob. of State A BC Boom 20% 0.34 0.22 0.14 Good...
- Q To what extent do you think distorted information has an impacton business and social decision making and understanding theworld?
- Q The Optical Scam Company has forecast an 17 percent sales growthrate for next year. The current financial statements are shownbelow. Current assets, fixed assets, and short-term debt areproportional to sales.INCOME...
- Q Construct a balance sheet for Sophie’s Sofas given thefollowing data. (Be sure to list the assets and liabilitiesin order of their liquidity.) Cash balances=$7,000 Inventory of sofas=$170,000 Store and property=$70,000 Accounts receivable=$19,000 Accounts payable=$14,000 Long-term debt=$140,000BALANCE...
- Q Stock Y has a beta of 0.7 and an expected return of 8.29percent. Stock Z has a beta of 1.8 and an expected return of 12.03percent. What would the risk-free...
- Q Orlando advertised for bids for the purchase of $3 millionprincipal amount of Waste Water Revenue Bonds. Bonds will bedelivered on April 1, 2021, and the interest will be paid on...
- Q You have $218242 to invest in a stock portfolio (this amount isyour original wealth). Your choices are Stock H, with an expectedreturn of 15.14 percent, and Stock L, with an...
- Q Piedomont Products LTD (PPL) has current sales of $60 million.sales are expected to grow to $80 million next year. PPL currentlyhas accounts receivables of $9 million, inventories of $15 millionand...
- Q Avicorp has a $ 14.6 million debt issue? outstanding, with a 5.9% coupon rate. The debt has? semi-annual coupons, the next couponis due in six? months, and the debt matures...
- Q Consider the following hypothesis test:H 0: 50H a: > 50A sample of 55 is used and the population standard deviation is8. Use the critical value approach to state your conclusion foreach of...
- Q Precision Tool is trying to decide whether to lease or buy somenew equipment for its tool and die operations. The equipment costs$51,000, has a 3-year life and will be worthless...
- Q GED corporation, located in the United States, has an accountpayable obligation of ¥800 million payable in one year to a bank inTokyo. The current spot rate is ¥115/$1.00 and the...
- Q Conch Republic Electrics locates in Key West, Florida. ThePresident is Shelley Couts, who inherited the company. The companyis a reputable manufacturer of various electronic items. JayMcCanless, a recent Business graduate,...
- Q Corner Jewelers, Inc. recently analyzed the project whose cashflows are shown below. However, before the company decided toaccept or reject the project, the Federal Reserve changed interestrates and therefore the...
- Q MV Corporation has debt with market value of $101 ?million,common equity with a book value of $95 million, and preferred stockworth $22 million outstanding. Its common equity trades at $50...
- Q Problem in Forecasting Interest Rates based on unbiasedexpectations theory:These are the rates today (June 15, 2018) for loans of equalrisk.R1 = 2%;R2 = 3%R3 = 4%R4 = 5%A. Given this...
- Q most recent financial statements for kerch inc are shownhere.the Assuming no income taxes.income statementBalance Sheetsales$8,300assets$23,200Debt$9,00costs5,400_______Equity14200net2810Total$23,200Total$23,20incomeAssets and cost are proportional to sales. Debt and equity arenot. No dividends arepaid. Next year's...
- Q The balance sheet and income statement for the J. P. Robard Mfg.Company are given below. Calculate the following ratios: currentratio, debt ratio, times interest earned, average collectionperiod, inventory turnover, fixed...
- Q Your firm is contemplating the purchase of a new $1,498,500computer-based order entry system. The system will be depreciatedstraight-line to zero over its 5-year life. It will be worth$145,800 at the...
- Q Consider the following two mutually exclusive projects: YearCash Flow(A)Cash Flow(B)0–$358,000–$46,000137,00023,200257,00021,200357,00018,7004432,00013,800 Whichever project you choose, if any, you require a return of15 percent on your investment. a-1What is the payback period for each project?...
- Q Briefly discuss the importance of the options market andpurposes that they serve in the market. List and discuss one proand one con about these speculative strategiesusing a real-world example. Protective...
- Q consider a $1000 deposit earning 6.0% interest per year for fiveyears. interest earned on the original deposit excluding interestearned on interest is $300.00 and total interest earned is morethan $335...
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