Finance question and answers for August 08, 2023
- Q 1) Two assets' correlation is 0. The first has expected returnof 9% and standard deviation of 16%, the second has expected returnof 13% and standard deviation of 20%. Calculate the...
- Q A bond with a coupon rate of 7 percent sells at a yield tomaturity of 9 percent. If the bond matures in 12 years, what is theMacaulay duration of the...
- Q Raymond Mining Corporation has 2 million shares of common stockoutstanding and 25,000 semiannual bonds outstanding, each with anannual coupon rate of 10% and a par value $1,000. The common stockcurrently...
- Q Miller Co. has a weighted average cost of capital of 7.5%. It'scost of equity is 10% and the average yield to maturity on itsbonds is 5%. If the tax rate...
- Q NEED IN 1 HOUR!!!!suppose a firm is considering a capital budgeting project whichrequires upfront (Yr0) $3,000,000 investment in fixed assets and a$185,000 upfront investment in NWC. The firm expects to...
- Q 4.Draymondvisits a car dealership looking for a sports car tocruise the city in style. He tells thedealership that he can repaya loan at $475per month for the next sixyears. If...
- Q Stark Industries wants to sell 15-year bonds that pay interestannually. The par value of bonds will be at $1,000. StarkIndustries stock is selling for $45 per share, and each bond...
- Q Suppose you buy a bond with a coupon of 8.2 percent today for$1,100. The bond has 7 years to maturity. Assume interest paymentsare reinvested at the original YTM.a. What rate...
- Q Stark Industries wants to sell 15-year bonds to the school ofthe gifted and talented at Xavier’s School. The par value of bondswill be at $1,000 and they pay interest annually....
- Q True/False1. Common stocks and preferred stocks are the same exceptpreferred stocks do not have voting rights.2. Risk is defined as the possibility that you will lose moneywhen buying an investment.
- Q Zhdanov Inc. forecasts that its free cash flow in the comingyear, i.e., at t = 1, will be -$10 million, but its FCF at t = 2will be $10 million....
- Q Jarett & Sons's common stock currently trades at $27.00 ashare. It is expected to pay an annual dividend of $1.00 a share atthe end of the year (D1 = $1.00),...
- Q A vehicle has a first cost of $25,000. Its market value declinesby 15% annually. It is used by a firm that estimates the effect ofolder vehicles on the firm’s image....
- Q Corporation A plans to launch a new project and the financialmanager is considering whether this is a valuable investment forthe corporation. Consider: The initial cost of this project is$197.92, and...
- Q A bond has a par value of $1,000, a time to maturity of 20years, and a coupon rate of 7.10% with interest paid annually. Ifthe current market price is $710,...
- Q Yoda and his Jedi Knights, have just received a project toproduce a new Pink Lightsaber. The variable cost per unit is at$750, the sales price would be set at twice...
- Q Salvatore has the opportunity to invest in a scheme which willpay$7,500at the end of each of the next 5 years. He must invest$15,000at the start of the first year and...
- Q The Rebellion issued $50,000,000 face value of 30-year bondscarrying a 12% (annual payment) coupon; these bonds were issuedfive (5) years ago. The Rebellion would now like to refund thesebonds that...
- Q Give two modern instruments business owners can use to makedeposits when their source of payments are checks and they cannotphysically go to their banks during their hours of operation.
- Q The Galactic Empire Inc. must purchase $5,000,000 worth of heavyblaster rifles. The Galactic Empire is looking into either leasingthe weapons or purchasing them. The Galactic Empire has a zero taxrate...
- Q For the most recent year, GHI Company paid an annual dividend of$1.00. The company expects dividends to grow by 15% for the nexttwo years, followed by 4 years of growth...
- Q ABC company has decided to purchase a new printing machine. ThisMachine has a 9-yer life and will cost 750,000 to install the newmachine. Total operation costs of the machine per...
- Q Evergreen Corporation (calendar-year-end) acquired the followingassets during the current year: (ignore §179 expense and bonusdepreciation for this problem): (Use MACRS Table 1 and Table2.)2018DatePlacedOriginalAssetinServiceBasisMachineryOctober 25$102,000Computer equipmentFebruary 334,000Used delivery truck*August 1747,000FurnitureApril...
- Q Information on four bonds is presented in the table. Each bondhas a face value of $100. Each bond that pays a coupon pays itannually.BONDMATURITY (YEARS)COUPON RATEYTMA10%5%B56%7%C1010%9%D200%8%a) Compute the percentage change...
- Q The following table shows prices per $100 face value ofdefault-free zero-coupon bonds:MATURITY(Years)12345Price94.5289.6885.481.6578.35Draw the yield curve. You may assume annual compounding.
- Q Luther Industries needs to raise $25 million to fund a newoffice complex. The company plans to issue 10-year maturity bondswith a face value of $1000 and a coupon rate of...
- Q We are evaluating a project that costs $670,000, has a life of 5years, and has no salvage value. Assume that depreciation isstraight-line to zero over the life of the project....
- Q suppose the standard deviation of a stocks return is 25% peryear and the riskless return is 10% APR.Answer the below questionsusing the Black -Scholas OPM. A. What is a 6...
- Q A manufacturing company's financials reveal the followingratios:Ratio/Calculation20162015201420132012Industry Ave.Debt Ratio40.0%42.0%46.0%45.0%45.0%52.0%Times Interest Earned7.17.17.16.96.97.1Fixed Charge Coverage5.45.45.96.96.96.5Financial Leverage Ratio1.71.71.91.81.82.1Based on your review of this company's debt paying abilityratios and their comparison to the industry,averages...
- Q 20XW20XX20XY20XZchange in EBIT34442349change in sales25404037DOL1.361.10.61.3Degree of Financial Leverage (DFL) = operating profit/EBT20XW20XX20XY20XZoperating profit1810260432014767Earning/income before taxes (EBT)1716240228994333DFL1.051.081.101.10DCL1.431.190.631.46Given is the companies DOL, DFL and DCL for20XW, 20XX, 20XY and 20XZ Discuss the risks...
- Q A bond that pays interest semiannually has a price of $1,043.47and a semiannual coupon payment of $27.00. If the par value is$1,000, what is the current yield? Pick one: A.4.92%...
- Q Homework 3/financial ratiosCA=300, Cl=200, inventory = 50, find CR and QRAR=600. Sales = 3650, find ACPEBIT = 800, I=200, find TIERLTD=500, CL=100, TA=2000, find DRLTD=500, CL=100, CS=300, RE=100. Find Debt/equity...
- Q Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$425,000 is estimated to result in $169,000 in annual pretax costsavings. The press...
- Q Homework 5: Time value of moneyYou make a onetime deposit of $2000. Your investment period is40 years and the interest rate is 9%. How much you willhave in your account after...
- Q Homework 2 Statement of Cash flowsConstruct a cash flow statement for XYZ Company using thefollowing information XYZCOMPANY BALANCESHEET DECEMBER31, 2006, 2007 Assets Liab+ equity 2006 2007 20062007Cash 120 150 Acc.payable 200 150Mkt.Sec 80 100 Notespayable 300 250 Acc.Rec 360 200 otherliab. 100 150Inventory 340 600currentassets 900 1050 Currentliab. 600 550GrossFA 22002400 Long termdebt 1000 1200Acc.Dep 500 600 Commonstock 400 250Net fixed asset 17001800 Retainedearnings 600 850Total assets 26002850 Totalliab.+equity 2600...
- Q Lancaster Lumber buys $8 million of materials (net of discounts)on terms of 3/5, net 60; and it currently pays on the5th day and takes discounts. Lancaster plans to expand,which will...
- Q Your boss believes the company's power plant is producing toomuch air pollution on a typical island. Your boss gives you threechoices for dealing with this problem because he/she does not...
- Q Weisbro and Sons common stock sells for $21 a share and pays anannual dividend that increases by 5.4 percent annually. The marketrate of return on this stock is 9.4 percent....
- Q Investor W has the opportunity to invest $615,000 in a newventure. The projected cash flows from the venture are as follows.Use Appendix A and Appendix B. Year 0Year 1Year 2Year 3Year...
- Q 12.Which of the following statements is (are) correct?(x)Although the NASDAQdoes have some large firms, it is mostlycomposed of small high-technology firms.(y)Since the DJIA is composed of the 30 largest companies...
- Q Austin Grocers recently reported the following 2016 incomestatement (in millions of dollars):Sales$700Operating costs including depreciation500EBIT$200Interest40EBT$160Taxes (40%)64Net income$96Dividends$32Addition to retained earnings$64For the coming year, the company is forecasting a 30% increasein...
- Q Case 2:By the end of each year, you contribute an equal amount of$3,300 per year to your retirement fund portfolio, which earns anannual nominal return of 11.25% averagely in the...
- Q The Warren Watch Company sells watches for $21, fixed costs are$145,000, and variable costs are $10 per watch.What is the firm's gain or loss at sales of 5,000 watches?Enter loss...
- Q Consider a project that has a 10% cost of capital that requiresan initial investment of $10,000. The year 1 net cash inflow is$2,450; the year 2 net cash inflow is...
- Q Parramore Corp has $16 million of sales, $1 million ofinventories, $2 million of receivables, and $1 million of payables.Its cost of goods sold is 75% of sales, and it finances...
- Q Starset Machine Shop is considering a 4-year project to improveits production efficiency. Buying a new machine press for $390,000is estimated to result in $148,000 in annual pretax cost savings.The press...
- Q Consider the following abbreviated financial statements for CaboWabo, Inc.: CABO WABO, INC.Partial Balance Sheets as of December 31, 2015 and 20162015201620152016AssetsLiabilities and Owners’ EquityCurrent assets$2,753$2,890Current liabilities$1,107$1,658Net fixed assets12,50913,060Long-term debt6,5967,818CABO WABO, INC.2016...
- Q Protected Steel Corporation (PSC) has a book value of $6 pershare. PSC is expected to earn $0.60 per share forever and pays outall its earnings as dividends. The required rate...
- Q I would like the answers for these case study questions showingclearly how they are calculated. IssuerFace ValueCoupon Rate RatingQuoted Price$Years Until MaturitySinking FundCall PeriodABC Energy10006%AAA809.1020Yes3 YrsABC Energy10000%AAA211.6420YesN/ATrans Power100010%AA1025.0020Yes5 YrsTelco Utilities100012%AA1300.0030No5 Yrs1. One...
- Q Ronald was recently hired by Highland Equipment Inc. as a juniorbudget analyst. He is working for the Venture Capital Division andhas been given for capital budgeting projects to evaluate. He...
- Q What risks would you advise the credit manager to consider inthe structuring of motor vehicle loans?
- Q Describe how a typical stock option plan works. What are someproblems with a typical stock option plan?
- Q Are ATPs (Automated Trading Platforms) going to be a threat tothe existence of human brokers?
- Q Those questions are related to Financial Mathematics:Mario’s regular pay is $23.00 per hour. The regular workweek is40 hours, and overtime is paid at time-and-a-half the regularhourly rate. If Mario worked...
- Q Carlsbad Corporation's sales are expected to increase from $5million in 2016 to $6 million in 2017, or by 20%. Its assetstotaled $6 million at the end of 2016. Carlsbad is...
- Q At year-end 2016, total assets for Arrington Inc. were $1.8million and accounts payable were $335,000. Sales, which in 2016were $2.2 million, are expected to increase by 20% in 2017. Totalassets...
- Q Are ATPs (Automated Trading Platforms) going to be a threat tothe existence of human brokers?
- Q A)Simon recently received a credit card with an 18% nominalinterest rate. With the card, he purchased an Apple iPhone 7 for$382.27. The minimum payment on the card is only $20...
- Q How might leasing lead to increased credit availability?Describe some economic factors that might provide an advantage toleasing?
- Q 1.You have been following a stock for 4 months and the followingis its past returnYear 1: 5%Year 2: 16%Year 3: -1%Year 4: -2%What is the expected return based on historical...
- Q The current yield curve for default-free zero-coupon bonds is asfollows:Maturity (years)YTM110.8%211.8312.8a. What are the implied one-year forward rates?(Do not round intermediate calculations.Round your answers to 2 decimal places.)b. Assume that...
- Q 1. [Valuing a Put Option] Suppose a stock is currently tradingfor $60, and in one period will either go up by 20% or fall by 10%.If the one-period risk-free rate...
- Q ABC Company sells 2,976 chairs a year at an average price perchair of $161. The carrying cost per unit is $15.22. The companyorders 500 chairs at a time and has...
- Q 1) Prestigious University is offering a new admission andtuition payment plan for all alumni. On the birth of a child,parents can guarantee admission to Prestigious if they pay thefirst year's...
- Q f the three intrinsic value estimates for Stock X weredifferent, you would have the most confidence in Company X's CFO'sestimate. Intrinsic values are strictly estimates, and differentanalysts with different data...
- Q PARROTHEAD ENTERPRISES 2017 and 2018 Partial Balance SheetsAssets Liabilities and Owners’ Equity 2017 2018 2017 2018 Currentassets $ 1,224 $ 1,331 Current liabilities $ 503 $ 559 Net fixedassets 4,994...
- Q Conscious Capitalism - Bikes Simulation I am sure individuallyeach of you are happy/unhappy about the performance on certainmeasure(s) (net profit, market share, balanced scorecard,cumulative balanced scorecard, revenue, expense, cost, etc)...
- Q Photochronograph Corporation (PC) manufactures time-seriesphotographic equipment. It is currently at its target debt? equityratio of .65. It’s considering building a new $58 millionmanufacturing facility. This new plant is expected to...
- 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 A fast growth share has the first dividend (t=1) of $1.48.Dividends are then expected to grow at a rate of 6 percent p.a. fora further 2 years. It then will...
- Q The common stock of CORPORATION X has a beta of 0.9. TheTreasury bill rate is 4%, and the market risk premium is estimatedat 8%. CORPORATION X capital structure is 27%...
- Q You are the CFO of a 400-bed hospital in Texas and havingtrouble with your bottom line and staying within budget. As part ofyour continued efforts to train your department directors/supervisors...
- Q What is the difference between objective and subjectiveimpossibility bin contract performance?
- Q Conn Man’s Shops, a national clothing chain, had sales of $340million last year. The business has a steady net profit margin of 8percent and a dividend payout ratio of 35...
- Q The compounding frequency on a loan is once every year. If youborrow $35,974.44 at an annual interest rate of 3.75%, how muchmust you pay every year so that you pay...
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