Finance question and answers for August 12, 2023
- Q Goodyear Tire & Rubber Co has a project with initialinvestment requiring $-120,000 and the following cash flows will begenerated because of the project: $27,000; $31,000; $53,000;$41,000; and $29,000 respectively at...
- Q There is a bond with FV = 1000, coupon rate of 10% paid annuallyand 5 year maturity. At year 0, YTM = 8%.Given constant YTM, what is the bond price...
- Q Yields on debt securities are affected by credit risk, tax status,liquidity and term to maturity. Discuss the effect of these factorson the yield of debt securities. Discuss the factors that...
- Q A rent-to-own agreement allows the renter to either return themerchandise after a specified period of time or apply the monthlypayments toward purchasing the item(s) (or clearly, the rentercould default on...
- Q What were some of the weaknesses of the national banking systemthat gave rise to the Federal Reserve Act?
- Q 2. WRKSHT 2 – High/Low Method Computationsa. Determine the Cost Estimation Equations assumingi. Independent Variable = “Thousands of Units Produced”ii. Independent Variable = “Number of Paid Days”b. Determine the Cost...
- Q If the IRR for a project is 20%, then the project's NPV wouldbe:
- Q Recently Bitcoin has risen dramatically in price. Someeconomists believe that Bitcoin and other digital/cryptocurrenciesare merely a ‘fad’. Other economists and investors believe digitaland cryptocurrencies will replace government issued currencies.Discuss digital...
- Q You are bullish on Telecom stock. The current market price is$80 per share, and you have $8,000 of your own to invest. Youborrow an additional $8,000 from your broker at...
- Q Cause of the financial failure of large institutions in2008?short question?
- Q Six years ago the Templeton Company issued 20-year bonds with a13% annual coupon rate at their $1,000 par value. The bonds had an8% call premium, with 5 years of call...
- Q Last year Carson Industries issued a 10-year, 15% semiannualcoupon bond at its par value of $1,000. Currently, the bond can becalled in 6 years at a price of $1,075 and...
- Q A 7% semiannual coupon bond matures in 4 years. The bond has aface value of $1,000 and a current yield of 7.5198%. What are thebond's price and YTM? (Hint: Refer...
- Q Problem 4-19 (Algorithmic)The Silver Star Bicycle Company will be manufacturing both men’sand women’s models of its Easy-Pedal 10-speed bicycles during thenext two months. Management wants to develop a production scheduleindicating...
- Q You are is considering replacing a five-year-old machine thatoriginally cost $50,000. It was being depreciated usingstraight-line to an expected salvage value of zero over itsoriginal 10-year life and could now...
- Q You are is considering replacing a five-year-old machine thatoriginally cost $50,000. It was being depreciated usingstraight-line to an expected salvage value of zero over itsoriginal 10-year life and could now...
- Q You must evaluate a proposal to buy a new milling machine. Thebase price is $174,000, and shipping and installation costs wouldadd another $15,000. The machine falls into the MACRS 3-year...
- Q Bombs Away Video Games Corporation has forecasted the followingmonthly sales: January$118,000July$63,000February111,000August63,000March43,000September73,000April43,000October103,000May38,000November123,000June53,000December141,000Total annual sales = $972,000Bombs Away Video Games sells the popular Strafe and Capture videogame. It sells for $5 per unit...
- Q An open-end mutual fund has the following stocks:StockSharesStock PriceA6,00089B33,00022C5,20091D73,50013If there are 50,000 shares of themutual fund, what is the NAV?Suppose the fund in the previous problem has liabilities of$110,000. What...
- Q The management of a company is considering replacing a number ofold looms in the mill’s weave room. The looms to be replaced aretwo 220-cm President looms, sixteen 135-cm President looms,...
- Q Madsen Motors's bonds have 19 years remaining to maturity.Interest is paid annually, they have a $1,000 par value, the couponinterest rate is 6%, and the yield to maturity is 7%....
- Q Due to a recession, expected inflation this year is only 3.75%.However, the inflation rate in Year 2 and thereafter is expected tobe constant at some level above 3.75%. Assume that...
- Q A firm's bonds have a maturity of 10 years with a $1,000 facevalue, have an 11% semiannual coupon, are callable in 5 years at$1,180.13, and currently sell at a price...
- Q Your firm will eitherpurchase or lease a new $500,000 packaging machine from themanufacturer. If purchased, the machine will be depreciatedstraight-line over five years. You can lease the machine using atrue...
- Q Walker & Campsey wants to invest in a new computer system,and management has narrowed the choice to Systems A and B. System Arequires an up-front cost of $125,000, after which...
- Q If Wild Widgets, Inc., were an all-equity company, it would havea beta of .90. The company has a target debt-equity ratio of .60.The expected return on the market portfolio is...
- Q Look at this information:Shortly after Blades began exporting toand importing from Thailand, Asia experienced weak economicconditions. Consequently, foreign investors in Thailand feared thebaht’s potential weakness and withdrew their investments, resultingin...
- Q 3. What is the principle assumption that allows an analyst tomodify a residual earnings (RE) model to a residual operatingearnings (ReOI) model? In your answer, explain the primary benefitof a...
- Q Established in 1987, ABC Community Hospital not-for-profit is anacute care hospital located in an east coast Metropolitan area.With a staff of nearly 200 physicians and specialists, 800employees and 100 volunteers,...
- Q Rusty Williams, the owner and CEO of The Rusty Bicycle Company,a small manufacturer and distributer of recreational bikes, hasdejectedly watched sales of his company’s flagship bike, theWindRunner, decline precipitously over...
- Q The Robinson Corporation has $27 million of bonds outstandingthat were issued at a coupon rate of 10.950 percent seven yearsago. Interest rates have fallen to 10.250 percent. Mr. Brooks, theVice-President...
- Q currently looking at two countries - Sri Lanka and Malaysia.The company's plan to issue bonds and new ordinary shares to raisemoney for the investment. This gives rise to a 15%...
- Q Silver Bakers, Inc. (SBI) has an opportunity to invest in a newbread-making machine. SBI needs more productive capacity, so thenew machine will not replace an existing machine. The new machineis...
- Q McCormick & Company is considering a project that requiresan initial investment of $24 million to build a new plant andpurchase equipment. The investment will be depreciated as amodified accelerated cost...
- Q McCormick & Company is considering a project that requiresan initial investment of $24 million to build a new plant andpurchase equipment. The investment will be depreciated as amodified accelerated cost...
- Q QUESTION 1 - Present Value – 20 marksYou have approached your organisation’s bank for a $1,000,000loan. The bank has advised you that the organization can take atraditional mortgage for 10...
- Q Sam buys 100 shares of Acme stock at $100 per share on January1, Year 1. At the end of the first year (December 31, Year 1), shebuys 100 more shares...
- Q QUESTION 2 – Valuing Bonds – 20 marksTreasury billsLICI tendered for $5m of 180 days Treasury Bills (T-Bills) at ayield of 5.0 percent at 9.30am today. At 2pm LICI was...
- Q McCormick & Company is considering a project that requiresan initial investment of $24 million to build a new plant andpurchase equipment. The investment will be depreciated as amodified accelerated cost...
- Q QUESTION 3 – Valuing Stocks – 20 marksYour CFO has sent you three analyst reports for a young, growingcompany that you are interested in acquiring. These reports depictthe company as...
- Q Myers Business Systems is evaluating the introduction of a newproduct. The possible levels of unit sales and the probabilities oftheir occurrence are given next: PossibleMarket ReactionSales inUnitsProbabilitiesLow response10.20Moderate response50.30High response70.40Very high...
- Q Ant Financial is not present in the cryptocurrency space. Shouldit be? Why?
- Q ABC Company's stock has a beta of 1.95, the risk-free rate is2.25%, and the market risk premium is 6.75%. What is ABC's requiredrate of return using CAPM? Enter your answer...
- Q You will deposit $10,000 today. It will grow for 10 years at 10%interest compounded monthly. You will then withdraw the fundsquarterly over the next 4 years. The annual interest rate...
- Q You are going to value Lauryn’s Doll Co. using the FCF model.After consulting various sources, you find that Lauryn's has areported equity beta of 1.5, a debt-to-equity ratio of 0.3,...
- Q Below you will find the closing stock prices for eBay over athree-week period. Calculate the simple three-day and five-daymoving averages for the stock. (Round your answers to 2decimal places.)WeekDayClose1Monday$38.48Tuesday38.30Wednesday37.90Thursday38.16Friday37.422Monday37.59Tuesday37.66Wednesday37.70Thursday38.39Friday38.493Monday38.42Tuesday38.58Wednesday38.91Thursday39.06Friday38.89Day 3day...
- Q Telstar Communications is going to purchase an asset for$760,000 that will produce $370,000 per year for the next fouryears in earnings before depreciation and taxes. The asset will bedepreciated using...
- Q An asset was purchased three years ago for $120,000. It fallsinto the five-year category for MACRS depreciation. The firm is ina 35 percent tax bracket. Use Table 12–12.a. Compute the...
- Q Calculate the? 95% prediction intervals for the four differentinvestments included in the following table.Small Stocks?S&P 500Corporate Bonds?T-BillsAverage Return19.6219.62?%12.2112.21?%5.375.37?%3.043.04?%Standard Deviation of returns38.3638.36?%19.4419.44?%6.376.37?%3.453.45?%
- Q Agadgets producer currently manufacture 300,000 unit per year. itbuts gadgets lids from an outside supplier at a price of 2.1$ perlid. the plant manager believes that it would be cheaper...
- Q I would like you to discuss the current state of the economy andwhether forecasters are predicting that the economy will continueto expand or whether a recession is coming. You can...
- Q Both John and Mary are aged 20 now. John plans to contribute$100 per month in advance into his superannuation fund for 20 yearsand stop contributing thereafter. Mary plans to start...
- Q You borrowed $100,000 at an interest rate of 3.8%, with constantannual payments of both principal and interest over 15 years.What is your annual payment?What is the outstanding balance after 4...
- Q A 20-year, 4% quarterly coupon, $1,000 par value bond is sellingfor $1,057.31 with. Find its YTM in (a) APR and (b) EAR.
- Q The following three defense stocks are to be combined into astock index in January 2016 (perhaps a portfolio manager believesthese stocks are an appropriate benchmark for his or herperformance). Assume...
- Q ?(Bond relationship?) ?Mason, Inc. has two bond issues?outstanding, called Series A and Series? B, both paying the sameannual interest of ?$100. Series A has a maturity of 12 ?years,whereas Series...
- Q Given the information below for Seger Corporation, compute theexpected share price at the end of 2017 using price ratio analysis.Assume that the historical average growth rates will remain thesame for...
- Q There is a project with the following cash flows :YearCash Flow0?$23,70017,00027,70037,10045,100What is the payback period?Multiple Choice2.73 years4.00 years3.81 years3.63 years3.37 years
- Q The Ellis Corporation has heavy lease commitments. Prior toSFAS No. 13, it merely footnoted lease obligations in thebalance sheet, which appeared as follows: Use Appendix D for anapproximate answer but...
- Q Which one of the following will increase the present value of alump sum future amount? Assume the interest rate is a positivevalue and all interest is reinvested.A. Increase time periodB....
- Q An investment promises to make $100 annual payments forever. Ifthe annual interest rate is 7%, then what is the value of thisinvestment today? Round your answer to 2 decimal places.
- Q A farmer is thinking about investing in a center pivotirrigation system to irrigate 80 acres of land in Fresno. With anirrigation system, operating expenses would increase by $75 peracre due...
- Q Computech Corporation is expanding rapidly and currently needsto retain all of its earnings; hence, it does not pay dividends.However, investors expect Computech to begin paying dividends,beginning with a dividend of...
- Q The Ramirez Company's last dividend was $1.75. Its dividendgrowth rate is expected to be constant at 24% for 2 years, afterwhich dividends are expected to grow at a rate of...
- Q Assume a $95,000 investment and the following cash flows for twoalternatives.YearInvestment AInvestment B1$35,000$40,000230,00035,000320,00025,000420,000—520,000—a. Calculate the payback for investment A and B.(Round your answers to 2 decimal places.) b. Which investment would...
- Q 2 Franchise Valuea) Suppose that Mark Cuban wants to purchase the Mavericks in2000 (call this year 0), and he expects to receive $400,000 inprofits in years 1, 2, and 3...
- Q A jeweler is considering producing a limited edition diamondbracelet, and she is trying to decide how many bracelets toproduce. The table gives her estimated total cost for variousproduction levels as...
- Q Discuss types of biases that result ininvestors making active choices that are less than optimal.In contrast to the biases discussed inthe previous question, certain types of biases can yield less...
- Q Discuss the advantages/disadvantages of cost to charge,step-down, and activity-based costing methods
- Q Ten annual returns are listed in the following? table:negative 19.3?19.3?%16.916.9?%17.917.9?%negative 49.6?49.6?%43.843.8?%1.91.9?%negative 16.5?16.5?%45.945.9?%44.744.7?%negative 3.7?3.7?%a. What is the arithmetic average return over the? 10-yearperiod?b. What is the geometric average return over the?...
- Q You are considering how to invest part of your retirementsavings.You have decided to put$ 400 comma 000$400,000into three? stocks:58 %58%of the money in GoldFinger? (currently$ 18$18?/share),12 %12%of the money in...
- Q World Enterprises is determined to report earnings per share of$3.20. It therefore acquires the Wheelrim and Axle Company. Thereare no gains from merging. In exchange for Wheelrim and Axleshares, World...
- Q The 2018 balance sheet of Spieth's Golf Shop, Inc., showedLong-term debt of $1.565 million, and the 2019 balance sheet showedlong-term debt of $1.645 million. The 2019 income statement showedan interest...
- Q 5.2 Radical Rewrite: Information E-Mail—Tips for Conferencing(L.O. 1) Gabriel Lugo, a blogger and Web conferencing expert,responds to a request from Samantha Staiger, who wants advice foran article she is writing....
- Q You are examining the economy of a very small, completelyisolated island nation. There are only three people on this island:Felix, Dmitri Chekov, and David. Felix owns a house valued at$1,040...
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