Finance question and answers for August 15, 2023
- Q 4-3 Joe Smith has been in the plumbing business as a soleproprietor for the past 35 years and is planning to retire. Hisinsurance agent has told him that he should...
- Q X-treme Vitamin Company is considering two investments, both ofwhich cost $12,000. The cash flows are as follows:YearProject AProject B1$13,000$12,00025,0004,00036,00011,000Use Appendix B for an approximate answer but calculate yourfinal answer using...
- Q NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $125,000, and shipping and installation costs wouldadd another $18,000. The machine falls into the...
- Q Analyze the 20-year, 8% coupon rate (annual payment), $1,000 parvalue bond. The bond currently sells for $1,318. What’s the bond’scurrent yield, and capital gain yield? 6.07%, 0.71% 6.07%, -0.71%8%, 1.43%...
- Q Newsome Inc. buys on terms of 4/10, net 45. It does not take thediscount, and it generally pays after 55 days. What is theeffective (not nominal) annual percentage cost of...
- Q A 30-year maturity bond with face value of $1,000 makessemiannual coupon payments and has a coupon rate of 8.0%.(Do not round intermediate calculations. Enter your answersas a percent rounded to...
- Q Tyler Inc.'s most recent annual dividend was $3.65 a share. Thefirm has been growing at a consistent 4% rate for several years,but analysts generally believe better times are ahead and...
- Q You are considering a new product launch. The project will cost$1,850,000, have a four-year life, and have no salvage value;depreciation is straight-line to zero. Sales are projected at 180units per...
- Q Use the following returns for X and Y. Returns Year X Y 1 22.0 %27.0 % 2 – 17.0 – 4.0 3 10.0 29.0 4 20.0 – 15.0 5 5.0...
- Q 9. Suppose Blue Thumb Tools is considering the introduction of anew, heavier hammer to be used for driving spikes. The new hammerwill cost $490,000. The cost will be depreciated straight-line...
- Q Explain, as a portfolio finance manager, how you would manage aportfolio for an investor? What analysis would youperform, how would you know when to advise a change should be madein...
- Q Identify an investment that youcould reduce Exchange Rate risks through spreading. Carefullyexplain why this would spread your risk.
- Q Rib? & Wings-R-Us is considering the purchase of a newsmoker oven for cooking? barbecue, ribs, and wings. It is lookingat two different ovens. The first is a relatively standard smokerand...
- Q You are considering a hotel purchase. The current purchase priceis $ 3,000,000. The bank is willing to finance 70% of the purchaseprice for 20 years in quarterly installments at 8%...
- Q A-Rod Manufacturing Company is trying to calculate its cost ofcapital for use in making a capital budgeting decision. Mr. Jeter,the vice-president of finance, has given you the followinginformation and has...
- Q Your company currently has$ 1 comma 000$1,000?par,5.25 %5.25%coupon bonds with 10 years to maturity and a price of$ 1 comma 075$1,075.If you want to issue new? 10-year coupon bonds at?...
- Q A firm has 2,000,000 shares of stock outstanding, total debt of$3,000,000 at an annual interest rateof 8% and annual depreciation expense of $300,000, and isconsidering borrowing an additional$6,000,000 at 8%...
- Q Matt and Debra Baxter live in an upscale neighborhood in Orem,Utah. Matt is a partner in the family owned business. Debra stayshome with their child, Brady, who is age 5.After...
- Q TapsiCo is a manufacturer of soft drinks. TapsiCo owns a land inGeorgia that can be used for building a Distribution Center (DC).The company has estimated that it will cost $1M...
- Q Briefly explain each of the following:an accounting systema bank reconciliationaccrual accountingcash accounting250–300 words
- Q The risk-free rate of return is 9.0%, the expected rate ofreturn on the market portfolio is 14%, and the stock of XyrongCorporation has a beta coefficient of 2.0 resulting in...
- Q Cost of debt. ?Dunder-Mifflin, Inc.? (DMI) isselling? 600,000 bonds to raise money for the publication of newmagazines in the coming year. The bond will pay a coupon rate of12.8?% with...
- Q Cost of debt with fees. Dunder-Mifflin, Inc.?(DMI) is selling? 600,000 bonds to raise money for the publicationof new magazines in the coming year. The bonds will pay a couponrate of...
- Q You have opened a new motel with an attached restaurant andcocktail lounge. What are the risks that your business faces? Whatinsurance coverages should you consider essential in your insuranceprogram?
- Q Economic order quantity ?(EOQ). Tinnendo, Inc.believes it will sell 4 million? zen-zens, an electronic? game,this coming year. Note that this figure is for annual sales. Theinventory manager plans to order?...
- Q Steady Eddie Corp. is constructing its cash budget. Its budgetedmonthly sales are $6,000, and they are constant from month tomonth. 40% of its customers pay in the first month and...
- Q SnowSports Interactive: AGlobal Start-up’s ChallengesoverviewAustralia-based SnowSports Interactive’s core intellectualproperty combined the latest positioning, wireless, andidentification technologies with proprietary tracking and analysissoftware. SSI identified the company’s business activities assubject to relatively...
- 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 Assume you have just been hired as a business manager ofPizzaPalace, a regional pizza restaurant chain. The company’s EBITwas $50 million last year and is not expected to grow. The...
- Q Titan Corp issued a 1,000 par value bond paying 8 percent interestwith 15 years to maturity. Assume the current yield to maturity is10 percent. What is the price (value) of...
- Q Delizzia, a family owned business, produces and delivers potatochips to supermarkets and mom & pop stores. Located in BuenosAires, Argentina, Delizzia is planning to expand its operations tocover other major...
- Q 1.The pre merger balance sheets of firm A and B aregiven below.Firm A is interested in taking over firm B.Prepare thepost- merger balance sheet for firm A according to the...
- Q You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $300,000, and it wouldcost another $60,000 to modify the equipment for special use by...
- Q You must evaluate a proposal to buy a new milling machine. Thebase price is $161,000, and shipping and installation costs wouldadd another $20,000. The machine falls into the MACRS 3-year...
- Q You believe you will spend $48,000 a year for 12 years once youretire in 24 years. If the interest rate is 5% per year, how muchmust you save each year...
- Q A 7% semiannual coupon bond matures in 4 years. The bond has aface value of $1,000 and a current yield of 7.3432%.What is the bond's price? Do not round intermediate...
- Q how can you reduce your tax liability and/or avoid paying taxeswhen you file this year legally
- Q Without a computer and special calculator, ________.A) computing the payback period is much more difficult thancomputing the IRRB) finding the IRR will typically be a very easy processC) finding the...
- Q Please show how to write the formulas for these in Excel. Thatis what the assignment requires and I don't know how to do it.Thank you! All are in column D....
- Q A company is analyzing two mutually exclusive projects, S and L,with the following cash flows:01234Project S-$1,000$887.30$240$5$10Project L-$1,000$10$260$380$766.73The company's WACC is 10.0%. What is the IRR of the betterproject? (Hint: The...
- Q A store has 5 years remaining on its lease in a mall. Rent is$1,900 per month, 60 payments remain, and the next payment is duein 1 month. The mall's owner...
- Q Please solve by hand, not using excel. No discount rateprovided.Suppose Blue Thumb Tools is considering the introduction of anew, heavier hammer to be used for driving spikes. The new hammerwill...
- Q 2. What does it mean for a financial market to be consideredinformationally efficient and economically efficient ?3. Do you think investors can earn abnormal returns in financialmarkets that are at...
- Q Photochronograph Corporation (PC) manufactures time seriesphotographic equipment. It is currently at its target debt-equityratio of .85. It’s considering building a new $47 millionmanufacturing facility. This new plant is expected to...
- Q Explain 4 Monetary Transmission Mechanisms (Channels of money)and explain how reductions in money impact the components ofaggregate demand, AD and output
- Q Suppose you have been hired as a financial consultant to DefenseElectronics, Inc. (DEI), a large, publicly traded firm that is themarket share leader in radar detection systems (RDSs). The companyis...
- Q Your division is considering two projects with the followingcash flows (in millions):0123Project A-$19$8$15$17Project B-$17$11$8$6What are the projects' NPVs assuming the WACC is 5%? Round youranswer to two decimal places. Do...
- Q An 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 the firm has...
- Q Examine the following book-value balance sheet for UniversityProducts Inc. The preferred stock currently sells for $30 per shareand pays a dividend of $3 a share. The common stock sells for...
- Q The Metallica Heavy Metal Mining (MHMM) Corporation wants todiversify its operations. Some recent financial information for thecompany is shown here: Stock price$73 Number of shares40,000 Total assets$7,600,000 Total liabilities$2,200,000 Net income$440,000MHMM is considering an investment...
- Q Refer to the table below and calculate both the real and nominalrates of return on the TIPS bond in the second and third years.(Do not round intermediate calculations. Round your...
- Q Big Retailer (BR) follows a moderate current asset investmentpolicy, but is now considering a change, perhaps to a restricted ormaybe to a relaxed policy. BR’s annual sales are $1,400,000; itsfixed...
- Q Discuss the following two statements:1- the corporate charter and the bylaws of a company are legaldocuments; therefore, they should not be examined by the auditors.If the auditor wants information about...
- Q Loaded-Up Fund charges a 12b-1 fee of 1% and maintains anexpense ratio of 0.90%. Economy Fund charges a front-end load of2%, but has no 12b-1 fee and an expense ratio...
- Q Provide an example of and describe an investment asset, aconsumption asset and one that might be a mix of the two. Explainthe impact of this classification on the valuation of...
- Q The most obvious cost in a capital budget is the actual cost ofthe capital expenditure item. We must also consider other coststhat will be incurred when we make the capital...
- Q Lewis Companies sells 2,600 units a month for cash at a price of$299 a unit and a variable cost of $187 a unit. The firm estimatesit can increase its sales...
- Q does company as a business form preclude any activities aimed atsocial impact in New Zealand.(charitable trusts and limited liability companies)
- Q Global Services is considering a promotional campaign that willincrease annual credit sales by $650,000. The company will requireinvestments in accounts receivable, inventory, and plant andequipment. The turnover for each is...
- Q NEW PROJECT ANALYSIS You must evaluate a proposal to buy a newmilling machine. The base price is $145,000, and shipping andinstallation costs would add another $6,000. The machine falls intothe...
- Q NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $145,000, and shipping and installation costs wouldadd another $6,000. The machine falls into the...
- Q Photochronograph Corporation (PC) manufactures time seriesphotographic equipment. It is currently at its target debt-equityratio of .7. It’s considering building a new $70 millionmanufacturing facility. This new plant is expected to...
- Q What is the impact on deferred tax asset and deferred taxliability if a company records accelerated depreciation for taxpurposes and straight-line depreciation for book purposes?
- Q Red Shoe Co. has concluded that additional equity financing willbe needed to expand operations and that the needed funds will bebest obtained through a rights offering. It has correctlydetermined that...
- Q Photochronograph Corporation (PC) manufactures time seriesphotographic equipment. It is currently at its target debt-equityratio of .7. It’s considering building a new $70 millionmanufacturing facility. This new plant is expected to...
- Q Robert is comparing two different capital structures: Anall-equity plan (Plan I) and a levered plan (Plan II). Under PlanI, the company would have 205,000 shares of stock outstanding.Under Plan II,...
- Q You are bearish on Telecom and decide to sell short 100 sharesat the current market price of $40 per share.a. How much in cash or securities must you putinto your...
- Q The mortgage on your house in Winnipeg is 5 years old. Itrequired monthly payments of $ 1 comma 390 ?, had an original termof 30? years, and had an interest...
- Q The following two projects are mutually exclusion the firm'scost of capital is12%. The cash flow for each projects are given inthe following table. initial investment-60000 year CF(A) CF(B) 136000 46000...
- Q Kolby corporation is comparing two different capital structures,Plan I, would result in 1,300 shares of stock and $80,640 in debt.Plan II would result in 2,900 shares of stock and $19,200...
- Q What is the purpose of the loan that Mass Stove isrequesting?
- Q in 400 words describe the following,1. Offer some reasons that the intrinsic value that you mightcalculate with the methodologies learned might yield a pricedifferent than what the stock trades at...
- Q Your are the CFO of a factory.What procedures will be used formonitoring overall business performance? What level of performancewill your business shoot for? These should be targets for next yearand...
- Q Victor Connors work at Home Trust Mortgage (HTM) company. One ofhis duties at work is to prepare informative tables, charts andgraphs showing monthly payments to clients for various loanamounts. You...
- Q QUESTION 3Suppose the one-year, two-year, three-year, and four-year spotrates are determined to be 1%, 2%, 3%, and 4%, respectively. Whatis the yield to maturity of a four-year, 5% annual coupon...
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