Finance question and answers for August 28, 2023
- Q Question 36There are two firms: Firm U and Firm L. Both firms have $50Mtotal assets and $8M EBIT (earnings before interest and taxes).Firm U is an unleveraged firm without debt....
- Q Here are data on ?$1,000 par value bonds issued by? Microsoft,GE? Capital, and Morgan Stanley. Assume you are thinking aboutbuying these bonds. Answer the following? questions:a. Assuming interest is paid?...
- Q How does disbursement policy relate to shareholder value?
- Q What is a firm's weighted-average cost of capital if the stockhas a beta of 1.1, Treasury bills yield 4%, and the marketportfolio offers an expected return of 16%? In addition...
- Q Holt Enterprises recently paid a dividend, D0, of$3.25. It expects to have nonconstant growth of 15% for 2 yearsfollowed by a constant rate of 4% thereafter. The firm's requiredreturn is...
- Q Consider the following situation:State of EconomyProbability of State of EconomyReturns if State OccursStock AStock BStock CBoom20%25%10%5%Recession80%-30%5%10%The expected return on the marketportfolio is 7% and the US Treasury bill yields 3%....
- Q Macon Company is considering a new assembly line to replace theexisting assembly line. The existing assembly line was installed 2years ago at a cost of $90,000; it was being depreciated...
- Q Both projects required rate of return is 10%. Year Project XProject Y 0 -100 -100 1 50 20 2 30 40 3 30 40 4 30 50 5 -10 -9...
- Q Define the terms Market Value Added (MVA) and Economic ValueAdded (EVA), explain how each is calculated, and differentiatebetween them
- Q Suppose investors believe that the standard deviation of themarket-index portfolio has increased by 50%. Speculate on twopotential implications of the Security Market Line (SML) and CAPMregarding the effect of this...
- Q A city has identified two options for developing solar powercapacity. The investment basis for comparison is 8 years, withinterest fixed at 12% per year.Option A is to build a photovoltaic...
- Q Say the level of the market as measured by the Dow JonesIndustrial Average is currently at 12,000. A forecaster has made aprediction of 13,300 for the level of the market...
- Q Find an article about Labor and Profit margins and write asummary about it. ( the article has to be no more than 6 monthsold)
- Q CASH CONVERSION CYCLEParramore Corp has $12 million of sales, $3 million ofinventories, $2 million of receivables, and $1 million of payables.Its cost of goods sold is 80% of sales, and...
- Q A manufacturer wishes to make and sell 1.1 million units peryear of an aviation part for 12 years with interest fixed at 14%per year. Option A is to build a...
- Q Assume that you manage a risky portfolio with an expected rateof return of 14% and a standard deviation of 46%. The T-bill rateis 4%. Your client chooses to invest 85%...
- Q Geary Machine Shop is considering a four-year project to improveits production efficiency. Buying a new machine press for $547,200is estimated to result in $182,400 in annual pretax cost savings.The press...
- Q Need Excel Format and screenshotThe attached printout of an Excel spreadsheet shows the use ofsix financial formulas related to the time-value-of-money conceptsdiscussed in Chapter 5. Your task is to reproduce...
- Q How do you write a the security characteristic lineequation (SCL) using the regression outputm with usingstock returns?
- Q Brandtly Industries invests a large sum of money in R&D; asa result, it retains and reinvests all of its earnings. In otherwords, Brandtly does not pay any dividends, and it...
- Q Harris Shipping Company has excess cash of $300,000 and 200,000total shares outstanding. The firm pays no dividends and its netincome for the year just ended is $100,000. The market valuebalance...
- Q Part AYing Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable. If the corporate tax rate is 31 percent, what is theaftertax...
- Q Consider the following two mutually exclusive projects: YearCash Flow (A)Cash Flow (B)0–$275,196 –$15,775 126,300 5,356 255,000 8,583 355,000 13,565 4380,000 9,066 Whichever project you choose, if any, you require a 6...
- Q Your firm is contemplating the purchase of a new $1,831,500computer-based order entry system. The system will be depreciatedstraight-line to zero over its 5-year life. It will be worth$178,200 at the...
- Q In the previous 5 years, Google paid an annual dividend asfollows: Year Dividends 2011 2.7 2010 2.5 2009 2.2 2008 1.8 20071.5 Google is expected to pay a dividends of...
- Q part AThe Drogon Co. just issued a dividend of $2.51 per share on itscommon stock. The company is expected to maintain a constant 7percent growth rate in its dividends indefinitely....
- Q Why are internal and external sources of information importantto identify business trends?
- Q AutoIgnite produces electronic ignition systems for automobilesat a plant in Cleveland, Ohio. Each ignition system is assembledfrom two components produced at AutoIgnite’s plants in Buffalo, NewYork, and Dayton, Ohio. The...
- Q NPVYour division is considering two projects with thefollowing cash flows (in millions):Project A-$31$7$12$22Project B-$19$13$6$5What are the projects' NPVs assuming the WACC is 5%? Roundyour answer to two decimal places. Do...
- Q "Ownership and Stakeholder Theories" Please respond to thefollowing: Which theory (Ownership and Stakeholder) do you feel hasmore of an impact on the business environment? Provide an examplefrom current events in...
- Q The stock of Business Adventures sells for $25 a share. Itslikely dividend payout and end-of-year price depend on the state ofthe economy by the end of the year as follows: DividendStock...
- 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 A florist can purchase a delivery truck from her local GMdealerfor $25,000. The GM dealer will also lease the truck for$6,100per year over five years. The truck has an expected...
- Q Ella Funt would like to set up her retirement account that willbegin in 30 years. To play it safe, she wants to assume that shewill live forever and she will...
- Q BMY and CELG Acquization1. Changes or shocks in macroeconomic (e.g., interest rates),industry (e.g., oil price, consumer preferences) or global factors(e.g., tariffs and trade agreements) often leads to opportunitiesto create value...
- Q You are evaluating two different silicon wafer milling machines.The Techron I costs $258,000, has a 3-year life, and has pretaxoperating costs of $69,000 per year. The Techron II costs $450,000,has...
- Q Here are simplified financial statements for Phone Corporationin a recent year: INCOME STATEMENT(Figures in $ millions) Net sales$ 13,600 Cost of goods sold4,310 Other expenses4,162 Depreciation2,668 Earnings before interest and taxes (EBIT)$ 2,460 Interest expense710 Income before tax$...
- Q Do you think the average investors on NYSE are concern about theintrinsic value of a stock, whenever they make a trade on WallStreet? please use your own word and no...
- Q Max Hype Inc. is expected to have an EBIT of $440,000.00 nextyear. Also next year, depreciation, the increase in net workingcapital, and capital spending are expected to be $37,500.00,$23,000.00, and...
- Q What is the similarities and differences between morals, ethicsand the law? What do you do when a conflict occurs?
- Q The following are the cash flows of two projects:YearProject AProject B0?$330 ?$330 1160 230 2160 230 3160 230 4160 a.Calculate the NPV for both projects if the opportunity cost ofcapital...
- Q How has General Motors performed in terms of revenue and profitthis past year? (has revenue grown, did profit slip)How has net income performed in the past 4 quarters and 5...
- Q Discuss why integrity, honesty, and transparency are essentialin financial reporting. Give credit to any sources or real-worldexamples you use to support your statements.GAAP are the general rules, regulations, and guidelines...
- Q What are the drawbacks for a company who does not allocateoverhead costs to its products? Why might a company do this andwhat other controls would they have to implement to...
- Q Caspian Sea Drinks is considering the purchase of a plum juicer– the PJX5. There is no planned increase in production. The PJX5will reduce costs by squeezing more juice from each...
- Q What do financial markets do? Why are financial marketsimportant to a society? How do financial markets accomplish whatthey do? What are asymmetric information problems and why wouldthis problem in financial...
- Q The price of a small cabin is?$55 comma 00055,000.The bank requires a? 5% down payment. The buyer is offered twomortgage? options: 20-year fixed at9.59.5?%or? 30-year fixed at9.59.5?%.Calculate the amount of...
- Q Dog Up! Franks is looking at a new sausage system with aninstalled cost of $741,000. This cost will be depreciatedstraight-line to zero over the project's 10-year life, at the endof...
- Q A project with an initial cost of $24,800 is expected togenerate cash flows of $5,900, $8,000, $8,750, $7,650, and $6,700over each of the next five years, respectively. What is theproject's...
- Q You are given the following information concerning the tradesmade on a particular stock. Calculate the money flow for the stockbased on these trades. (Leave no cells blank - be certainto...
- Q Miller Corporation has a premium bond making semiannualpayments. The bond has a coupon rate of 11 percent, a YTM of 9percent, and 11 years to maturity. The Modigliani Company has...
- Q Consider a world that only consists of the three stocks shown inthe following? table: LOADING.... a. Calculate the total value ofall shares outstanding currently. b. What fraction of the totalvalue...
- 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 Use the data below to construct the advance/decline line andArms ratio for the market. Volume is in thousands of shares.(Input all amounts as positive values. Do not roundintermediate calculations. Round...
- Q Estimate discount rate using CAPM (Please provide details onyour estimation. You need to estimate risk free rate and marketrisk premium. A reasonable risk free rate should be between 2%-3%and reasonable...
- Q Jeckell and Hyde will have earnings per share of $3 for year 1.J&H plans to retain 80% of their earnings in years 1 and 2. Inyears 3, 4 and 5,...
- Q The Arbors at Los Brisos and Ranch Pointe are being consideredfor investment. Our initial investment in the two propertiesare: The Arbors at Los Brisos $2,000,000 Ranch Pointe $2,750,000The cost of...
- Q A project has annual depreciation of $24,700, costs of $100,700,and sales of $148,500. The applicable tax rate is 35 percent. Whatis the operating cash flow?$31,070$47,125$105,170$39,715$25,375
- Q Compute the value of a share of common stock of a company whosemost recent dividend was $2.00 and is expected to grow at 6 percentper year for the next 2...
- Q Bellinger Industriesis considering two projects for inclusion in its capital budget,and you have been asked to do the analysis. Both projects'after-tax cash flows are shown on the time line below.Depreciation,...
- Q IntroIt is the end of 2019.You plan to complete a Ph.D. in 5 years. Your favorite uncle haspromised to help you with your school expenses by giving you thefollowing amounts...
- Q Intro It is the end of 2019. You (foolishly) played the lotteryand won the following cash flows, to be paid at the end of eachyear:Year 2020 2021 2022 2023 2024Cash...
- Q Q1(a). Discuss briefly why ethical decision-making is essentialin an organization.Q1(b). Identify three (3) companies internationally, regionallyor locally that were cited for ethical violations in their businessoperations.Q1(c). How could these ethical...
- Q Intro It is the end of 2019. You plan to complete a Ph.D. in 5years. Your favorite uncle has promised to help you with yourschool expenses by giving you the...
- Q Summer Tyme, Inc., is considering a new 3-year expansion projectthat requires an initial fixed asset investment of $4.158 million.The fixed asset will be depreciated straight-line to zero over its3-year tax...
- Q Refunding Analysis Mullet Technologies is considering whether ornot to refund a $100 million, 14% coupon, 30-year bond issue thatwas sold 5 years ago. It is amortizing $3 million of flotationcosts...
- Q Explain how the clearinghouse would record the following:Mr. A buys a September wheat futures contract from Ms. B for $4.00/bu. on July 20.Mr. D buys a September wheat futures contract...
- Q Suppose the spot price of a bushel of wheat is $2.00, the annualstorage cost is $0.30 per/bushel, the risk?free rate is 8%, and thecosts of transporting wheat from the destination...
- Q In May, Mr. Smith planted a wheat crop, which he expects toharvest in September. He anticipates the September harvest to be10,000 bushels and would like to hedge the price he...
- Q Find the duration of a 7.0% coupon bond makingsemiannually coupon payments if it has three years untilmaturity and has a yield to maturity of 6.0%. What is the durationif the...
- Q Using a cost of capital of 15?%, calculate the net present valuefor the project shown in the following table and indicate whetherit is? acceptableInitial investment $-1,145Year Cash inflows1 $762 $1323 ...
- Q The ultimate responsibility for monitoring a firm rests with theshareholders only. shareholders, board of directors, independentaccountants, and lenders. shareholders, board of directors, andindependent accountants. shareholders and board of directors.
- Q Use the following cash flow with a 5% discount rate:Year Cash Flow0 -$ 80,0001 20,0002 15,0003 20,0004 25,0005 30,000What is the NPV?$ 9,154-$2,567$14,003$10,036
- Q Lamar Advertising is considering investing in a project thatrequires an after-tax initial investment of $128 million and isexpected to produce after-tax cash inflows of $29 million inadvertising revenue for each...
- Q You purchased 1000 shares of Dell stock on margin at $70 pershare. Assume the initial margin is 50% and the maintenance marginis 40%. Assume the stock pays no dividends, and...
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