Finance question and answers for July 01, 2023
- Q 2. Problem 5.22Click here to read the eBook: Amortized LoansLOAN AMORTIZATIONJan sold her house on December 31 and took a $20,000 mortgage aspart of the payment. The 10-year mortgage has a...
- Q Bond prices can fall either because of a change in the generallevel of interest rates or because of an increased risk of defaultor a change in the real rate of...
- Q You have some extra cash this month and you are consideringputting it toward your car loan. Your interest rate is 6.8 %?, yourloan payments are $ 624 per? month, and...
- Q The following information is for two all equity companies,Cathay Pacific and Hong Kong Airline:Cathay PacificHong Kong AirlinePrice per share$50$10Total earnings$2,100,000$880,000Share outstanding1,400,000800,000Cathay Pacific is planning to acquire Hong Kong Airline byexchanging...
- Q T-bills currently yield 4.3 percent. Stock in Nina Manufacturingis currently selling for $80 per share. There is no possibilitythat the stock will be worth less than $73 per share in...
- Q An electric utility is considering a new power plant in northernArizona. Power from the plant would be sold in the Phoenix area,where it is badly needed. Because the firm has...
- Q Question 1Problem 1 - Using FCFEIt is 12/31/15. The following data havebeen accumulated from analysis of FrankBeamer Incorporated:1232016E2017E2018EAnnual FCFE$ 120,000$ 160,000$ 180,000Given:???Net Debt$ 500,000Shares Outstanding 200,000Stock Price per share$ 15.00Effective Tax Rate30.0%WACC8.0%Beta1.10Risk Free Rate4.00%Equity Risk Premium6.00%Terminal Growth...
- Q Keller Construction is considering two new investments. ProjectE calls for the purchase of earthmoving equipment. Project Hrepresents an investment in a hydraulic lift. Keller wishes to usea net present value...
- Q Consider the following information: Rate of Return if State Occurs State of EconomyProbability of State of EconomyStock AStock B Recession.10.03–.20 Normal.70.08.14 Boom.20.13.32Calculate the standard deviation for stock a and b.
- Q A company with a share price of $53 has shares outstanding of 6million and net income of $20 million. The company conducts aleverage recapitalization to alter its capital structure byborrowing...
- Q We are evaluating a project that costs $105790, has a seven-yearlife, and has no salvage value. Assume that depreciation isstraight-line to zero over the life of the project. Sales areprojected...
- Q Consider a four-year project with the following information:initial fixed asset investment = $502325; straight-linedepreciation to zero over the four-year life; zero salvage value;price = $34; variable costs = $25; fixed...
- Q Problem 10-17Unequal LivesThe Perez Company has the opportunity to invest in one of twomutually exclusive machines that will produce a product it willneed for the foreseeable future. Machine A costs...
- Q You have just purchased a car and taken out a $35,000 loan. Theloan has a? five-year term with monthly payments and an APR of6.1%.a. How much will you pay in?...
- Q Suppose you purchase a 10-year, 4% semi-annual coupon bond for78.681. If the yield remains constant and you reinvest the couponsyou receive at that yield, what will be the value of...
- Q Learning AssessmentConch Republic ElectronicsConch Republic Electronics is a midsized electronicsmanufacturer located in Key West, Florida. The company president isShelley Couts, who inherited the company. When it was founded over70 years...
- Q stock a has a beta of 1.6 and a standard deviation of 25%. stockb has a beta of 1.4 and a standard deviation of 20%. portfolio abwas created by investing...
- Q In practice, a common way to value a share of stock when acompany pays dividends is to value the dividends over the next fiveyears or so, then find the “terminal”...
- Q NEW PROJECT ANALYSISYou 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...
- Q 1. You have $10,026.61 in a brokerage account, and you plan todeposit an additional $5,000 at the end of every future year untilyour account totals $220,000. You expect to earn...
- Q A firm is evaluating a project with the following cash flow:Year 0: -$28,000Year 1: $12,000Year 2: $15,000Year 3: $11,000A) If the required return is 14%, what is the NPV?B) What...
- Q What are the pros and cons of the various capitalbudgeting decision methods (NPV, IRR, MIRR, PB, DPB)? If you had topick one method to use for all project valuation situations,...
- Q (1 point) Suppose that for retirement purposes, over the courseof 23 years, you make monthly deposits of $240.00$240.00 into anordinary annuity that pays an annual interest rate of 2.273%2.273%compounded monthly....
- Q Bottoms Up Diaper Service is considering the purchase of a newindustrial washer. It can purchase the washer for $7,800 and sellits old washer for $1,600. The new washer will last...
- Q You are the analyst for a Pistol Pete’s Pizza Palace, arestaurant that is thinking of expanding their business to includecatering for at least the next three years. To take on...
- Q NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $194,000, and shipping and installation costs wouldadd another $14,000. The machine falls into the...
- Q P & G India. Proctor and Gambles's affiliate in India, P& G India, procures much of its toiletries product line from aJapanese company. Because of the shortage of working capital...
- Q After adding a new line of widgets, Worldwide WidgetManufacturing, Inc., expects all assets and current liabilities toshrink with sales. The company has sales for the year just ended of$20 million....
- Q A project has annual cash flows of $8,000 for the next 10 yearsand then $8,000 each year for the following 10 years. The IRR ofthis 20-year project is 8.32%. If...
- Q OPTIMAL CAPITAL BUDGETHampton Manufacturing estimates that its WACC is 12.5%. Thecompany is considering the following seven investment projects:ProjectSizeIRRA$750,00014.0%B1,250,00013.5C1,250,00013.2D1,250,00013.0E750,00012.7F750,00012.3G750,00012.2Assume that each of these projects is independent and that eachis just as...
- Q Question 14Suppose you are given the following information for the Legendsof Clash Co.Debt: 18,000 bonds outstanding, with a facevalue of $1,000. The bonds currently trade at 112.5% of par value,and...
- Q Give an example of a retirement planning problem whose solutioninvolves calculating the present value of multiple cash flows. Giveanother example whose solution involves calculating the futurevalue of multiple cash flows.
- Q A homeowner can obtain a $250,000, 30-year fixed-rate mortgageat a rate of 6.0% with zero points or at a rate of 5.5% with 2.25points.How long must the owner stay in...
- Q The table below shows the closing monthly stock prices for IBMand Amazon. Calculate the simple three-month moving average foreach month for both companies. (Input all amounts aspositive values. Do not...
- Q The balance sheet of MT Co. shows current assets of $14,000, netfixed assets of $21,800, current liabilities of $4,300, long-termdebt of $2,600, and equity of $28,900. The balance sheet of...
- Q How did the capm equation become like this :E(r_m)-rf=A*sigma_m^2. Please show the steps/derivation
- Q You recently purchased a stock that is expected to earn 11percent in a booming economy, 10 percent in a normal economy andlose 5 percent in a recessionary economy. There is...
- Q Problem Six Use excel123 Inc. is considering purchasing a new machine. The machinewill cost $2,500,000. The machine will be used for a project thatlasts 4 years. The expected salvage of...
- Q Click here to read the eBook: The Cost of Retained Earnings,rsClick here to read the eBook: Composite, or Weighted Average, Costof Capital, WACCWACCEmpire Electric Company (EEC) uses only debt and...
- Q Problem Four :Kaplan Incorporated currently uses an older model BAII plusmilling machine that waspurchased two years ago for $10,000. The machine would be soldtoday for $3,000. If the oldmachine is...
- Q You are given the following information for Cleen Power Co.Assume the company’s tax rate is 38 percent. Debt: 9,000 7.6percent coupon bonds outstanding, $1,000 par value, 30 years tomaturity, selling...
- Q Sapp Trucking's balance sheet shows a total of noncallable $45million long-term debt with a coupon rate of 7.00% and a yield tomaturity of 6.00%. This debt currently has a market...
- Q One year ago, your company purchased a machine used inmanufacturing for $110,000. You have learned that a new machine isavailable that offers many advantages; you can purchase it for$150,000 today....
- Q A company has a debt-to-equity ratio of 1/4 in terms of marketvalues. Its equity beta is 1.15 and its cost of debt is 3.5%. Itstax rate is expected to be...
- Q A firm has a capital budget of $100 which must be spent on oneof two projects, which any unspent balance being placed in a bankdeposit earning 15%. Project A involves...
- Q Having an issue with question C. My answer continues to beincorrect. Thank you.McGriff Dog FoodCompany normally takes 27 days to pay for average daily creditpurchases of $9,460. Its average daily...
- Q Chapter 11 - Exercise 03Kyle Godwin is interested in buying a 24-foot pontoon boatfor $11,850. His creditunion’s terms are 10% down, 14% interest, and 24 months to pay offthe loan.Calculate...
- Q discuss the role of investing in global securities as part ofoverall portfolio selection and of the role of internationaldiversification on portfolio selection
- Q what is strategic financial management
- Q Harley-DavidsonInc. produces motorcycles, motorcycle parts and related accessoriesand merchandise in the United States and internationally. It isheadquartered in Milwaukee, Wisconsin. Use the followinginformation on Harley-Davidson and five other similar companies...
- Q There are two banks in the area that offer 25-year, $285,000mortgages at 5.8 percent compounded monthly and charge a $4,800loan application fee. However, the application fee charged byInsecurity Bank and...
- Q Just Dew It Corporation reports the following balance sheetinformation for 2014 and 2015. JUST DEW IT CORPORATION2014 and 2015 Balance SheetsAssetsLiabilities and Owners’ Equity2014201520142015 Current assets Current liabilities Cash$12,000$17,775 Accounts payable$46,875$55,575 Accounts receivable12,75016,425 Notes payable19,12524,750 Inventory50,25056,925 Total$75,000$91,125 Total$66,000$80,325 Long-term debt$30,000$27,000 Owners’ equity Common...
- Q Caspian Sea Drinks is considering the purchase of a new waterfiltration system produced by Rube Goldberg Machines. This newequipment, the RGM-7000, will allow Caspian Sea Drinks to expandproduction. It will...
- Q Mina, age 50, has a business with the following employees:EmployeeDate of BirthEmployment Start DateCompensationAli4/24/19856/30/2017$56,000Bob6/25/19762/30/2010$120,000Cindy3/15/19874/25/2008$75,000David2/4/19977/14/17$87,000Edward2/28/199310/14/2012$47,000Mina earns $450,000 and has for about4 years. There is no retirement plan now and Mina would...
- Q 1. A bond with 10 years to maturity has a face value of $1,000.The bond can be called in four years for $1050. The bond pays an 6percent semiannual coupon,...
- Q 1- You are evaluating a capital project with a Net Investment of$400,000, which includes an increase in net working capital of$16,000. The project has a life of 12 years with...
- Q A project has an initial cost of $40,000, expected net cashinflows of $9,000 per year for 7 years, and a cost of capital of11%. What is the project’s NPV? (Hint:...
- Q The following represents the probability distribution of futurereturns for stock A and stock B. State of Economy ProbabilityReturn on Security A Return on Security B Boom 0.20 18% 4% Normal0.60...
- Q Hors d’Age Cheeseworks has been paying a regular cash dividendof $4.80 per share each year for over a decade. The company ispaying out all its earnings as dividends and is...
- Q Consider the following scenarios for Space Corp.’s likelyequity returns per year:Scenario Probability ExpectedReturnsReally Bad15% (5%)Bad20% 2.5%Likely30% 7.5%Better20% 12.5%Really Good15% 20%What is the expected return for thissecurity per year? What is the standard deviation ofexpected returns? What are the expected...
- Q Interest is compounded annually unless stated otherwise.Payments are at the end of the year unless stated otherwise. Allbonds have a face value of $1000.3. Lettuce Unite expects free cash flows...
- Q Riordan Trucking has sales of $18M and an accounts receivablebalance of $1M. The firm has projected next year's sales at $24Mand wants to reduce ACP by 2 days. Calculate Riordan's...
- Q What is economic capital and regulatory capital?
- Q 5. In order to diversify your investing strategy, aftergraduation you decide to also invest annually in Tesla, Inc. Youdecide to invest $300 every January 1st for 5 years in Tesla...
- Q A stock market comprises 4600 shares of stock A and 2000 sharesof stock B. Assume the share prices for stocks A and B are $25 and$35, respectively. What is the...
- Q Waller, Inc., is trying to determine its cost of debt. The firmhas a debt issue outstanding with 13 years to maturity that isquoted at 107 percent of face value. The...
- Q Market Value CapitalStructureSuppose the SchoofCompany has this book value balance sheet:Current assets$30,000,000Current liabilities$20,000,000Fixed assets70,000,000Notes payable$10,000,000Long-term debt30,000,000 Common stock (1 millionshares)1,000,000Retained earnings39,000,000Total assets$100,000,000Total liabilities and equity$100,000,000The notes payable areto banks, and the...
- Q NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $142,000, and shipping and installation costs wouldadd another $19,000. The machine falls into the...
- Q Consider the following information:Cash Flows ($)ProjectC0C1C2C3C4A–6,2002,2002,2002,9000B–1,50001,0003,2004,200C–3,8002,2001,3001,7001,200a. What is the payback period on each of theabove projects? (Round your answers to 2 decimalplaces.)ProjectPayback PeriodAyear(s)Byear(s)Cyear(s)b. Given that you wish to use the...
- Q Down Under Boomerang, Inc. is considering a new three-yearexpansion project that requires an initial fixed asset investmentof $2.4 million. The fixed asset will be depreciated straight-lineto zero over its three-year...
- Q Find the real return, nominal after-tax return, and realafter-tax return for each of the following stocks:StockNominal ReturnInflationTax RateX13.5%5%15%Y8.7%4.7%25%Z5.2%2.5%28%
- Q A firm can lease a truck for 4 years at a cost of $36,000annually. It can instead buy a truck at a cost of $86,000, withannual maintenance expenses of $16,000....
- Q If your firm were to consider investing in the followingproject, calculate the NPV, IRR, and Payback values. Would this bea good investment for your company? PROJECT CASH FLOWS AND VALUESFOR...
- Q A stock currently trades at $40. The continuously compoundedrisk-free rate of interest is 7%, and the volatility of the stockreturn is 35%. Use the Black-Scholes formula to compute each of...
- Q MBA Corp is considering whether to expand widget production.This would require the purchase of a new widget-producing machineat a cost of $5,400,000. The machine would produce 450,000 widgetsper year during...
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