Finance question and answers for July 01, 2023
- Q Beryl's Iced Tea currently rents a bottling machine for $54,000per? year, including all maintenance expenses. It is consideringpurchasing a machine? instead, and is comparing two? options:A. Purchase the machine it...
- Q Explain in detail why is it important for a normal, rationalinvestor to hold a fully diversified portfolio. Use preciselanguage (correct finance terminology) and describe what happens inyour portfolio as you...
- Q Dog Treats has 6,500 shares of stock outstanding at a marketprice per share of $11. FIDO has 15,000 shares outstanding thatsell for $18 a share. By merging, $9,600 of synergy...
- Q BOND VALUATIONAn investor has two bonds in her portfolio, Bond C and Bond Z.Each bond matures in 4 years, has a face value of $1,000, and has ayield to maturity...
- Q Harrimon Industries bonds have 6 years left to maturity.Interest is paid annually, and the bonds have a $1,000 par valueand a coupon rate of 10%.What is the yield to maturity...
- Q Use the data below for problems 6 to 10.YearProj YProj Z0($210,000)($210,000)1200,00095,000295,00078,0003—73,0004—87,500 The projects provide a necessary service, so whichever one isselected is expected to be repeated into the foreseeable future.Both projects...
- Q Bond J has a coupon of 7.2 percent. Bond K has a coupon of 11.2percent. Both bonds have 12 years to maturity and have a YTM of 8.4percent.a. If interest...
- Q The National Division of Roboto Company is buying 10,000 widgetsfrom an outside supplier at $30 per unit. Roboto's OverseasDivision, which is producing and selling at full capacity (12,000units), has the...
- Q Rob wishes to buy a European put option on BioLabs, Inc., anon-dividend–paying common stock, with a strike price of $45 andsix months until expiration. BioLabs' common stock is currentlyselling for...
- Q Your corporation is considering investing in a new product line.The annual revenues (sales) for the new product line are expectedto be $163,994.00 with variable costs equal to 50% of these...
- Q 10. Your firm is replacing a manually-operated machine with afully automated machine. The old machine was purchased 5 years ago,had an original depreciable value of $140,000, and is depreciableusing simplified...
- Q (Discounted payback period?) ? Gio's Restaurants is consideringa project with the following expected cash? flows: Year ProjectCash Flow? (millions) 0 ?$(150?) 1 90 2 70 3 90 4 100 If...
- Q Heron Corporation is planning to add manufacturingcapacity by installing new high-tech machines. The machines wouldincrease revenues by $180,000 per year and increase costs by$50,000 per year. The new machines cost...
- Q The White Corporation has a capital structure of 60 percentcommon equity, 10 percent preferred stock, and 30 percent debt.This capital structure is believed to be optimal.To finance expansion plans over...
- Q Simmons, Inc., is considering a new 4-year project that requiresan initial fixed asset investment of $3.65 million. The fixed assetis eligible for 100 percent bonus depreciation in the first year.At...
- Q The Phone Company has the following costs of producing andselling a cell phone when it produces and sells 100,000 cell phonesper month:Per unit manufacturing cost Directmaterials $60.00 Directlabor 10.00 Variable manufacturing overhead cost 35.00 Fixed manufacturing overhead...
- Q Use the following to answer questions 1-4. You currently live(rent free) in your parents' basement but it's a bit awkward whenyou bring dates home. Your friends are looking for a...
- Q The market consensus is that Analog Electronic Corporation hasan ROE = 11%, a beta of 1.45, and plans to maintain indefinitelyits traditional plowback ratio of 3/4. This year’s earnings were$2.60...
- Q Use Excel or similar for this exercise.Consider a 30 year bond paying 3 percent coupons semi-annually anda yield-to-maturity equal to 5 percent. Find the price andduration.Try a few different coupon...
- Q Air Tampa has just been incorporated, and its board of directorsis grappling with the question of optimal capital structure. Thecompany plans to offer commuter air services between Tampa andsmaller surrounding...
- Q Your factory has been offered a contract to produce a part for anew printer. The contract would last for 3 years and your cashflows from the contract would be $4.75...
- Q Optimum portfolio combines investments – Please write a paper aboutoptimizing investments in a portfolio. Global investing needs to beincluded. Many foreign stock and bond investments provide superiorrates of return compared...
- Q what is the net present value of a project with the following aftertax cash flows using a discount rate of 10% year 0 45,000 year 114,000 year 2 14,000 year...
- Q Explain in your own words the concept of the sensitivityanalysis in 2 paragraphs.
- Q A three year bond with face value of $1000 pays annual couponsof 4 percent and has a yield- to-maturity of 5 percent. What is theprice, duration, and convexity of the...
- Q MVP, Inc., has produced rodeo supplies for over 20 years. Thecompany currently has a debt-equity ratio of 70 percent and the taxrate is 22 percent. The required return on the...
- Q IRRlong dash—Mutuallyexclusive projects Bell Manufacturing is attempting to choosethe better of two mutually exclusive projects for expanding thefirm's warehouse capacity. The relevant cash flows for the projectsare shown in the...
- Q NPV and IRR Benson Designs has prepared the following estimatesfor a long-term project it is considering. The initial investmentis$27 comma 69027,690 ,and the project is expected to yield after-tax cash...
- Q ??Maria? Gonzalez, Ganado's Chief Financial? Officer, estimatesthe? risk-free rate to be 3.20 %?, the? company's credit riskpremium is 3.80?%, the domestic beta is estimated at 1.18?, theinternational beta is estimated...
- Q Shadow Corp. has no debt but can borrow at 6.4 percent. Thefirm’s WACC is currently 9.7 percent and the tax rate is 22percent.a. What is the company’s cost of equity?...
- Q Five years ago, Oleander, Inc. issued $10,000,000 worth of15-year zero coupon bonds. The bonds carry a $5,000 par value. Ifthe market prices the bonds to yield 5.5%, what is the...
- Q Calculate the tax disadvantage to organizing a U.S. businesstoday if the Jobs and Growth Tax Reconciliation Act of 2003 passedwith this provision. Consider the following firm: All earnings willbe paid...
- Q Pompeii Pizza Club owns three identical restaurants popular fortheir specialty pizzas. Each restaurant has a debt-equity ratio of40 percent and makes interest payments of $45,000 at the end ofeach year....
- Q Artie's Wrestling Stuff is considering building a new plant.This plant would require an initial cash outlay of ?$ 8 million andwould generate annual free cash inflows of ?$ 1 million...
- Q D’Jais Corporation, a U.S. company, owns 100% of Bar ACorporation, a New Zealand company. Bar A's equipment was acquiredon the following dates (amounts are stated in New Zealanddollars):Jan. 1, 2017...
- Q Bond value and timelong dashChanging required returns??PersonalFinance Problem ??Lynn Parsons is considering investing in eitherof two outstanding bonds. The bonds both have ?$1 comma 000 parvalues and 8?% coupon interest...
- Q Big? Steve's, a maker of swizzle? sticks, is considering thepurchase of a new plastic stamping machine. This investmentrequires an initial outlay of ?$ 110,000 and will generate freecash inflows of...
- Q eBookFind the future values of these ordinaryannuities. Compounding occurs once a year. Do not roundintermediate calculations. Round your answers to the nearestcent.$900 per year for 10 years at 8%.$ $450 per...
- Q ?You have been assigned the task of evaluating two mutuallyexclusive projects with the following projected cash? flows:YearProject ACash FlowProject BCash Flow0?$(102,000?)?$(102,000)132,000???????????002???32,000???????????003???32,000???????????004???32,000???????????005???32,000??230, 000If the appropriate discount rate on these projects is...
- Q Apply WACC in NPV. Brawn Blenders has the following incrementalcash flow for its new? project:CategoryT0T1T2T3Investment??$3,390,000Net working capital change??$279,000?$279,000Operating cash flow?$1,427,000?$1,427,000?$1,427,000Salvage?$212,000Should Brawn accept or reject this project at an adjusted WACCofa)...
- Q Tiny Tots has debt outstanding, currently selling for $830 perbond. It matures in 12 years, pays interest annually, and has a 12%coupon rate. Par is $1000, and the?firm’s tax rate...
- Q *PLEASE PROVIDE ALL SOLUTIONS USING MICROSOFT EXCEL WITHANY RELEVANT FORMULAS, thank you!*You are an analyst in charge of valuing common stocks. You havebeen asked to value two stocks. The first...
- Q : Define and give examples of three types of corporate mergers,and explain the role of leveraged buyouts and taking a firmprivate.
- Q Due to a recession, expected inflation this year is only 3.25%.However, the inflation rate in Year 2 and thereafter is expected tobe constant at some level above 3.25%. Assume that...
- Q BUSINESS DECISION: FINANCIAL RATIOSThe years 2005 to 2009 saw a coffe company's revenues grow bymore than 50%. Use the following financial data to answer thequestions below.Starbucks - Selected Financial Data(In...
- Q draw and describe the attributes of a perfect asset
- Q Company X is planning to add another project, which willgenerate $125,000 annual revenue for the company in the next 6years, with operating costs of $50,500 per year. To take this...
- Q The ask yield on a 6 percent coupon Treasury bond maturing ineight years is 5.488 percent. If the face value is $1,000, whatshould be the QUOTED cost of the bond...
- Q Assuming that the current interest rate is 3 percent, computethe present value of a five-year, 5 percent coupon bond with a facevalue of $1,000. What happens when the interest rate...
- Q Fijisawa Inc. is considering a major expansion of its productline and has estimated the following cash flows associated withsuch an expansion. The initial outlay would be?$1,850,000and the project would generate...
- Q Consider two projects, X and Y. Project X's IRR is 19% andProject Y's IRR is 17%. The projects have the same risk and thesame lives, and each has constant cash...
- Q You are considering a project with an initial cash outlay of ?$85,000 and expected free cash flows of ?$ 28,000 at the end of eachyear for 7 years. The required...
- 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 8) Suppose you were evaluating the performance of threedifferent funds. Your analysis produces the following results:FundAlphaBetaHedge fund following a market neutral strategy0.11.6Mutual fund investing actively in stocks and bonds-0.10.4Index Fund...
- Q You are just 25 years old and you have $50,000 in yourretirement saving accounts. You expect to retire at the age of 65(work for 40 more years) and expect to...
- Q Problem 11-13Replacement AnalysisThe Everly Equipment Company's flange-lipping machine waspurchased 5 years ago for $100,000. It had an expected life of 10years when it was bought and its remaining depreciation is...
- Q Carlsbad Corporation's sales are expected to increase from $5million in 2016 to $6 million in 2017, or by 20%. Its assetstotaled $5 million at the end of 2016. Carlsbad is...
- Q Suppose your firm is considering two mutually exclusive,required projects with the cash flows shown below. The requiredrate of return on projects of both of their risk class is 9percent, and...
- Q Problem 11-07New-Project AnalysisThe president of the company you work for has asked you toevaluate the proposed acquisition of a new chromatograph for thefirm’s R&D department. The equipment's basic price is...
- Q Suppose you are going to receive $14,400 per year for six years.The appropriate interest rate is 9.5 percent.a. What is the present value of the payments if they are in...
- Q Problem 11-14Replacement AnalysisDeYoung Entertainment Enterprises is considering replacing thelatex molding machine it uses to fabricate rubber chickens with anewer, more efficient model. The old machine has a book value of$600,000...
- Q Problem 11-15Risky Cash FlowsThe Bartram-Pulley Company (BPC) must decide between twomutually exclusive investment projects. Each project costs $7,500and has an expected life of 3 years. Annual net cash flows fromeach...
- Q A store has 5 years remaining on its lease in a mall. Rent is$2,000 per month, 60 payments remain, and the next payment is duein 1 month. The mall's owner...
- 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 You own $10 million of the 8% (semiannual), 10 year Treasurybond priced at par to yield 8% annually. You want to hedge yourposition against an increase in yields using the...
- Q Green Manufacturing, Inc., plans to announce that it will issue$2.02 million of perpetual debt and use the proceeds to repurchasecommon stock. The bonds will sell at par with a coupon...
- Q Broussard Skateboard's sales are expected to increase by 20%from $8.0 million in 2018 to $9.60 million in 2019. Its assetstotaled $5 million at the end of 2018.Broussard is already at...
- Q A bond is scheduled to mature in five years. Its coupon rate is9 percent with interest paid annually. This $1,000 par value bondcarries a yield to maturity of 10 percent.Calculate...
- Q Assume that Firm XYZ’s ROE= 15%, its beta = 2, the market return= 15%, the risk-free rate = 5%. The firm’s current Dividend PayoutRatio = 60%. If the firm increases...
- Q You have been assigned to implement a three-month hedge for astock mutual fund portfolio that primarily invests in medium-sizedcompanies. The mutual fund has a beta of 1.46 measured relative tothe...
- Q 2- Rise Against Corporation is comparing two different capitalstructures: an all equity plan (Plan A) and a levered plan (PlanB). Under Plan A, the company would have 210,000 shares of...
- Q Sound Enterprises is looking to lever up the firm. Their ROE was10% with a debt ratio 0.10. If they pay out 30% of earnings, thenwhat will be the new sustainable...
- Q 1)The weak form of the efficient market theory contends thatSelect one:A. any publicly available information is useless in predictingfuture price movements.B. past performance can help determine the general direction offuture...
- Q Letang Industrial Systems Company (LISC) is trying to decidebetween two different conveyor belt systems. System A costs$280,000, has a four-year life, and requires $85,000 in pretaxannual operating costs. System B...
- Q Air Tampa has just been incorporated, and its board of directorsis grappling with the question of optimal capital structure. Thecompany plans to offer commuter air services between Tampa andsmaller surrounding...
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