Finance question and answers for July 01, 2023
- Q Pirate Company produces planks. They are currently consideringreplacing their fleet of delivery trucks. Replacing the old truckswill require an initial outlay of $300,000 but Pirate Company willsave $200,000 per year...
- Q We are evaluating a project that costs $1,398,000, has asix-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the life of the project. Sales areprojected...
- Q Your firm is considering leasing a new computer. The lease lastsfor 9 years. The lease calls for 10 payments of $1,000 per yearwith the first payment occurring immediately. The computer...
- Q The following table gives Foust Company's earnings per share forthe last 10 years. The common stock, 8.6 million sharesoutstanding, is now (1/1/17) selling for $77 per share. Theexpected dividend at...
- Q Yield to Maturity and Required Returns The BrownstoneCorporation's bonds have 5 years remaining to maturity. Interest ispaid annually, the bonds have a $1,000 par value, and the couponinterest rate is...
- Q mpson Orange Juice Company normally takes 30 days topay far its average dailycredit purchases af $8.400,.:lts average daily sales are $9,900,and it coHects itsaccounts irt 34 days.qt .a. What is...
- Q These are the cash flows for two projects. Calculate the NPV andIRR for both. Then select the best project according to the NPVmeasure. Use a WACC of 10% for both...
- Q 1. Laketown Enterprises is considering a project that has thefollowing cash flows. It’s WACC is 10%. Year 0, 1, 2, and 3 Cashflows are $950, $500, $400, and $300, respectively.a....
- Q global services is considering a promotional campaign that willincrease annual credit sales by $570,000 the company will requireinvestments in accounts receivable, inventory, and plant andequipment. the turnover for each is...
- Q You have the following cost and revenue information on aproject that invests in the conversion of a coal-fired electricitygenerating plan into a gas-fired unit.Cost of new equipment: $200million.The equipment will...
- Q You are evaluating two investment alternatives. One is a passivemarket portfolio with an expected return of 8% and a standarddeviation of 12%. The other is a fund that is actively...
- Q Gotham City has considered paying an annual bonus to Batman(according to the considerations mentioned below) for helping themkeep the city of criminals clean. However, Batman prefers thepayment in a single...
- Q You have been asked to determine a WACC for DressHouse, a midsized regional women's clothing chain.DressHouse has a debt-to-equity ratio is lower than usual at40%. The tax rate is 30%....
- Q A bond's credit rating provides a guide to its price. Assume Aaabonds yield 4.1% and Baa bonds yield 5.1%. Assume a 10% five-yearbond with annual coupons and a face value...
- Q If a bond's yield to maturity does not change, the return on thebond each year will be equal to the yield to maturity. Confirm thisfor both a premium and a...
- Q the yield on a 9 month treasury bond 2.3 % the yield on a threeyear treasury bond is 2.9% and the yield on a ten year treasurybond is 4.3%. although...
- Q Problem 6-21 Price Ratio Analysis (LO4, CFA4)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...
- Q Rhodes Corporation: Income Statements for Year EndingDecember 31 (Millions of Dollars)20162015Sales$10,800.0$9,000.0Operating costs excluding depreciation8,910.07,650.0Depreciation and amortization293.0234.0 Earnings before interest and taxes$1,597.0$1,116.0Less Interest232.0194.0 Pre-tax income$1,365.0$922.0Taxes (40%)546.0368.8Net income available to common stockholders$819.0$553.2Common dividends$737.0$443.0Rhodes Corporation:...
- Q The nation of Fishkasar has a tax rate of 5% on the first 20,000wallops (the national currency) fo taxable income, then 20% on thenext 30,000 wallops, then 50% on all...
- Q You have been given the following information for PattyCake’sAthletic Wear Corp. for the year 2018:Net sales = $39,150,000.Cost of goods sold = $22,270,000.Other operating expenses = $6,900,000.Addition to retained earnings...
- Q KMS Corporation has assets with a market value of $434 million,$28 million of which are cash. It has debt of $276 million, and 16million shares outstanding. Assume perfect capital markets....
- Q Suppose you are given the following end of year returns forLarge stocks, Long-term Bonds, Treasury Bills, and Inflation.Calculate the correlation between T-bills and Inflation. (Round to4 decimals). Year Large Stocks...
- Q Assume the market value of Fords' equity, preferred stock anddebt are $7 billion, $4 billion and $10 billion respectively. Fordhas a beta of 1.4, the market risk premium is 6%...
- Q XTC Corp. is considering the replacement of equipment used toproduce zips. Last year, XTC produced and sold 100,000 zips at aunit price of $32. Operating expenses (excluding depreciation) withthe old...
- Q PC Shopping Network may upgrade its modem pool. It last upgraded2 years ago, when it spent $95 million on equipment with an assumedlife of 5 years and an assumed salvage...
- Q Jack’s friend plans to buy a boat 45 years from now, when heretires. Today’s price for the boat is $300,000. The price isexpected to rise 3% per year. The friend...
- Q 6.You have assets A and B. Asset A has an expected return of10%. The market portfolio return is 12%. The risk free rate is 2%.What is the expected return of...
- Q Photochronograph Corporation (PC) manufactures time seriesphotographic equipment. It is currently at its target debt-equityratio of .60. It’s considering building a new $65 millionmanufacturing facility. This new plant is expected to...
- Q Change Corporation expects an EBIT of $45,000 every yearforever. The company currently has no debt, and its cost of equityis 13 percent. The corporate tax rate is 23 percent. a.What is...
- Q James, Inc., has purchased a brand new machine to produce itsHigh Flight line of shoes. The machine has an economic life of 6years. The depreciation schedule for the machine is...
- Q 5Mullineaux Corporation has a target capital structure of 55percent common stock and 45 percent debt. Its cost of equity is12.6 percent, and the cost of debt is 7.3 percent. The...
- Q Assume that you, as an STI employee, were awarded options on1,000 shares of STI stock today at the current market price.Without doing a detailed numerical calculation, make yourbest-guess estimate as...
- Q Year t=0 t=1 t=2 t=3 t=4??? $7,500 $12,500 $15,000 $17,500The Payback Period of this project is 2.4 years. The appropriatediscount rate is 13%. Find the Net Present Value of the...
- Q Consider the following information:Rate of Return If State OccursState ofProbability ofEconomyState of EconomyStock AStock BStock C Boom0.16 0.363 0.463 0.343 Good0.44 0.133 0.113 0.183 Poor0.34 0.023 0.033 ?0.075 Bust0.06 ?0.123 ?0.263 ?0.103...
- Q Question 3. In 2018 Steve Company used static budgeting. Theyswitched in 2019 to a different budgeting process and they wereable to identify unnecessary spend in their advertising budget.Even though there...
- Q 8Hero Manufacturing has 10 million shares of common stockoutstanding. The current share price is $82 and the book value pershare is $5. The company also has two bond issues outstanding,...
- Q (Calculating project cash flows and? NPV)??The Chung ChemicalCorporation is considering the purchase of a chemical analysismachine. Although the machine being considered will result in anincrease in earnings before interest and...
- Q Please use excel to do your analysis. Follow the steps and havea what if analysis data table for your car loan case. You areloaning 20,000 with 8.5 % interest for...
- Q Assume that you hold a well-diversified portfolio that has anexpected return of 11.0% and a beta of 1.20. You are in the processof buying 1,000 shares of Alpha Corp at...
- Q Your portfolio allocates equal funds to the DW Co. andWoodpecker, Inc. DW Co. stock has an annual return mean andstandard deviation of 12 percent and 35 percent, respectively.Woodpecker, Inc., stock...
- Q Opportunity cost.??Revolution Records will build a new recordingstudio on a vacant lot next to the operations center. The land waspurchased five years ago for ?$480 comma 000. ? Today, the...
- Q Consider an investor with a position consisting of 1 longEuropean call and 1 long European put, both having strike price of$50. The current underlying asset price is $50. The call...
- Q Dillon Labs has asked its financial manager to measure the costof each specific type of capital as well as the weighted averagecost of capital. The weighted average cost is to...
- Q Your portfolio allocates equal amounts to three stocks. Allthree stocks have the same mean annual return of 13 percent. Annualreturn standard deviations for these three stocks are 30 percent,40 percent,...
- Q Fill in the following table, supplying all the missinginformation. Use this information to calculate the security’s beta.(Negative values should be indicated by a minus sign. Leaveno cells blank - be...
- Q A. X-treme Vitamin Company is considering two investments, bothof which cost $20,000. The firm’s cost of capital is 15 percent.The cash flows are as follows:YearProject AProject B112000100002800060003600016000(a) What is the...
- Q Brown Fashions Inc.'s December 31, 2017 balance sheet showedtotal common equity of $4,050,000 and 195,000 shares of stockoutstanding. During 2018, the firm had $450,000 of net income, andit paid out...
- Q Dog Up! Franks is looking at a new sausage system with aninstalled cost of $475,000. This cost will be depreciatedstraight-line to zero over the project's 5 year life, at the...
- Q suppose the following information represents the return forGeneral Motors (GM) and American Telephone & Telegraph (ATT)common stocks over a five-year period: Year Revenue GM ATT 1 10%12% 2 4 6...
- Q 8*) Say that you observed the three following exchange ratesprevailing in a market.$1 = SKr7.3068 €1 = $1.2572 €1 = SKr 9.4541Can you see an opportunity for arbitrage? Explain thesteps.If so, assuming...
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