Finance question and answers for July 04, 2023
- Q “Given the option of working for a functional, divisional, ormatrix organization for which would you rather work? Why?”
- Q Question: The current market price of a security is $50, thesecurity's expected return is 15%, the riskless rate of interest is2%, and the market risk premium is 8%.a. What is...
- Q ABC Company is considering the purchase of a new forklift forits flourishing roofing business. The key parameters of the threeforklifts under scrutiny (Alpha, Beta and Gamma) are providedbelow.ParametersAlphaBetaGammaInitial Cost($)400,000500,000550,000Revenues ($)230,000...
- Q On December 31, 2012, a company issued a 3-year, 10% annualcoupon bond with a face value of $100,000. Calculate the book valueof the bond at year-end 2012, 2013, and 2014,...
- Q At the beginning of this year, Brandon Corporation entered intobusiness acquisition. As a result of the acquisition, Brandonreported the following intangible assets:Patent $480,000Franchise Agreement $350,000Copyright $150,000Goodwill $550,000Total: $1,530,000The patent expires...
- Q A stock price is currently $50. Over each of the next two3-month periods it is expected to go up by 6% or down by 5%. Therisk-free rate is 5% per...
- Q Please watch this video called Anatomy of Fraud.After watching the episode, try to determine what systematicelements allowed the crime to happen.https://www.youtube.com/watch?v=whMVt7LhTxk&feature=youtu.be
- Q Both Bond Sam and Bond Dave have 7 percent coupons, makesemiannual payments, and are priced at par value. Bond Sam has 4years to maturity, whereas Bond Dave has 11 years...
- Q Northwood Corp, purchased new equipment to be used in itsmanufacturing plant. The cost of the equipment was $250,000including $5,000 freight and $12,000 of taxes. In addition to theequipment cost, Northwood...
- Q Ashes Divide Corporation has bonds on the market with 15 yearsto maturity, a YTM of 12.0 percent, and a current price of$1,176.50. The bonds make semiannual payments. What must the...
- Q Your firm is contemplating the purchase of a new $575,000computer-based order entry system. The system will be depreciatedstraight-line to zero over its 7-year life. It will be worth$90,000 at the...
- Q Huang Industries is considering a proposed project whoseestimated NPV is $12 million. This estimate assumes that economicconditions will be "average." However, the CFO realizes thatconditions could be better or worse,...
- Q Project L requires an initial outlay at t = 0 of $25,000, itsexpected cash inflows are $5,000 per year for 9 years, and its WACCis 11%. What is the project's...
- Q A pension plan is obligated to make disbursements of $4 million,$9 million, and $4 million at the end of each of the next threeyears, respectively. The interest rate is 18%...
- Q 1) The beta of a financial asset is equal to__________.A. the covariance between the security and marketreturns divided by the variance of the market'sreturnsB. one, if the standard deviation of...
- Q Stocks A and B have the following historical returns:YearStock A's Returns, rAStock B's Returns, rB2011- 23.90%- 12.00%201224.7527.40201311.7538.402014- 1.25- 6.50201524.75-11.20Calculate the average rate of return for stock A during theperiod 2011...
- Q 1. You have just turned 22, and you intend to start saving foryour retirement. You plan to retire in 43 years when you turn 65.During your retirement, you would like...
- Q Which of the following decision measures should capitalbudgeting decision makers consider? a. discounted payback b. NPV c.IRR d. MIRR e. Although NPV is considered the most important methodin the decision...
- Q Olsen Outfitters Inc. believes that its optimal capitalstructure consists of 60% common equity and 40% debt, and its taxrate is 40%. Olsen must raise additional capital to fund itsupcoming expansion....
- Q how are convertible bonds different from put bonds? Which bond would make more sense, from an investor’sviewpoint, in a low interest rate environment? Why?
- Q 2. You just took a $315,000, 30-year loan. Payments at the endof each month are flat (equal in every month) at an annual interestrate of 3.75 percent.a)Calculate the monthly payment.b)Provide...
- Q General Meters is considering two mergers. The first is withFirm A in its own volatile industry, the auto speedometer industry,while the second is a merger with Firm B in an...
- Q Lemon Auto Wholesalers had sales of $1,310,000 last year, andcost of goods sold represented 77 percent of sales. Selling andadministrative expenses were 13 percent of sales. Depreciationexpense was $11,000 and...
- Q Discuss IMF loans as important parts of international efforts toaddress financial crises. Why have these loans been controversial?(Text only please)
- Q You must evaluate a proposal to buy a new milling machine. Thebase price is $124,000, and shipping and installation costs wouldadd another $15,000. The machine falls into the MACRS 3-year...
- Q A stock price is currently $50. It is known that at the end oftwo months it will be either $53 or $48. The risk-free interestrate is 10% per annum with...
- Q Explain the chart below :DateStock PricePE Ratio12/31/2017 1,169.5 $ 6.15 190.29/30/2017 961.4 $3.94 244.06/30/2017 968.0 $3.94 245.73/31/2017 886.5 $5.32 166.612/31/2016 749.9 $4.91 152.79/30/2016 837.3 $ 4.37 191.66/30/2016 715.6 $4.02 178.03/31/2016 593.6 $2.43 244.3
- Q Quantitative Problem: Sunshine SmoothiesCompany (SSC) manufactures and distributes smoothies. SSC isconsidering the development of a new line of high-protein energysmoothies. SSC's CFO has collected the following informationregarding the proposed project,...
- Q "For countries with fixed exchange rates, payments deficitswould be self-correcting, if only governments would stop doingtheir darnedest to prevent correction." Comment, and include howcounterbalancing monetary policy (sterilization) can preventself-adjustment from...
- Q Explain the chart below:20162017Net Sales$ 135,987,000.00$ 177,866,000.00Beginning Accounts Receivable$ 5,654,000.00$ 8,339,000.00Ending Accounts Receivable$ 8,339,000.00$ 13,164,000.00Average Accounts Receivable(Beginning Accounts Receivable + Ending Accounts Receivable) /2$ 6,996,500.00$ 10,751,500.00Average Collection Period(Average Accounts Receivable * 365 days) / Net sales$ 18.78$ 22.06
- Q The items below were found while reviewing internal controlduring your evaluation. Consider whether the item is a significantdeficiency or a material weakness based on the other factspresented in the case...
- Q Zach has been appointed fiscal coordinator for the stanfordnarcolepsy institute. He has the task of valuing 3M. 3M will pay adividend of $2.25 next quarter. Zach estimates that the firm...
- Q Mill Creek Corporation (MCC) currently has 430,000 shares ofstock outstanding that sell for $50 per share. Assuming no marketimperfections or tax effects exist, what will the share price beafter: a.MCC has...
- Q Suppose you build a portfolio of 25% in A and 75% in B,calculate expected returns, volatility, and a 95% confidenceinterval for the portfolio.StockAStockB201110.00%6.00%20127.00%2.00%201315.00%5.00%2014-5.00%1.00%20158.00%-2.00%
- Q Suppose you open a trading account with Black Hills Brokerage.Considering the producing of shale gas in U.S. you believe gasolineprices will decrease, and you establish a short position of 15gasoline...
- Q Stock in Daenerys Industries has a beta of 0.97. The market riskpremium is 8.5 percent, and T-bills are currently yielding 3.5percent. The company's most recent dividend was $2 per share,...
- Q You are the CFO of floor Covering America Inc. As part of theplanning and budgeting process, each division head from thecompany's five divisions has submitted their capital request. thefollowing are...
- Q Elon Musk has asked for your advice. Should he invest $1 billioninto his SpaceX company to develop a Mission to Mars – or should heinvest in a second giant battery...
- Q 1. True or false? Briefly explain.a Suppose that you open The Wall Street Journal and find thatthe 30-yearTreasury bond has a yield-to- maturity of 7.5%. This is anexample of a...
- Q in a few words, what is the difference between mutual andstandard fund?
- Q A corporate bond has 2 years to maturity, a coupon rate of 6%, aface value of $1,000 and pays coupons semiannually. The marketinterest rate for similar bonds is 7.5%.What is...
- Q You work for a small pottery company that is considering sellingproducts on the Internet. After careful analysis, you estimate thatthe firm would need to spend $80,000 developing a Web site...
- Q A two-year, 8% coupon bond with a face value of $1,000 has acurrent price of $1,000. Assume that the bond makes annual couponpayments. The term structure of interest rates is...
- Q In May 2000, the U.S. Treasury issued 30-year bonds with acoupon rate of 6.25%, paid semiannually. A bond with a face valueof $1,000 pays $31.25 (1,000 × 0.0625 / 2)...
- Q 7. AppCo is an early stage company whose financial plans callfor the company to be sold in 4 years, at a valuation of $50million. You are considering an investment of...
- Q 4.Genzyme is a local biotechnology firm that invests heavily inresearch and development.(a) Currently, Genzyme re-invests all of its cashflows to helpfund new R&D. Investors expect Genzyme to produce zero netcashflows...
- Q After-tax cost of debt Bella Wans is interestedin buying a new motorcycle. She has decided to borrow money to paythe $25,000 purchase price of the bike. She is in the...
- Q 4) Assume that revenue is $180 million, cost of goods sold is$50 million, total assets are $800 million and inventories are$80million. On the common size statements, inventories would havean approximate...
- Q Problem 11-10Replacement AnalysisSt. Johns River Shipyards' welding machine is 15 years old,fully depreciated, and has no salvage value. However, even thoughit is old, it is still functional as originally designed...
- Q What does the correlation between the returns of two riskyassets measure? Why should investors care about this measure?
- Q Saint Nick Enterprises has 17,900 shares of common stockoutstanding at a price of $71 per share. The company has two bondissues outstanding. The first issue has 9 years to maturity,...
- Q Suppose a company has proposed a new 4-year project. The projecthas an initial outlay of $17,000 and has expected cash flows of$8,000 in year 1, $9,000 in year 2, $10,000...
- Q “The cost of equity can never be cheaper than the cost of debtconsidering an equity investor is the last taker of funds, shouldthe worse come to worst for the issuer....
- Q A woman is looking to purchase her primary home in the ClevelandSuburbs. She has enough for a 20% down payment and an income of$40,000 per year. However, her FICO Score...
- Q Objective: To provide you with an opportunityto collect and collate for analysis, data and information on theeffectiveness of financial management processes within the workteam.Activity: Collect and collate dataabout the effectiveness...
- Q You are in charge of the bond trading and forward loandepartment of a large investment bank. You have the following YTM’sfor five default-free pure discount bonds as displayed on yourcomputer...
- Q 1. 2017 business tax cuts2. Budgeting and types of budgets (financial, line-item, cashflow, master, sales, etc.)3. Business plans and their components4. Internal and external data5. Short-term v. Long term planning
- Q ForecastingSources of capital SBA loans5 Cs of borrowing (Credit, Collateral, etc.)
- Q Please explain the agency problem between shareholders andmanagers in corporate finance and how compensation plan, board ofdirectors and takeovers can possibly mitigate the problem.
- Q Sexton Inc. is considering Projects S and L, whose cash flowsare shown below. These projects are mutually exclusive, equallyrisky, and not repeatable. If the decision is made by choosing theproject...
- 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 You find a bond with 21 years until maturity that has a couponrate of 6.0 percent and a yield to maturity of 5.2 percent. Supposethe yield to maturity on the...
- Q What is the purchase price of a $15,000, 5.5% bond with monthlycoupons redeemable in eight years if the bond is bought to yield4.5% compounded semi-annually?
- Q Mr. Warren Buffet an investor or speculator? What are thereasons behind your view? and what is the differences betweeninvest and speculate?Identify and explain the possible factors that might have madehim...
- Q You are currently holding a portfolio that consists of (a) $2000cash and (b) one 10-year zero coupon bond with a face value of$1000 and 12% yield to maturity. The Macaulay...
- Q NumberFace ValuePercentPriceMarketValueInterestRate$10TotalAnnualof BondsofCommissionBondInterestPurchasedEach Bondper $1,000 bondInvestmentAll Bonds50$1,00085.00%8%165$1,00075.50%12.00%30$1,00092.25%10.75%20$1,00010.50%7%25$1,00071.50%9.90%40$1,00073.50%6.50%80$1,00080.25%4.80%
- Q 1) Do you think Bernie Ebbers knew about the fraud beingperpetrated at WorldCom? 2) Why or why not? 3) Assume Bernie did know. Do you think hispunishment/sentence is fair?
- Q Chapter 12 -Exercise 06Sinking Fund - Majors Trucking, Inc.Item needed:18-Wheel Transport TruckAmount needed:$118,000Interest rate:6%Payment made:Annually for 5 YearsSinking Fund Factor:PaymentPeriodicInterestPeriodicPaymentBalance atEnd ofPeriod12345
- Q 1. A firm is considering purchasing an asset that willcost $5 million. Other depreciable costs include $800,000 ininstallation costs. if the asset is classified as a 5 year classwhat is...
- Q Some recent financial statements for Smolira Golf Corp.follow.SMOLIRA GOLF CORP.2017 and 2018 Balance SheetsAssetsLiabilities and Owners’ Equity2017201820172018 Current assets Current liabilities Cash$34,385$37,837 &nbsAccounts payable$36,722$42,582 Accounts receivable17,80127,766 Notes payable19,00816,200 Inventory36,31042,632 Other19,86424,634 Total$88,496$108,235 Total$75,594$83,416 Long-term debt$115,000$145,000 Owners’ equity Common stock and paid-insurplus$55,000$55,000 Accumulated retainedearnings307,217344,452 Net plant and...
- Q Interest rate risk is associated with the bonds pricevariability given a change in the interest rates.Suppose you have BOND A, which is a 30 year zero coupon bond andBOND B,...
- Q Assume that you are a loan officer. You are considering making aloan to a retail company–any such company that is actually locatednear your home. You want to use as collateral...
- Q 3.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 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 What is the average accounting rate of return(APR) on a piece ofequipment that will cost $ 1.2 million and that will result inpretax cost savings of $380,000 for the first...
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