Finance question and answers for July 05, 2023
- Q Dividend payment :Why the company have to pay the Divident ?What are the raisons (rational) they pay in theDividend?
- Q Name the four major factors that affect the exchange rate in thelong run. Relative to other (foreign) countries, what happens to acountry’s (domestic) exchange rate when it experiences an increasein...
- Q Better Mousetraps has developed a new trap. It can go intoproduction for an initial investment in equipment of $5.4 million.The equipment will be depreciated straight line over 6 years to...
- Q The following table shows option quotes for the November soybeancontract.Please create a bear spread. What positions in what contractswould you take?What is the cost of your position? (Remember, there are...
- Q Edna Recording? Studios, Inc., reported earnings available tocommon stock of?$5,000,000last year. From those? earnings, the company paid a dividendof?$1.15on each of its1,000,000common shares outstanding. The capital structure of the companyincludes45?%?debt,10?%preferred?...
- Q Calculation of individual costs and WACC???Lang Enterprises isinterested in measuring its overall cost of capital. Currentinvestigation has gathered the following data. The firm is inthe30?%tax bracket.Debt??The firm can raise debt...
- Q Assume Alpha Ltd is currently trading on the NYSE with a stockprice of $65. The American one-year call option on the stock istrading at $20 with strike price of $65....
- Q Suppose you are a strategist for a hedge fund. Your researchindicates that the quality spread for BBB bonds and AAA bonds is150 basis points in periods of economic slowdown and...
- Q Saddleback Company paid off $45,000 of its accounts payable incash. What would be the effects of this transaction on theaccounting equation?a.Assets, $45,000 increase; equity, $45,000 increase.b.Assets, $45,000 decrease; liabilities, $45,000...
- Q Arethere any instances in which companies should not paydividends?
- Q What are some of the most important risks associated withbonds?
- Q Edna Recording? Studios, Inc., reported earnings available tocommon stock of?$5,000,000last year. From those? earnings, the company paid a dividendof?$1.15on each of its1,000,000common shares outstanding. The capital structure of the companyincludes45?%?debt,10?%preferred?...
- Q The credit crisis was caused by the mortgage market, yet it hada serious impact on bond markets. Write a short essay on how thebond market was affected, and offer your...
- Q Calculation of individual costs and WACC???Lang Enterprises isinterested in measuring its overall cost of capital. Currentinvestigation has gathered the following data. The firm is inthe30?%tax bracket.Debt??The firm can raise debt...
- Q The price of a call option with a strike of $100 is $10. Theprice of a put option with a strike of $100 is $5. Interest ratesare 0 and the...
- Q In 250 word,Bonds are long term debt offerings issued bygovernments and corporations. Many corporate bonds contain a ‘callprovision’. This feature requires the issuer to pay a price abovepar value when...
- Q IncorrectQuestion 30 / 1 ptsWhich of the following would represent the least likely use ofan income statement prepared for a business enterprise?Use by customers to determine a company's ability to...
- Q a) The internal records of the bank are very important sourcesof information to identify problem accounts. What aspects in theinternal records may indicate that the financial position of acustomer is...
- Q 16-Large Manufacturing, Inc. is considering investing in somenew equipment whose data are shown below. The equipment has a3-year class life and will be depreciated by the MACRS depreciationsystem, and it...
- Q How is the stock price set at the time of company formation?Describe the key factors that influence stock price before IPO.
- Q Amount financed = 240,000 - 91,088 = $148,912. This is Pv. Nper= 15 years*12 = 180 and rate = 4.5%/12Amount paid each month = PMT(4.5%/12, 180, -148912) =1139.07find payment number...
- Q Amount financed = 240,000 - 91,088 = $148,912. This is Pv. Nper= 15 years*12 = 180 and rate = 4.5%/12 Amount paid each month =PMT(4.5%/12, 180, -148912) = 1139.07 The...
- Q You have a portfolio that is invested 13 percent in Stock A, 52percent in Stock B, and 35 percent in Stock C. The betas of thestocks are .82, 1.37, and...
- Q CategoryT0T1T2T3Investment-$3,605,000Net working capital change-$ 236,000$ 236,000Operating cash flow$1,483,000$1,483,000$1,483,000Salvage$ 287,000Should Brawn accept or reject this project at an adjusted WACCof 7.347.34?%, 9.349.34?%, or 11.3411.34?%?
- Q Summarize key facts from this week’s material. In yourreflection, focus on the ideas of risk, return and expectation.Explain why this is an important concept for the firm. TheReflection should be...
- Q a) Two firms, ABC Ltd and XYZ Ltd, are identical in everyrespect apart from their capital structure. Both will earn $284million if the market swings upwards and $100 million in...
- Q Par ValueCoupon RateYears to MaturityYield to MaturityPriceCoupon Frequency$5,000.00?510%$4,620.92annual$1,000.00?155%$1,000.00semiannual$1,000.00?511%$923.34monthly$1,000.00?2012%$924.50quarterlyMake sure to round all intermediate calculations to at least sixdecimal places.
- Q Hastings Corporation is interested in acquiring VandellCorporation. Vandell has 1 million shares outstanding and a targetcapital structure consisting of 30% debt; its beta is 1.35 (givenits target capital structure). Vandell...
- Q In your own words, how would you define accounting? What isits purpose, and why is it important?Explain the differences between managerial accounting andfinancial accounting.What is an income statement, a balance...
- Q As the finance manager for a growing mining services company,you approach Bank West Limited to discuss their range of businessloan facilities. Identify the fundamental principle of finance thatrelates to the...
- Q Cosmo has a margin account with a balance of $50,000 with anational broker-dealer. The initial margin requirement on thisaccount is 50%. Cosmo is interested in purchasing shares ofArdvark, Inc., which...
- Q Wayne, Inc., wishes to expand its facilities. The companycurrently has 5 million shares outstanding and no debt. The stocksells for $36 per share, but the book value per share is...
- Q a company issued 1000, 4 years annual bond having face value of10000 each with a coupon rate of 14% if the market rate is 12%calculate amortization to be charged in...
- Q A project will cost $1,000 today and will pay back $100 one yearfrom today (t=1), $200 two years from today (t=2), $500 three yearsfrom today (t=3) and $1,000 four years...
- Q Consider the following bonds:Bond A: 10% coupon, paid annually, matures in 3 yearsBond B: 8% coupon, paid annually, matures in 2 yearsIf Bond A is selling for $1,060 and Bond...
- Q 14.Following is project A's cash flow tableYearCash Flow0-26,00016,20026,20036,20046,20059,700Assuming that the project is found by 40% of equity and 60% ofdebt. The required rate of return of equity is 10%. The...
- Q Consider the following information: State of Probability of Rateof Return If State Occurs Economy State of Economy Stock A Stock BStock C Boom .15 .350 .450 .330 Good .45 .120...
- Q What are several human traits that tend to affect investmentdecisions?
- Q Airbus sold an A400 aircraft to Delta Airlines, a U.S. company,and billed $30 million pay- able in six months. Airbus is concernedabout the euro proceeds from international sales and would...
- Q Assume that the common stock of Luther Industries is currentlytraded for 47 per share. The stock pays no dividends. A 3-monthEuropean call option on Luther with a strike price of...
- Q Give an example of radical innovation, and compare it toincremental innovation (how do you know this is radicalinnovation?). Be original
- Q Airbus sold an A400 aircraft to Delta Airlines, a U.S. company,and billed $30 million pay- able in six months. Airbus is concernedabout the euro proceeds from international sales and would...
- Q Airbus sold an A400 aircraft to Delta Airlines, a U.S. company,and billed $30 million pay- able in six months. Airbus is concernedabout the euro proceeds from international sales and would...
- Q How would you describe the significance of Economies ofScale and why they are relevant to direct and indirect cost and tomanagement in general?What does this provide for a organization?
- Q Businesses providing taxable goods and services in Canada mustregister to collect either GST or HST, depending on where thebusiness is registered. The federal government has set the GST rateat 5%....
- Q An equally weighted portfolio consists of 74 assets which allhave a standard deviation of 0.252. The average covariance betweenthe assets is 0.091. Compute the standard deviation of thisportfolio. Please enter...
- Q Shrieves Casting Company is considering adding a new line to itsproduct mix, and the capital budgeting analysis is being conductedby Sidney Johnson, a recently graduated MBA. The production linewould be...
- Q 3. In order to increase sales from their present annual $35million, ABC Company, a retailer, is considering more liberalcredit standards. Currently, the firm has an average collectionperiod of 30 days....
- Q 4. A $600,000 CPM fully amortizing loan is made, at a 4%interest rate compounded monthly, for a 30 year term. Loan comeswith a charge of 5 points. What is the...
- Q Question 14Bill and Cathy will be retiring in fifteen years and would liketo buy an Italian villa. The villa costs $500,000 today, andhousing prices in Italy are expected to increase...
- Q which of the following statements is correct according to theTax Court?A) a general partner is not subject to self-employment tax.B) a member of an LLC is not subject to self-employment...
- Q A firm has been experiencing low profitability in recent years.Perform an analysis of the firm's financial position using theDuPont equation. The firm has no lease payments but has a $3million...
- Q Contrail Air, Inc., is looking at two capital structures.Plan A is an all equity with 500,000 shares outstandingPlan B is a levered plan with 320,000 shares outstanding anddebt of $3,467,000...
- Q Why is S&P 500 a good proxy for the implied equity riskpremium (ERP) estimation?
- Q Pasta Shop has sales of $315,000, average accountsreceivable of $32,000, average inventory of $28,000 and averageaccounts payable of $24,000. The cost of goods sold is equivalentto 70 percent of sales....
- Q John borrows $30,000 to buy a new car from a local bank with0.55% interest rate per month (you don’t need to do any rateconversion). He agrees to pay off the...
- Q You own stock with an overall expected return of 18.32 percent.The economy is expected to either boom or be normal. There's a 65percent chance the economy will boom. If the...
- Q Assume that there are three possible states of the economy:poor, moderate and booming. A firm expects to have $468,000 insales in a poor economy, $694,000 in a moderate economy, and$915,000...
- Q Why one would expect to see differences in performance betweenESG mutual funds and conventional mutual funds?
- Q In 150 words do you think it is more difficult for a manager tocontrol direct or indirect costs? Why do you think this isso?
- Q Your client wants to purchase stock on margin. You assess theclient and the stock and decide that a 40% margin is appropriate.Commissions are 1% and the rate of interest on...
- Q You have $1M to invest. You want to maximize returns subject toa portfolio standard deviation of 11%. Assume the S&P500 indexis the market portfolio (m), and that it has an...
- Q Q4. Suppose you develop a mutual fund that includes 500 NASDAQstocks, all with equal weights in the fund's portfolio. The averagereturn standard deviation of the stocks is 44 percent, and...
- Q The current yield curve for default-free zero-coupon bonds is asfollows: Maturity (years) YTM 1 10.2 % 2 11.2 3 12.2 a. What arethe implied one-year forward rates? (Do not round...
- Q International Foods (IFC) currently processes seafood with aunit it purchased several years ago. Theunit, which originally cost $500,000, currently has a book value of$250,000. IFC is consideringreplacing the existing unit...
- Q A bond has 15 years to maturity and an annual coupon of 12%. Theface value of the bond is $1,000 and coupon payments are madesemiannually. The bond is currently trading...
- Q Why would a firm not use its weighted average cost of capital(WACC) to evaluate all proposed investments? (5m)Hints and notes to students: dot points are acceptable.It is important to explain...
- Q Step by step with provided answers. What is the formula step bystep? Thank you so much.10. Given annual returns of 14%, 8%, -10% and 4%, what is thegeometric average? = 3.61% 11....
- Q QUESTION 2MONTHLY Expected Returns, Standard Deviations, andCorrelations July 1990 through December 2014, 294 months, returnsare total stock market returns for the region)Correlation with:Asset ClassExpected ReturnStd. DeviationUSJapanAsia (non-Japan)EuropeUS0.89%4.34%1.000.410.710.79Japan0.21%5.97%0.411.000.470.50Asia (non-Japan)0.96%6.01%0.710.471.000.75Europe0.74%5.04%0.790.500.751.004. Suppose you...
- Q Consider a series of end-of-period CFs spanning 2042-2051, whichdecrease at a 0.6% rate each period. The amount of the first CF inthe series is $140. The interest rate is 2.1%....
- Q Problem 12-04 Sales Increase Maggie's Muffins Bakery generated$4,000,000 in sales during 2016, and its year-end total assets were$2,600,000. Also, at year-end 2016, current liabilities were$1,000,000, consisting of $300,000 of notes...
- Q Q1: What factors have contributed to the rise of globalization?Why haven’t its effects been consistent in all nations?Q2: Have the effects of globalization been positive or negative?Explain.
- Q Problem 12-06 Additional Funds Needed The Booth Company's salesare forecasted to double from $1,000 in 2016 to $2,000 in 2017.Here is the December 31, 2016, balance sheet: Cash $ 100...
- Q Pro forma retained earnings - ex. #2The bottom line on the pro forma P&L for the fiscal year thathas just begun is $500,000. The top line is $3.5 million.The current...
- Q How is the premium of an interest rate cap calculated?
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