Finance question and answers for July 07, 2023
- Q how does financial planning and strategic planning influencehealth care organizations?
- Q The current market price of a security is $50, the security'sexpected return is 15%, the riskless rate of interest is 2%, andthe market risk premium is 8%.What is the beta...
- Q A store has 5 years remaining on its lease in a mall. Rent is$1,900 per month, 60 payments remain, and the next payment is duein 1 month. The mall's owner...
- Q Testing Company, Inc. has the following combination of Debt andEquity:Common Stock:15.5 million shares outstandingPar value of $5/shareBook value of $20/shareCurrent price on the market of $65.25Current Beta per a reliable...
- Q 8. Problem 11.09 (Capital Budgeting Criteria: EthicalConsiderations)An electric utility is considering a new power plant innorthern Arizona. Power from the plant would be sold in the Phoenixarea, where it is badly...
- Q Discuss bond credit ratings. What are the two basic categoriesof bonds according to their credit rating (you do not need to referto specific ratings) and what is the credit spread?
- Q A property has just come to the market for 3 million. You planon acquiring the property, hold for one year, and then sell it. Youhave the option to finance the...
- Q You anticipate havingto pay $30,000 per year for your child’s college education starting10 years from now. You plan to finance four years of college bymaking quarterly deposits in a savings...
- Q A $100 bond with 4%coupon rate matures in 25 years. It bears semiannual coupons and ispurchased for $117.50 to yield i(2).A $100 bond with 5%coupon rate also matures in 25...
- Q Mercer Asbestos Removal Company removes potentially toxicasbestos insulation and related products from buildings. There hasbeen a long-simmering dispute between the company’s estimator andthe work supervisors. The on-site supervisors claim that...
- Q Ms. Smith wants to invest in two securities, ABC and PQR, andthe relevant information is below:State of the EconomyProbabilityReturn on ABC (%)Return on PQR (%)Bear0.25-15%4%Moderate0.55%4%Bull0.2520%4%Calculate expected returns and standard deviations...
- Q The normal credit terms Jonas Company gives are Net 45.Thenormal terms it is given by its suppliers is Net 30.Its goal is tomantain 40 days of delivery on hand.The following...
- Q 6.Question 6John Jones is deciding on one of two career choices, beforeretiring in 40 years time.Choice 1John can go to a prestigious graduate school for two years andobtain a degree....
- Q What is a static budget? What is a flexible budget? Which ismore useful, and why? Cite any references used. Participate infollow-up discussion by reviewing your classmates' posts, addingadditional information, asking...
- Q Why would a firm not use its weighted average cost of capital(WACC) to evaluate all proposed investments? Please give examplesas wellUnder what circumstances will the IRR and NPV rules lead...
- Q What are the major differencesin accounting standards that one might want to be aware of whentrying to compare the financial results of an American and aEuropean company?
- Q Titan Mining Corporation has 9.3 million shares of common stockoutstanding and 260,000 6.8 percent semiannual bonds outstanding,par value $1,000 each. The common stock currently sells for $34 pershare and has...
- Q Please give me solution and pick from multiple choiceUsing the following returns, calculate the average returns forAbundant and Slim.Returns (%)YearAbundantSlim200681520075-42008-6-9200971120101262011910a.The average return for Share Abundant is 5.83% and 4.83% forShare...
- Q Assume that the management of H. S. Job, Inc.calculated anestimated overhead application rate of $5 per direct laborhour.At the beginning of the year one job was on hand. Job#678 had accumulated...
- Q Hope bonds have a coupon rate of 7% and mature in 7 years.Assuming semi-annual coupons with face value of $100, what is thevalue of this bond? Similar bonds yield 6%.a.The...
- Q Mars Inc. is considering the purchase of a new machine thatcosts $80,000. This machine will reduce manufacturing costs by$20,000 annually. Mars will use the 3-year MACRS method (shownbelow) to depreciate...
- Q Outline and provide examples of how a firm could pursueshareholder wealth maximization in relation to the following 5points each.1. Capital Structure. 2. Cost of capital. 3. NPV 4. IRR 5....
- Q You are evaluating the proposed acquisition of a new computer.The computer's price is $ 7 0,000, and it falls into the MACRS3-year class. Purchase of the computer would require an...
- Q Problem 18-04New Stock IssueBynum and Crumpton Inc. (B&C), a small jewelry manufacturer,has been successful and has enjoyed a positive growth trend. NowB&C is planning to go public with an issue...
- Q Problem 7-05Nonconstant Growth ValuationA company currently pays a dividend of $3.5 per share(D0 = $3.5). It is estimated that the company's dividendwill grow at a rate of 19% per year...
- Q TYPE ANSWERS1.Differentiate between simple and compound interest; know how tocalculate each (investment perspective)Understand important considerations of how to allocate cash,such as liquidity, safety, convenience, etc.Know what credit is, and the...
- Q TYPE ANSWERS1.Be able to identify your responsibilities as a debtor, as wellas creditors’ responsibilities to youBe able to identify methods to increase your credit scoreDifferentiate between simple and compound interest;...
- Q TYPE ANSWERS1.Know the basic concept of investing, why investing is important,and the idea that money can work for youUnderstand and be able to apply the basic rule of 72Be familiar...
- Q 1) Describe two signals, one pro, one con, a company may send tothe markets when they initiate a regular dividend.2) List one advantage and one disadvantage of using leverage in...
- Q 1) Describe two signals, one pro, one con, a company may send tothe markets when they initiate a regular dividend.2) List one advantage and one disadvantage of using leverage in...
- Q Aria Acoustics, Inc. (AAI), projects unit sales for a newseven-octave voice emulation implant as follows:YearUnit Sales173,000286,0003105,000497,000567,000Production of the implants will require $1,500,000 in networking capital to start and additional net...
- Q Dome Metals has credit sales of $180,000 yearly with creditterms of net 60 days, which is also the average collectionperiod. a. Assume the firm offers a 3 percent discount forpayment in...
- Q The annual returns for three years for stock B were 0 percent,10 percent, and 26 percent. Annual returns for three years for themarket portfolio were +6 percent, 18 percent, and...
- Q A project has cash flows of -$1,000. -$2,000, +$3,000, and+$4,000 in consecutive years. Your cost of capital is 30% perannum. Use the IRR rule to determine whether you should take...
- Q A 1-year call option with a strike price of $80 cost $20. Ashare costs $70. The interest rate is 10% per year. Find the costof a 1-year put option with...
- Q Briefly explain the assumptions under which capital structuredoes not matter.
- Q Take a look at this new companies projected cash flow statement.Analyze and describe the health of the company.202020212022Net Cash Flow from OperationsNet Profit$72,379$88,903$481,724Depreciation & Amortization$96,000$96,000Change in Accounts Receivable($54,538)($29,542)($54,536)Change in InventoryChange...
- Q A Ford Motor Co. coupon bond has a coupon rate of 7?% and paysannual coupons. The next coupon is due tomorrow and the bondmatures 29 years from tomorrow. The yield...
- Q The term structure shows the following Treasury spot rates:Maturity in years 1 2 3 4 5 Spot Rate in % 0.6 1.1 1.6 1.9 2.6Attempt 1/10 for 10 pts. Part...
- Q STRIK-IT-RICH GOLD MINING COMPANY The Strik-it-Rich Gold MiningCompany is a U.S. multinational firms and considering investing ina project in Germany. The cost of the investment project is €100million. This cost...
- Q 1. a. Two investors, A and B, areevaluating the same investment opportunity, which has an expectedvalue of £100. The utility functions of A and B are ln(x) and?????x?2, respectively. Which...
- Q Periodic interest rates. You have a savings account in which youleave the funds for one year without adding to or withdrawing fromthe account. Which would you rather have: a daily...
- Q Solarius Trading Company isconsidering lengthening its credit period from 30 to 50 days. Allcustomers will continue to pay on the net date. The firm currentlyhas $300,000 of sales per year,...
- Q Daily Enterprises is purchasing a$ 9.6million machine. It willcost $54,000 to transport and install the machine. The machine hasa depreciable life of five years using? straight-line depreciationand will have no...
- Q The owners’ equity accounts for Freya International are shownhere: Common stock ($.40 par value)$44,000 Capital surplus360,000 Retained earnings788,120 Total owners’ equity$1,192,120 a-1If Freya stock currently sells for $30 per share and a 10percent stock dividend...
- Q ABC has accumulated $23 million in assets, operating income of$1.75 million. The tax rate is 35%. It finances 25%, 50% and 75% ofits assets with debt at costs of 9%,10&...
- Q A 16-year, 4.5 percent coupon bond pays interest annually. Thebond has a face value of $1,000. What is the percentage change inthe price of this bond if the market yield...
- Q Four separate cases involving similar fact situations wereconsolidated as they presented the same constitutional question. Ineach case, police officers, detectives, or prosecuting attorney'stook a defendant into custody and interrogated him...
- Q A stock price is $74, and current risk free interest rates are2%. If the put option with a $100 strike price expires in 6 months,and the call option is trading...
- Q Your firm, Agrico Products, is considering a tractor that wouldhave a cost of $37,000, would increase pretax operating cash flowsbefore taking account of depreciation by $12,000 per year, andwould be...
- Q What happened in the 1990s that explains the small decrease inthe size of the U.S. Treasury markets pre-2000?What happened in the early 2000s that reversed thisdecrease?What caused that large growth...
- Q Roustabout Company manufactures skateboards. Last year’sincome statement is summarized below.Skateboards(2,000 units) Total Sales Revenue $ 100,000Variable Costs $ 40,000Contribution Margin $ 60,000 Fixed Costs $ 55,500Pre-Tax Profit $ 4,500 Required:a. What...
- Q Acompany sells two products: a standard model and a deluxe model.The standard model sells for $50 and has a contribution marginratio of 40%. The deluxe model sells for $100 and...
- Q The CEO of a 400-bed hospital has scheduled a board of directorsmeeting to discuss the current financial situation of the hospitaland steps that need to be done to correct some...
- Q On January 1 , 2009 the total assets of the Shipley Company were$ 180 million.During the year, the company plans to raise andinvest $ 90 million.The firm’s present capital structure...
- Q Store Closing?For this discussion, consider the following scenario:The privately owned Baker Company was founded in 1960. Thecompany manufactures kitchen cabinets and has been very successful,expanding from one facility to twelve...
- Q Cochran Corporation has a weighted average cost of capital of11% for projects of average risk.Projects of below average riskhave a cost of capital of 9% , while projects of above...
- Q Using capital budgeting, recommend a capital investment projectand discuss what value will it add to the firm and should theorganisation take up the project or not?the firm can be an...
- Q Use the following items to determine the total assets, totalliabilities, net worth, total cash inflows, and total cashoutflows.Rent for the month$1,450Monthly take-home salary$2,985Spending for food$745Cash in checking account$610Savings account balance$2,050Balance...
- Q Question 1-- NPV Profiles: Graph the NPVprofiles for both projects on a common chart., making sure youidentify the "crucial" points.Time Project A Cash flow Project B Cash flow0 -$725 -$8501...
- Q Consider the following table for an eight-year period: YearT-bill returnInflation Year 17.36% 8.64% Year 28.39 12.27 Year 35.94 6.87 Year 45.42 4.93 Year 55.52 6.63 Year 67.99 8.95 Year 710.63 13.22 Year 812.45 12.45 Requirement 1:Calculate the average return for Treasury bills and the averageannual inflation...
- Q The Wei Corporation expects next year's net income to be $ 15million. The firm's debt ratio is currently 40%. Wei has $ 12million of profitable investment opportunities, and it wishes...
- Q Microsoft has just paid a dividend of $1 per share (thisdividend is already paid sometimes called Dividend 0). It isestimated that the companys dividend will grow at a rate of...
- Q Karsted Air Services is now in the final year of a project. Theequipment originally cost $26 million, of which 80% has beendepreciated. Karsted can sell the used equipment today for...
- Q A 30-year maturity bond making annual coupon payments with acoupon rate of 15.0% has duration of 9.41 years and convexity of129.3. The bond currently sells at a yield to maturity...
- Q Chastain Corporation is trying to determine the effect of itsinventory turnover ratio and days sales outstanding (DSO) on itscash conversion cycle. Chastain's 2016 sales (all on credit) were$127,000; its cost...
- Q Use the Black-Scholes model to findthe price for a call option with the following inputs: (1) currentstock price is $45, (2) exercise price is$50, (3) time to expiration is 3months,...
- Q Capital Structure AnalysisPettit Printing Company has a total market value of $100million, consisting of 1 million shares selling for $50 per shareand $50 million of 10% perpetual bonds now selling...
- Q ABC corporation's CFO decided to reevaluate its capitalstructure. Currently, ABC's stock trades for $30 a sHARE, AND 1BILLION SHARES ARE OUTSTANDING. ABC's market value of debt is $10billion. we do...
- Q A court has ordered Security Enterprises to pay 200000 in twoyears and 500000 in five years. In order to meet this importantliability, they wish to invest in a combination of...
- Q Your employer provides a 401(k) retirement plan and matches 100%of your contributions up to 4%. Your annual income is $90,000 andyou expect to earn an annualized 7.0% return on your...
- Q The Barnstormer Corp. needs new equipment that would cost $3.5million and would fall into the MACRS 5-year class for depreciationpurposes. Maintenance would be $160,000 per year, payable at thebeginning of...
- Q Consider a newly issued TIPS bond with a three yearmaturity, par value of $1000, and a coupon rate of 7%. Assumeannual coupon payments.TimeInflation in year just endedPar ValueCoupon PaymentsPrincipal PaymentTotal...
- Q 4. a) Compute the modified duration of a 10% coupon, 4-yearcorporate bond with a yield to maturity of 8%. b) Using themodified duration, If the market yield drops by 25...
- Q Barton Industries expects next year's annual dividend, D1, to be$1.60 and it expects dividends to grow at a constant rate g = 4.8%.The firm's current common stock price, P0, is...
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