Finance question and answers for July 14, 2023
- Q 1-10 true or false1) Information literacy is an essential skill set in the processof writing.2) In an e-mail, avoid a "subject" line that reveals the gist ofyour message before the...
- Q 1) You own some shares of AMZN in your long term portfolio,currently trading at $1,903, and are thinking of getting some extraincome by selling covered calls.You sell 200 shares worth...
- Q 1) Which of the following investments does requireinitial margin?A. buying a call optionB. buying a put optionC. buying a futures contractD. none of the above2) If the underlying asset has...
- Q Problem 10-10Capital Budgeting MethodsProject S has a cost of $11,000 and is expected to producebenefits (cash flows) of $3,400 per year for 5 years. Project Lcosts $23,000 and is expected...
- Q (For this part, you MUST present sufficient solution steps, andMUST apply specific Excel functions =NPV(…), =IRR(…), =AVERAGE(…),=YIELD(…) whenever applicable..) Ferengi, Inc. is subject to anapplicable corporate tax rate of 21...
- Q SOLVEDCardinal Industries had the following operating results for2018: Sales = $34,116; Cost of goods sold = $24,114; Depreciationexpense = $5,977; Interest expense = $2,700; Dividends paid =$1,978. At the beginning...
- Q Project cost$100 000Estimated life5 yearsEstimated residual value$20 000Annual Net Cash flow$30 000Required rate of return10%Given the data above, calculate the internal rate of return(IRR). (not using excel)
- Q (We are using the same data set we used in Question 2)You are the manager of the supermarket on the ground floor ofHolmes Building. You are wondering if there is...
- Q Identify two (2) pieces of information not included in theprincipal financial statements that you think would be important tosomeone considering whether to invest in your company. Explain yourreasons for believing...
- Q 4.Macbeth Spot Removers is entirely equity financed with values asshown below:DataNumber of shares1,800Price per share$18Market value of shares$32,400Although it expects to have an income of $2,300 a year inperpetuity, this...
- Q Question 6Sylvan Forests Ltd is analysing a new paper product with thefollowing after-tax cash flows:YEARCASH FLOW0-200,000160,000264,000364,000468,000568,000Sylvan Forests require a return of 15% on projects with thislevel of risk.What is the...
- Q If a U.S. resident just sold shares in a British firm that had a15% return (in pounds) during a period when the pound depreciated5%, the dollar return of the investment...
- Q Executive Cheese has issued debt with a market value of $100.96million and has outstanding 15.40 million shares with a marketprice of $10 a share. It now announces that it intends...
- Q QUESTION: YOUR BANK HAS THE FOLLOWING BALANCE SHEET:Assets Liabilities Reserves $ 50million Checkable deposits $200 millionSecurities 50million Loans 150million Bankcapital 50 millionIF THE REQUIRED RESERVE RATIO IS 10%, WHAT ACTIONS SHOULD THEBANK MANAGER TAKE IF THERE IS...
- Q True or False12. If you have the historical data of S&P500 index level inthe last 5 years, you can compute the returns of investment in 500stocks in the S&P500. Assume...
- Q Consider a three-factor APT model. The factors and associatedrisk premiums are:FactorRisk Premium (%)Change in GNP+5.6Change in energy prices–1.6Change in long-term interest rates+2.6Calculate expected rates of return on the following stocks....
- Q In healthcare, how might depreciation differ in not forprofit organizations vs a for profit organization?Why?
- Q MONTH ZEMIN CORP. MARKET1 7% 4%2 2% 1%3 2% 2%4 -3% -1%5 4% 2%6 2% 3%a. Given the? holding-period returns shown above, compute theaverage returns and the standard deviations for...
- Q You have taken out a $150,000, 5/1 ARM. The initial rate is 2%.The interest rate after the initial lock period is 4%. The term onthis 5/1 ARM is 30 years....
- Q Money Market HedgeJapanese Yen ¥ 250,000,000 ReceivableIn 3 months Spot Rate ¥105/$Forward 3 months is ¥100/$ 3MiUS = 8% per yeariJPY = 7% per year1. P.V. of receivable?2. Covert P.V....
- Q Using the following returns, calculate the arithmetic averagereturns, the variances, and the standard deviations for X andY. ReturnsYearXY112 % 20 % 230 41 319 -7 4-20 -21 521 49 Requirement 1:(a)Calculate...
- Q (We are using the same data set we used in Question 2)You are the manager of the supermarket on the ground floor ofHolmes Building. You are wondering if there is...
- Q A company plans to purchase a newmachine. There are two choices. The following are the cash flowsfrom two machines: MachineA: The machine’s initial purchaseprice is $99,718, and it has a singlemaintenance fee...
- Q Consider the following project for Hand Clapper, Inc. Thecompany is considering a 4-year project to manufacture clap-commandgarage door openers. This project requires an initial investment of$15.7 million that will be...
- Q Consider the following information: Rate of Return if State OccursState of EconomyProbability ofState of EconomyStock AStock BStock CBoom0.700.330.170.27Bust0.300.130.15-0.05 Requirement 1:What is the expected return on an equally weighted portfolio ofthese three stocks?...
- Q 1. Melbourne Metal is considering becoming a supplier oftransmission housings. It would require buying a new forge thatwould cost $125,000 (including all setup costs) and is expected tolast five years....
- Q You have been asked to evaluate the proposed acquisition of anew machine. The machine's price is $1,000,000 and our accountantrequires that it be written off over its 5-year class usingstraight-line...
- Q Professor Wendy Smith has been offered the following?opportunity: A law firm would like to retain her for an upfrontpayment of $ 49 comma 000. In? return, for the next year...
- Q Consider the following information:• A risky portfolio contains two risky assets.• The expected return and standard deviation for the firstrisky asset is 18% and 25%, respectively.• The expected return and...
- Q Develop and present a valuation model for corporate debt with aface value of $100 million dollars. The model should usehypothetical assumptions for the coupon rate and othercharacteristics as well as...
- Q The returns on shares of Laverne Corporation and ShirleyCorporation are predicted under the following various economicconditions:State of Economy Return on Laverne Return on ShirleyRecession -20% -30%Stagnant +0% -5%Moderate Growth +10%...
- Q Alpha & Omega wants to invest in a new computer system, andmanagement has narrowed the choice to Systems A and B.System A requires an up-front cost of $100,000, after which...
- Q Complete the following problems: 1. For this problem, use thefollowing randomly generated list of accounts, placing them inappropriate order to prepare an income statement. Accounts($000,000) Depreciation 25 General and administrative...
- Q Refer to the table below. 3 Doors, Inc. Down Co. Expectedreturn, E (R) 14 % 7.5 % Standard deviation, ? 26 17 Correlation.38 Using the information provided on the two...
- Q Bill Clinton reportedly was paid $ 15.0 million to write hisbook My Life. The book took three years to write. In the time hespent? writing, Clinton could have been paid...
- Q You are choosing between two projects. The cash flows for theprojects are given in the following table? ($ million): ProjectYear 0 Year 1 Year 2 Year 3 Year 4 A...
- Q You are considering making a movie. The movie is expected tocost $ 10.7 million up front and take a year to produce. After?that, it is expected to make $ 4.6...
- Q Wagner Industries is comparing two different capital structures.Plan I would result in 9,500 shares of stock and $361,000 in debt.Plan II would result in 12,000 shares of stock and $238,000...
- Q Consider the following information for a mutual fund, the marketindex, and the risk-free rate. You also know that the returncorrelation between the fund and the market is 0.89. Year FundMarket...
- Q A firm faces the issue of which investments to undertake. Thereare three projects, A, B, and C, each with a horizon (duration) of8 years. For each of the three projects,...
- Q What is a balance sheet?2. What is an income statement?3. What else, besides and income statement and balance sheetmight a lender request from a business wishing to borrow money?
- Q Aria Acoustics, Inc. (AAI), projects unit sales for a newseven-octave voice emulation implant as follows:Year Unit Sales1 76,0002 89,0003 108,7504 101,5005 68,800Production of the implants will require $2,250,000 in networking...
- Q The Darlington Equipment Company purchased a machine 5 years agoat a cost of $95,000. The machine had an expected life of 10 yearsat the time of purchase, and it is...
- Q The Butler-Perkins Company (BPC) must decide between twomutually exclusive projects. Each costs $7,000 and has an expectedlife of 3 years. Annual project cash flows begin 1 year after theinitial investment...
- Q 1. Wagner Industries is comparing two differentcapital structures. Plan I would result in 9,500 shares of stockand $361,000 in debt. Plan II would result in 12,000 shares ofstock and $238,000...
- Q Should monetary and fiscal policy be used to stablize the economyduring periods of inflation and high unemployments? Describe oneargument in favor and one against?
- Q Ch. 16 Q 1Complete a horizontal analysis for Brown Company.(Negative answers should be indicated by a minus sign.Leave no cells blank - be certain to enter "0" wherever required.Round the...
- Q A stock is currently at $30. Over each of the next twothree-months periods, the stock may move up to a factor 1.20 ordown by a factor of 0.80 each period....
- Q You are trying to estimate the fundamental growth in earningsfor Janus Enterprises for the next 5 years and have obtained thefollowing information:In the most recent year, Janus reported operating income...
- 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 Given the following information, fill out the following tableand determine what should be the optimal capital structure forConcours Corp. The company has $10 million in assets, a marginaltax rate of...
- Q A company has a 11% WACC and is considering two mutuallyexclusive investments (that cannot be repeated) with the followingcash flows:01234567Project A-$300-$387-$193-$100$600$600$850-$180Project B-$400$133$133$133$133$133$133$0What is each project's NPV? Round your answer to...
- Q What doesMomentum, Traction, Expertise: Your key numbersmean in writing a business plan?
- Q What doesBusiness Model: Key Revenue Streamsmean when writing a business plan?
- Q Please answer within the hour4.) Find the Effective Interest Rate for the Stated Rate of 0.05compounded 11 times per year. (Write Down your answer with 5decimal places, Ex. if the...
- Q 1. You have been hired to design an internet marketing strategyfor a company that sells herbs and spice. Describe theopportunities and challenges that business will face in an onlineenvironment.
- Q Computing the standard deviation for a portfolio of two risky?investments) Mary Guillot recently graduated from Nichols StateUniversity and is anxious to begin investing her meager savings asa way of applying...
- Q A mining company is considering a new project. Because the minehas received a permit, the project would be legal; but it wouldcause significant harm to a nearby river. The firm...
- 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 Kim Inc. must install a new air conditioning unit in its mainplant. Kim must install one or the other of the units; otherwise,the highly profitable plant would have to shut...
- Q Problem 12-06 Additional Funds NeededThe Booth Company's sales are forecasted to double from $1,000in 2016 to $2,000 in 2017. Here is the December 31, 2016, balancesheet:Cash $ 100Accounts payable $...
- Q The outcome of a options market hedgefor C$200,000 accounts payable due in 6 months is when optionsstrike price and the premium are $0.9850 and $0.01 respectively andthe us and the...
- Q What is the duration of your bond portfolio if you invest 30% ofyour portfolio in a bond with a duration of 12.2 (let’s denote itBA), 30% in a 20-year zero-coupon...
- Q Under which of the following circumstances is the pure playmethod of estimating a? project's beta particularly? useful?A.The firm is looking to expand its current business? operations,doing essentially the same work.B.The...
- Q Wilkinson Co. has identified an investment project with thefollowing cash flows: YearCash Flow1$76021,01031,27041,375 If the discount rate is 11 percent, what is the present value ofthese cash flows? (Do not round intermediate...
- Q ABC Corporation has $100 million in debt outstanding. The debthas 4 years to maturity and a 6% coupon. The debt has a par valueof $1,000 per bond and interest is...
- 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 An investment project costs $16,700 and has annual cash flows of$3,200 for six years.a. What is the discounted payback period if the discount rate iszero percent?b. What is the discounted...
- Q 4. Sky Metals, Inc. is a metal fabrication firm thatmanufactures prefabricated metal parts for customers in a varietyof industries. The firm’s motto is “If you need it, we can makeit.”...
- Q Chitown has $20 million in assets. it is considering a 50-percent debt/asset ratio vs.its current 20% debt/asset ratio. Debtcarries interest charges of 12 percent and shares sell for $20 pershare.A....
- Q Assume that the % expected return for security A and the marketM for a good, normal and bad economy (probabilities .3,.4,.3) are20, 16, and 10 for A and 8, 4,...
- Q Matheson Electronics has just developed a new electronic devicethat it believes will have broad market appeal. The company hasperformed marketing and cost studies that revealed the followinginformation: a.New equipment would...
- Q Capital budgeting criteriaA firm with a 14% WACC is evaluating two projects for thisyear's capital budget. After-tax cash flows, includingdepreciation, are as follows:012345Project A-$6,000$2,000$2,000$2,000$2,000$2,000Project B-$18,000$5,600$5,600$5,600$5,600$5,600Calculate NPV for each project. Round...
- Q Based on market values, Gubler's Gym has an equity multiplier of1.67 times. Shareholders require a return of 11.75 percent on thecompany's stock and a pretax return of 5.05 percent on...
- Q By Definition, the pecking order Theory states that firms preferto issue debt rather than equity if internal finance isinsufficient, e.g. due to assymetric information and related(mis)Interpretation by Investors.What does "assymetric...
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