Finance question and answers for July 20, 2023
- Q Suppose you have been hired as a financial consultant to DefenseElectronics, Inc. (DEI), a large, publicly traded firm that is themarket share leader in radar detection systems (RDSs). The companyis...
- Q A share of stock is currently worth $90 and has a volatility of20%. The domestic risk-free interest rate is 5% and the stock doesnot pay any dividend. Use a two-step...
- Q Do you agree or not agree with this statement made by a financestudent? Explain why. lf two bonds with the same term to maturityand the same yield have dierent coupon...
- Q Find the cost of debt?(r?d),and the? after-tax cost of debt for each of the following?bonds:Bond Par ValueCoupon RateMaturityCurrent ValueTax RateA?1,000?10%30 Years?1,455?40%B?1,000?12%13 Years??954?35%C?1,000?8%5 Years??875?45%Bond? A, Cost of Debt? (rd) :Bond A, After...
- Q Last year Charlie Brown had $5 million in operating income(EBIT). It’s depreciation expense was $1 million, its interestexpense was $1 million, and its corporate tax rate was 40%. Atyear-end, it...
- Q You are a manager at Percolated? Fibre, which is consideringexpanding its operations in synthetic fibre manufacturing. Yourboss comes into your? office, drops a? consultant's report on your?desk, and? complains, "We...
- Q We are examining a new project. We expect to sell 5,400 unitsper year at $68 net cash flow apiece for the next 10 years. Inother words, the annual cash flow...
- Q Bayani Bakery's most recent FCF was $48 million; the FCF isexpected to grow at a constant rate of 6%. The firm's WACC is 12%,and it has 15 million shares of...
- Q Galvatron Metals has a bond outstanding with a coupon rate of6.6 percent and semiannual payments. The bond currently sells for$1,856 and matures in 22 years. The par value is $2,000...
- Q PROBLEMA machine that costs $ 40,000 has a useful life of 8 years andit is estimated that the residual value at the end of its usefullife is $ 5,000. This...
- Q You want to buy a new sports car for $50,000. The contract is inthe form of a 60-month annuity due at a 7.2 APR. What will yourmonthly payment be? Answer...
- Q What is the duration of a 2 year bond that pays a 5% annualcoupon with a 9% YTM? Use $1000 as the face value of the bond.Using the duration, what...
- Q Investment advisors estimated the stock market returns for fourmarket segments: computers, financial, manufacturing, andpharmaceuticals. Annual return projections vary depending onwhether the general economic conditions are improving, stable, ordeclining. The anticipated...
- Q 5Rust Pipe Co. was established in 1994. Four years later thecompany went public. At that time, Robert Rust, the original owner,decided to establish two classes of stock. The first representsClass...
- Q find MIRR for a project with a cost of -$20,000 and subsequent cashflows of 10,000; $40,000, -$5,000; -$30,000. use wacc of 6%. willyou proceed with this project? why or why...
- Q Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$700,800 is estimated to result in $233,600 in annual pretax costsavings. The press...
- Q year stock A stock B2015 3 % 40%2016 5 % -5%2017 1 % 30%2018 10 % -10%2019 6 % 35 %(1) Determine the correlation coefficient of returns of stocks Aand...
- Q Grow Corp is a medium sized Commodity Producer. It is alreadyinvolved with industries such as oil and gas, forest products andgold exploration. Grow Corp operates in Australasia as well asNorth...
- Q Calculate the Pay-off Period for an IS project that has a$200,000 development cost in year 1 and annual $40,000 maintenancecosts from year 2 onwards. The benefits are expected to be...
- Q The Hastings Sugar Corporation has the following pattern of netincome each year, and associated capital expenditure projects. Thefirm can earn a higher return on the projects than the stockholderscould earn...
- Q Sarah’s gross salary is $200,000 per year. She is interested inpurchasing a $600,000 house. She will make a down payment of 20%and take out a 15 year, 4.5% fixed rate...
- Q The Thunder Dan's Corporation's purchases from suppliers in aquarter are equal to 65 percent of the next quarter's forecastedsales. The payables period is 60 days. Beginning accounts payablesis $200. Wages,...
- Q Your retirement fundconsists of a $7,500 investment in each of 20 different commonstocks. The portfolio's beta is 1.95. Now, suppose you sell one ofthe stocks with a beta of 1.0...
- Q River Kisigo flows through an area next to a medium sized cityinto river Rufiji. During recent years, annual floods have damagedhomes in its vicinity at an increased' rate. Average annual...
- Q The Raven Co. has just gone public. Under a firm commitmentagreement, Raven received $17.40 for each of the 20 million sharessold. The initial offering price was $19.50 per share, and...
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