Finance question and answers for July 22, 2023
- Q The current stock price for a company is $39 per share, andthere are 7 million shares outstanding. The beta for this firmsstock is 0.9, the risk-free rate is 4.3, and...
- Q Miscalculations ofboth financial statements can lead to poor allocation of resourcesas well as poor cost control. It can lead to an incorrectevaluation of the business with incorrect financial ratios such...
- Q 1. Smith Company manufactures lawn mowers. The firmhad the following inventories.Jan 1, 2019 Dec 31, 2019 Finished goods $142,000 $ 92,000 Work in process $262,000 $426,000 Materials ...
- Q I’m investing 6% of my monthly salary into a savings accountwith a monthly interest rate of 0.67%, the interest compoundsmonthly. How much will the savings account be worth after 10...
- Q Hula Enterprises is considering a new project to produce solarwater heaters. The finance manager wishes to find an appropriaterisk adjusted discount rate for the project. The (equity) beta ofHot Water,...
- Q Question 6: Assume you are a credit manager in charge ofapproving commercial loans to business firms. Identify threeaspects of a firm's cash flows you would review and explain thetype of...
- Q Creative Software Corporation is considering a new project whosedata are shown below. The required equipment has a 3-year tax life,after which it will be worthless, and it will be depreciated...
- Q Part B :Answer any 4 of the following questions.Exercise 1 -A firm generated net income of $862. The depreciation expensewas $47 and dividends were paid in the amount of $25....
- Q Given the following information about the returns of stocks A,B, and C, what is the expected return of a portfolio invested 30%in stock A, 40% in stock B, and 30%...
- Q If possible in terms of a financial calculatorQuestion 1: Gibson Inc. Is evaluating making a new investmentwhich will enhance its production of Les Paul guitars. Theequipment will require an investment...
- Q 5. A bond has just been issued. The bond will mature in 8 yearsand has a yield to maturity of 10%. The bond’s annual coupon rateis 8% and the face...
- Q A company has a proposed 2-year project with the cash flowsshown below and would like to calculate the NPV of this project sothat they can decide whether to pursue the...
- Q A company is considering a 5-year project to open a new productline. A new machine with an installed cost of $90,000 would berequired to manufacture their new product, which is...
- Q The current stock price for a company is $37 per share, andthere are 3 million shares outstanding. This firm also has 110,000bonds outstanding, which pay interest semiannually. If these bondshave...
- Q Suppose you are trying to estimate the after tax cost of debtfor a firm as part of the calculation of the Weighted Average Costof Capital (WACC). The corporate tax rate...
- Q 6) Consider an option on a non-dividend paying stock when thestock price is $38, the exercise price is $40, the risk-freeinterest rate is 6% per annum, the volatility is 30%...
- Q Rust 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 what caused the Recession 2007-2009
- Q Quantitative Problem: Barton Industries expectsnext year's annual dividend, D1, to be $2.00 and itexpects dividends to grow at a constant rate g = 4.8%. The firm'scurrent common stock price, P0,...
- Q 10. Establishment of a sole proprietorship is not relativelyeasy.11. Which of the following entities does not have limitedliability?a. General partnership.b. LLC taxed as a disregarded entity.c. S corporation.d. All of...
- Q Suppose you just bought a 15-year annuity of $7,700 per year atthe current interest rate of 11 percent per year. What is the valueof your annuity today? (Do not round...
- Q Over long periods, stock investments have tended tosubstantially outperform bond investments. However, it is not atall uncommon to observe investors with long horizons holding theirinvestments entirely in bonds. Are such...
- Q (1) You have just graduated from EOU and secured a job as stockbroker working for a regional brokerage exchange. To celebrate yournew position, you are going to buy the car/truck...
- Q 1.An indirect transfer would includewhich of the following?A. Boston National Bank acceptscustomer deposits in accounts that average about $1,000 each whilemaking various loans that average about $50,000 each.B. Northeastern Life...
- Q (2) Your wealthy Aunt offers you a graduation gift. She willgive you a $10,000 lump sum payment or 1,100/year for the next 10years. This is essentially a risk free gift...
- Q #2 MULTIPLE CHOICE (no need to show work but please getright)1. A property recently sold for $444,000 (cashequivalent) and had $65,700 in potential gross income (PGI) for thefollowing year. The...
- Q A borrower is offered a 30 year, fully amortizing ARM with aninitial rate of 3.35%. After the first year, the interest rate willadjust each year, using 1 yr LIBOR as...
- Q 2. As of July 2004, American Institute for Foreign Study (AIFS)hedge all its costs. Make a case (without any calculations) to CFO,Becky Tabaczynski, thata) hedging all its costs may not...
- Q Scenario analysis: Chip’s Home Brew Whiskey forecasts that if itsells each bottle of Snake-Bite for $20, the demand for the productwill be 15,000 bottles per year, Chip’s variable cost per...
- Q 1. Full House Co. has the following information:-Beta=1.2, Market Risk Premium= 7%, Risk free rate = 3%-A current price of common stock of $60/share, with 100,000shares outstanding-A preferred dividend of...
- Q Cost of Common EquityThe future earnings, dividends, and common stock price ofCallahan Technologies Inc. are expected to grow 4% per year.Callahan's common stock currently sells for $21.00 per share; itslast...
- Q Outdoor Sports is considering adding a putt putt golf course toits facility. The course would cost $172,000, would be depreciatedon a straight-line basis over its 5-year life, and would have...
- Q Broussard Skateboard's sales are expected to increase by 20%from $7.6 million in 2016 to $9.12 million in 2017. Its assetstotaled $3 million at the end of 2016. Broussard is already...
- Q Dunder-Mifflin has a beta of 1.8 and just paid a dividend of$0.85 that is expected to grow at 3.5%. If the risk-free rate is 3%and the expected market return is...
- Q Stock Market Valuation and Success - IPOThe business I’ve chosen is DocuSign Inc (DOCU). The companymakes software for digitally signing documents, and has been onCNBC’s list of startups revolutionizing the...
- Q Discuss in depth how opportunity cost, cannibalization, positiveexternalities, and sunk costs are instrumental in capital budgetingdecision making.
- Q why would you invest in ExxonMobil corporation?estimate what ExxonMobil corporation will be like in 5years from now.what do you think the stock market for ExxonMobilcorporation are going to be in...
- Q In a slow year, Deutsche Burgers will produce 2.4 millionhamburgers at a total cost of $3.9 million. In a good year, it canproduce 4.2 million hamburgers at a total cost...
- Q Consider the following information on Huntington Power Co.Debt: 4,000, 7% semiannual coupon bonds outstanding, $1,000 parvalue, 18 years to maturity, selling for 102 percent of par; thebonds make semiannual payments.Preferred...
- Q 9.1 . Describe 10 best practices for managers to identifyinformation technology, regulations, and risk management that mustbe considered in shaping the structure of an organization. Submityour 10 best practices and...
- Q Use the following information to draw XYZ's yield curve,using:- Average real risk free rate of return is constant over 30years at 1%- Inflation rate over 30 years is expected to...
- Q Haskell Corp. is comparing two different capital structures.Plan I would result in 14,000 shares of stock and $100,000 in debt.Plan II would result in 8,000 shares of stock and $200,000...
- Q 7. The relationship between the book value ofshareholders' equity and the firm's Market Value Added (MVA) andEconomic Value Added (EVA)Yesterday, Water and Power Co. released its 2015 annual reporton the...
- Q Write a 2-3 paragraph paper evaluating the lifetime NPV ofyourcollege degree and post to the discussion board
- Q You are saving for the college education of your two children.They are two years apart in age; one will begin college 14 yearsfrom today and the other will begin 16...
- Q Assume that XYZ corporation decided to simultaneouslyissue $40 million of straight bonds with a coupon rate of 14percent and $40 million of convertible bonds with a coupon rate of12 percent....
- Q The current stock price for a company is $33 per share, andthere are 7 million shares outstanding. The beta for this firmsstock is 0.9, the risk-free rate is 4.8, and...
- Q Suppose you are trying to estimate the after tax cost of debtfor a firm as part of the calculation of the Weighted Average Costof Capital (WACC). The corporate tax rate...
- Q 1. If you receive $29 each quarter for 19 years and thediscount rate is 0.05, what is the present value?(show the process and can use financialcalculator)2. If you receive $99...
- Q You are attempting to value a call option with an exercise priceof $109 and one year to expiration. The underlying stock pays nodividends, its current price is $109, and you...
- Q You are attempting to value a put option with an exercise priceof $106 and one year to expiration. The underlying stock pays nodividends, its current price is $106, and you...
- Q 1. If you receive $176 each month for 12 months and thediscount rate is 0.04, what is the future value?(show the process and can use financial calculator)2. If you receive...
- Q Suppose a company has proposed a new 4-year project. The projecthas an initial outlay of $29,000 and has expected cash flows of$7,000 in year 1, $8,000 in year 2, $11,000...
- Q Use the following information:Debt: $69,000,000 book value outstanding. The debt is tradingat 95% of book value. The yield to maturity is 10%.Equity: 1,900,000 shares selling at $36 per share. Assume...
- Q Profit or Loss on New Stock IssueSecurity Brokers Inc. specializes in underwriting new issues bysmall firms. On a recent offering of Beedles Inc., the terms wereas follows:Price to public:$5 per...
- Q Unemployment among high school graduates is quite high due to arecession. City Community College is considering a new program tohelp young people get the training they need to be more...
- Q A company is considering a 3-year project that requires aninitial installed equipment cost of $10,000. The project engineerhas estimated that the operating cash flows will be $4,000 in year1, $6,000...
- Q Answer in 200 wordsDescribe the efficient market theory. In your opinion,are the markets efficient? If so, what form of efficiency ispresent in financial markets?
- Q LIst three reasons why it important to keep daily records of allbusiness transactions. Q9
- Q BVPSCurrent = $95.ROEEarly = 16% for next 5 yrsROELate = 4% after 5yrs (in perpetuity)Expected ROE (discount rate) = 5.1 %Above numbers are independent from plow backs/ policybelow. Dividend Policy:Plow back...
- Q "Options Markets" Please respond to the following: Justify whyan investor may prefer stock splits versus stock dividends as aneffective way to increase their portfolio. Provide an example foryour justification. Analyze...
- Q A stock sells today for $130. The price of the stock in a yearis expected to be $140. The annual volatility of the stock is30%.a. Calculate the probability that in...
- Q Your friend wants to borrow $2,500 and pay you back the $2,500in a year from now. You agree to the loanbut tell your friend he must pay you $500 up-front.a)...
- Q #6. there is a choice to buy a car worth $32,000 with 100%financing at 3.99% APR for 60 months or lease at $500 per month.The car will need maintenance in...
- Q Haskell Corp. is comparing two different capital structures.Plan I would result in 12,000 shares of stock and $120,000 in debt.Plan II would result in 11,500 shares of stock and $140,000...
- Q Jiminy’s Cricket Farm issued a bond with 15 years to maturityand a semiannual coupon rate of 5 percent 3 years ago. The bondcurrently sells for 92 percent of its face...
- Q I just remember some keywords for a question: Semiannually,coupon rate =11%, 3 years to maturity, yield to maturity =10%, facevalue at 1000How to solve for the duration for this question?
- Q Dinklage Corp. has 8 million shares of common stock outstanding.The current share price is $82, and the book value per share is $6.The company also has two bond issues outstanding....
- Q RAK, Inc., has no debt outstanding and a total market value of$250,000. Earnings before interest and taxes, EBIT, are projectedto be $40,000 if economic conditions are normal. If there is...
- Q Caspian Sea Drinks is considering the production of a dietdrink. The expansion of the plant and the purchase of the equipmentnecessary to produce the diet drink will cost $24.00 million....
- Q Caspian Sea Drinks is considering the purchase of a plum juicer– the PJX5. There is no planned increase in production. The PJX5will reduce costs by squeezing more juice from each...
- Q Caspian Sea Drinks is considering the production of a dietdrink. The expansion of the plant and the purchase of the equipmentnecessary to produce the diet drink will cost $25.00 million....
- Q A project requiresan initial investment of $1,000,000 and is depreciatedstraight-line to zero salvage over its 10-year life. The projectproduces items that sell for $1,000 each, with variable costs of$700 per...
- Q A division of Cullumber Manufacturing is considering purchasingfor $1,530,000 a machine that automates the process of insertingelectronic components onto computer motherboards. The annual costof operating the machine will be $51,000,...
- Q BuildemBig, Inc. has $10,000 in their bank account, $25,000 ininventory, $35,000 in accounts receivable, $15,000 in payables, and$2,000 in accrued wages.a. What is their net working capital?
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