Finance question and answers for October 04, 2023
- Q Q1. You are a senior manager at anautomobile company. In an effort to offer a full menu of auto andgas products, your firm is considering an oil exploration project.The CEO...
- Q Explain what it means to “beat the market.” Why do manyindividuals -- both academic and nonacademic -- believe that suchis not systematically possible? Please be thorough. Whatmay move you to...
- Q Chris Company uses the perpetual inventory system and had thefollowing activity during the current monthly period.November1: BeginningInventory of 100 units @$20November5: Purchased100 units @ $22November8: Purchased50 units @$23November16: Sold200 units @ $45November19: Purchased50 units @...
- Q Question 2 25 MarksKavango Ltd is considering investing in a project at a cost of N$3000 000. The estimated economic life of the project is 5 years. Thecompany will use...
- Q Explain what it means to “beat the market.” Why do manyindividuals -- both academic and nonacademic -- believe that suchis not systematically possible? Please be thorough. Whatmay move you to...
- Q Question1 [41 MARKS]ABC Holdings is considering two projects. The projects aresimilar in nature and are expected to both operate for four years.Due to unavailability of funds to undertake both of...
- Q Identity and briefly discuss five sources of risk.
- Q A project has annual cash flows of $5,500 for the next 10 yearsand then $7,500 each year for the following 10 years. The IRR ofthis 20-year project is 12.84%. If...
- Q Compare a new venture to an existing company and explain whyexisting companies can obtain bank funding and new ventures cannot.In replies to peers, review the criteria needed for financing anddiscuss...
- Q Craig's Car Wash Inc. is considering a project that has thefollowing cash flow and cost of capital (r) data. What is theproject's discountedpayback?r.10.00%Year0123Cash flows?$900$500$500$500a. 2.09 yearsb. 1.88 yearsc. 2.52 yearsd....
- Q 300 -400 words, APA Citation/RefernecesDistinguish between direct and indirect investments in realestate.ANDIdentify the at least two main ways to invest in real estateindirectly in Maldives.
- Q Bounce Ltd is a leading manufacturer and retailer of one type ofproduct, ProdX. It has divided its operations into three divisionsi.e.Division A: Supply rubberDivision B: Compound rubber with chemicals to...
- Q On December 8, 2015, ABC store announced they were buying 123 Cofor $13.9 billion. The deal was for $92 per share, a 78% premium to123 CO.December 4 closing price of...
- Q Nichols Inc. is considering a project that has the followingcash flow data. What is the project's IRR? Note that a project'sIRR can be less than the cost of capital or...
- Q Robbins Inc. is considering a project that has the followingcash flow and cost of capital (r) data. What is the project's NPV?Note that if a project's expected NPV is negative,...
- Q Tara's textiles currently has credit sales of 360 million peryear and a collection period of 60 days. Assume that the price ofTara's products is $60 per unit and that the...
- Q Explain the relationship between risk, the expected rate ofreturn and the actual rate of return.
- Q Calculate E(rxy) for (50%X + 50%Y) portfolioE(rxz) for (50%X + 50%Z) portfolio from the followingdata: E(rxy) E(rxz) (50%X + 50%Y) (50%X + 50%Z)Yr (t) E(rx)E(ry) E(rz) 2012 8.0 24.08.0 2013 ...
- Q Pandalela Products manufacturers a variety of householdproducts. The company is considering introducing a new detergent.The company's CFO has collected the following information about theproposed product.* The project has an anticipated...
- Q What four financial statements can be found in a? firm's 10-K?filing? What checks are there on the accuracy of these?statements?Every public company is required to produce quarterly and annualfinancial statements....
- Q State of economyProbabilityEstimated Return (Fund A)Estimated Return (Fund B)Great30%10%25%Average30%15%11%Poor40%20%15%If you invest $2,000 in Fund A and $8,000 in Fund B, Calculatethe following:A.Portfolio’s Standard DeviationB. Construct the complete covariance and correlation...
- Q Question 3:The ABC Company has a WACC of 20%. Its cost of debt is 12%, whichis equal to the risk-free rate of interest. If ABC’s debt to equityratio is 2,...
- Q Question 1:A) Assume that you will deposit $4000 at the endof each of the next three years in a St. George bank account paying8% interest. You currently have $7000 in...
- Q A stock has a beta of 0.5 and an expected return of 9.6 percent.A risk-free asset currently earns 3.3 percent. If a portfolio ofthe two assets has an expected return...
- Q Yield to Maturity and Current YieldYou just purchased a bond that matures in 12 years. The bond hasa face value of $1,000 and has an 7% annual coupon. The bond...
- Q The possible outcomes for the returns on Stock X and the returnson the market portfolio have been estimated as follows:ScenarioStock XMarket Portfolio1-3%6%214%12%322%18%A) 2.1B) 0.7C) 1.0D) none of the above
- Q Bond Valuation with Annual PaymentsJackson Corporation's bonds have 5 years remaining to maturity.Interest is paid annually, the bonds have a $1,000 par value, andthe coupon interest rate is 11%. The...
- Q In December 2015?,General Electric? (GE) had a book value ofequity of $98.2 ?billion,9.5 billion shares? outstanding, and a market price of $29.97per share. GE also had cash of $101.1 ?billion,...
- Q One year ago, XYZ Co. issued 11-year bonds at par. The bondshave a coupon rate of 6.29 percent, paid semiannually, and a facevalue of $1,000. Today, the market yield on...
- Q Jimmy Football is retiring from his sport. Under terms definedby his professional league, Jimmy has a choice. He can receiveeither (a) monthly payments of $21,000 each for 20 years (240...
- Q The following returns have been estimated for Security T andSecurity S:ScenarioSecurity TSecurity S120%10%213%-6%315%20%Each scenario is equally likely to occur, and you plan to invest70% in Security T and 30% in...
- Q Your task is to value Shake Shack's (SHAK’s) stock. ShakeShack's next dividend (i.e., the dividend at t =1) is expected to be $3.25. Across years 2 and 3 and 4,...
- Q You are a capital-budgeting analyst for SpaceX. SpaceX ispondering the construction of a moon-tourism spaceship, requiringan outflow of $400 at t=0. If fully constructed, the spaceship willexpire in 10 years,...
- Q hello5. In 1983 the Bell Telephone System was broken up resulting inthe creation of seven regional telephone companies. The "BabyBells," as they were called, were freed from many of the...
- Q please answer in excelPART 1You are planning to purchase a house that costs $420,000. Youplan to put some money down and borrow the remainder with a 30-yearmortgage.Based on your credit...
- Q SOLVE WITH EXCEL FUNCTIONS: A certain construction project, whichis expected to take 3 years, will require the first month of $50,000 increasing at a rate of $ 5,000 per month...
- Q Describe the potential advantages of using daily and cumulativefigures for food costs and food costs percents, rather than relyingexclusively on end of the month calculations". Use examples andspecifics to help...
- Q All of the following statements concerning cash basis arecorrect except1 In general, income is included in taxable income in the yearin which it is actually received2 Income is included in...
- Q Please show your work. Having trouble getting to theanswer.Anthony Chon, 65, has recently retired. He estimates that hewill require $30,000 in after-tax real dollars per year. He doesnot expect to...
- Q You are trying to calculate the WACC for two firms. Firm XiG ispublicly traded and firm TanW is a private firm. You have collectedall necessary information for your WACC calculation:In...
- Q Briefly describe the use of stock options in a compensationplan. What are some potential problems with stock options as a formof compensation?
- Q The Woodruff Corporation purchased a piece of equipment threeyears ago for $230,000. It has an asset depreciation range (ADR)midpoint of eight years. The old equipment can be sold for $90,000.A...
- Q A farmer has the opportunity to purchase an advanced guidancesystem for precision farming. This is the advertisement: NewOutback MAX Guidance System Outback MAX™ with Outback ConnX™ —introducing the next generation...
- Q Sara Nixon is looking for a fixed-income investment. She isconsidering two bond issues:a. A Treasury with a yield of 5%b. An in-state municipal bond with a yield of 4% Sara...
- Q some informationthe risk free rate is 1.902Market Cap (the market value of equity) 254.89 Billion;Enterprise Value (market-value equity + net debt) 319.73 Billion;Total Cash 10.11 billion ; Total Cash Per...
- Q ?(Individual or component costs of capital?)Compute the costs for the following sources of? financing:a. A $1,000 par value bond with a market price of $940 and acoupon interest rate of...
- Q Why does retained earnings have an opportunity cost? Shouldn'tthese be cost free funds for the firm to invest? Explain.
- Q Nealon Energy Corporation engages in the? acquisition,exploration,? development, and production of natural gas and oil inthe continental United States. The company has grown rapidly overthe last 5 years as it...
- Q Compute the MIRR statistic for Project J if the appropriate costof capital is 10 percent. (Do not round intermediatecalculations and round your final answer to 2 decimalplaces.)Project JTime:012345Cash flow:?$1,000$350$1,480?$520$300?$100MIRR ______...
- Q ??Dillon Labs has asked its financial manager to measure thecost of each specific type of capital as well as the weightedaverage cost of capital. The weighted average cost is to...
- Q Rieger International is evaluating the feasibility ofinvesting?$90,000in a piece of equipment that has a55?-yearlife. The firm has estimated the cash inflows associated withthe proposal as shown in the following? table:Year?(t?)Cash...
- Q Consider the following financial statement information for theHop Corporation: Item Beginning Ending Inventory $11,600 $12,600 Accounts receivable 6,600 6,900 Accounts payable 8,800 9,200 Net sales $96,000 Cost of goods sold 76,000 Calculate the operating and cash cycles.
- Q what is the net present value of a three year $3000 annuity ifit currently costs 7200? the discount rate is 5%. A) would yourecommend this annuity? briefly explain why or...
- Q Suppose you are giving the outcome returns of some assets underdifferent scenarios. The probability for the bearish, neutral andbullish market is 20%, 50% and 30%.AssetBearish MarketNeutralBullish MarketA-4.0%0.0%8.0%B8.0%3.0%-7.0%C-13.0%-2.0%20.0%D6.0%2.0%-1.0%E20.0%10.0%10.0%Risk free Asset0.5%0.5%0.5%Please answer...
- Q In-Charge is apublicly listed firm that provides technology allowing customers tomonitor their credit and debit card use, set spending limits andactivate and de-activate cards through apps on mobile devices. Thecompany...
- Q Witten Entertainment is considering buying a machine that costs$556,000. The machine will be depreciated over four years by thestraight-line method and will be worthless at that time. Thecompany can lease...
- Q Thriller Corporation has one class of voting common stock, ofwhich 1,000 shares are issued and outstanding. The shares are ownedas follows: Joe Jackson 400 Mike Jackson (Joe’s son) 200 JaneJackson...
- Q A mature U.S. telecommunicationscompany expects to pay a dividend per share of $6 next year (paidannually at the end of the year) and expects the dividend to growat a constant...
- Q Which of the following is true of interval scales?a. There is a fixed zero point, where zero denotes the absenceof the attribute being measured.b. Arithmetic operations are limited to statistics...
- Q Suppose you are working on a bond issue for WeWork, a U.S. basedfirm with a BB credit rating. WeWork plans to issue 10-year parbonds with a face value of $1,000,...
- Q Compute the discounted payback statistic for Project D if theappropriate cost of capital is 12 percent and the maximum allowablediscounted payback is four years. (Do not roundintermediate calculations and round...
- Q Suppose your firm is considering investing in a project with thecash flows shown below, that the required rate of return onprojects of this risk class is 8 percent, and that...
- Q You work for a nuclear research laboratory that is contemplatingleasing a diagnostic scanner (leasing is a common practice withexpensive, high-tech equipment). The scanner costs $4,800,000 andwould be depreciated straight-line to...
- Q Explain why the present value of a cash flow stream, and theasset associated therewith; fluctuate in value with the level ofinterest rates in the capital markets. 2. List and explain...
- Q There are many potential goals of a corporation, such as:minimize costs, maximize sales, maximize employment, maximizeearnings, maximize shareholder wealth, maximize dividend payments,etc. Which one is the best for the long-term...
- Q Consider a European option on a non-dividend-paying stock whenthe stock price is $30, the exercise price is $29, continuouslycompounded risk-free interest rate is 5%, volatility is 25% perannum, and time...
- Q Assume that an average user of an iPhone application buys a planthat is worth $80. They tend to repeat this purchase two moretimes. And our profit margin is 25%.Develop a...
- Q Conch Republic Electronics is a mid-sized electronicsmanufacturer located in Key West, Florida. The company president isShelley Couts, who inherited the company. When it was founded over70 years ago, the company...
- Q After reading the following case, please answer the followingquestions:1. Why does agency problem arise?2. What is the cost of agency problem?3. How to minimize the agency problem?CASE STUDY ON AGENCY...
- Q If you were manager, what are some challenges you anticipate incomputing the WACC? Do you agree or disagree with the followingstatement: Using an inaccurate WACC could totally offset thecapital budgeting...
- Q What is the fair value of a $1,000 bond with an 8% coupon rateand a required rate of return of 15%?A. More than $1,000B. Less than $1,000C. Equal to $1,0002....
- Q Consider a 10-month forward contract on a stock when the stockis £50. Assume that the risk-free rate of interest continuouslycompounded is 8% per annum for all maturities and that thedividends...
- Q How do you think companies decide which type of private debtthey will use? Do they have a choice? Do managers consider what isbeing offered by financial institutions? Conversely, what dofinancial...
- Q Grunewald Industries sells on terms of 1/10, net 30. Gross saleslast year were $4,342,000 and accounts receivable averaged$475,000. Half of Grunewald's customers paid on the 10th day andtook discounts. What...
- Q The marketing department of Metroline Manufacturing estimatesthat its sales in20202020will be$ 1.51$1.51million. Interest expense is expected to remain unchanged at$ 36 comma 000$36,000?,and the firm plans to pay$ 66 comma...
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