Finance question and answers for July 02, 2023
- Q Assume that Globeworks is a constant growth company whose lastdividend was $1.70 and whose dividend is expected to growindefinitely at a 5.20% rate. What is the firm's expected dividendstream over...
- Q New-Project AnalysisThe president of the company you work for has asked you toevaluate the proposed acquisition of a new chromatograph for thefirm’s R&D department. The equipment's basic price is $77,000,and...
- Q Write an overview of the Return on Investment topic anda review of its historical roots
- Q What is cvs company dividend policy? Explain with reference
- Q An investment project costs $10,000 and has annual cash flows of$2,930 for six years. What is the discounted payback period if the discount rate iszero percent?What is the discounted payback period...
- Q Depreciation MethodsWendy's boss wants to use straight-line depreciation for the newexpansion project because he said it will give higher net income inearlier years and give him a larger bonus. The...
- Q New-Project AnalysisThe Campbell Company is considering adding a robotic paintsprayer to its production line. The sprayer's base price is$1,090,000, and it would cost another $22,500 to install it. Themachine falls...
- Q Using excel and show formulasYou are planning to purchase a house that costs $480,000. Youplan to put 20% down and borrow the remainder. Based on your creditscore, you believe that...
- Q On EXCEL1-You are going to buy a $350,000 building in cash and willdepreciate the asset over 30 years. Assume the building value willincrease 2% per year each year for 20...
- Q Better Mousetraps has developed a new trap. It can go intoproduction for an initial investment in equipment of $6.3 million.The equipment will be depreciated straight - line over 6 years...
- Q A bond has a coupon rate of 6 percent, 9 years to maturity,semiannual interest payments, and a YTM of 8 percent. If interestrates suddenly rise by 2 percent, what will...
- Q 2. Initial Outlay -$5,000 Year 1 $3,000 Year 2 $3,500 Year 3$3,200 Year 4 $2,800 Year 5 $2,500a. What is the PI if the discount rate is 20%? Round to...
- Q eBookIt is now January 1, 2018, and you are considering the purchaseof an outstanding bond that was issued on January 1, 2016. It hasan 8.5% annual coupon and had a...
- Q Sauer Milk Inc. wants to determine the minimum cost of capitalpoint for the firm. Assume it is considering the followingfinancial plans: Cost (aftertax) Weights Plan A Debt 3.0 % 25...
- Q Find the discounted payback period for the following cashflows.YearCash Flow0-450,0001135,0002155,0003165,0004200,000Assume a discount rate of 9%.Round your answer to two decimal places.
- Q The potential decision to abandon a project has option valuebecause:abandonment can occur at one specific point in the future.management is locked into a negative outcome.the project may be worth more...
- Q Massey-Moss Corporation has a perpetual EBIT of $3 million and a40% tax rate. Let’s assume that depreciation expense is zero. It isable to borrow at an interest rate of 14%,...
- Q Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$902,400 is estimated to result in $300,800 in annual pretax costsavings. The press...
- Q Slow Ride Corp. is evaluating a project with the following cashflows:YearCash Flow0–$13,200 15,900 26,600 36,300 45,200 5–5,700 The company uses a 11 percent discount rate and an 8 percentreinvestment rate on all of its projects. Calculate...
- Q Growth? Company's current share price is $ 20.30 and it isexpected to pay a $ 1.10 dividend per share next year. After? that,the? firm's dividends are expected to grow at...
- Q A company has found that its common equity capital shares have abeta equal to 1.5 while the risk-free return is 8 % and theexpected return on the market is 14...
- Q John plans to borrow $400,000 from his bank, which agrees thatJohn should repay the loan in 180 equal end -of-months payments.The annuel interest rate is 4.5%, compounded monthly.(1) what is...
- Q (Please note that the problem starts by saying "Last year", thismeans that N will equal 18 (9x2) and not 20 (10x2).Last year Carson Industries issued a10-year, 12% semiannual coupon bond...
- Q Calculate the solvency, liquidity, asset management efficiency, andprofitability ratios of the most recent year for the company AT& T
- Q Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$385,000 is estimated to result in $145,000 in annual pretax costsavings. The press...
- Q Jerome Corp. bonds have15 years to maturityan 8.75% coupon paid semi-annuallyand a $1,000 par value.The bond has a 6.50% yield to maturity, but it can be called in6 years at...
- Q The Boyd Corporation has annual credit sales of $1.95 million.Current expenses for the collection department are $31,000,bad-debt losses are 1.7%, and the days sales outstanding is 30days. The firm is...
- Q Dog Up! Franks is looking at a new sausage system with aninstalled cost of $296,400. This cost will be depreciatedstraight-line to zero over the project's 4-year life, at the end...
- Q A project has annual cash flows of $3,000 for the next 10 yearsand then $10,000 each year for the following 10 years. The IRR ofthis 20-year project is 13.98%. If...
- Q Wilson Pharmaceuticals’ stock has done very well in the marketduring the last three years. It has risen from $55 to $80 pershare. The firm’s current statement of stockholders’ equity is...
- Q Duffert Industries has total assets of $1,050,000 and totalcurrent liabilities (consisting only of accounts payable andaccruals) of $150,000. Duffert finances using only long-term debtand common equity. The interest rate on...
- Q You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $190,000, and it wouldcost another $47,500 to modify the equipment for special use by...
- Q Guthrie Enterprises needs someone to supply it with 149,000cartons of machine screws per year to support its manufacturingneeds over the next five years, and you’ve decided to bid on thecontract....
- Q Question 3What types of project require the least detailed and mostdetailed analysis in the capital budgeting process?Question 4What is cost of capital and why it is important?
- Q A company is considering manufacturing new elliptical trainers.This company did a marketing research 2 years ago, paying $750,000consulting fees and found that the market is ripe for such a newproduct....
- Q Compare and contrast Money Markets and Capital Markets. In yourdescription list the most financial instruments trading on eachmarket. Make sure that you always indicate what types of investorsprefer what type...
- Q Compare and contrast the strategies of index matching (orindexing) and of immunisation for managing a bond portfolio.Provide examples for who would use such strategies under whatcircumstances.
- Q 1. Mark to market a long Eurodollar futuresposition with June delivery at 93.75 if daily IMM Index settlementprices areDay 1: 93.90Day 2: 93.45Day 3: 93.24Day 4: 93.58Day 5: 94.00List the...
- Q Suppose today a mutual fund contains 2,000 shares of JPMorganChase, currently trading at $78.75, 1,000 shares of Walmart,currently trading at $77.10, and 2,500 shares of Pfizer, currentlytrading at $45.50. The...
- Q Libby Co. is an unlevered firm. Investors currently expect a12.75% return on the company’s equity. The company is subject to a24% corporate tax rate.If earnings before taxes are expected to...
- Q Revenues generated by a new fad product are forecast as follows:Year Revenues 1) $56,000 2) 40,000 3) 30,000 4) 20,000 Thereafter0.Expenses are expected to be 50% of revenues, and working...
- Q Your firm has estimated the following cash flows for twomutually exclusive capital investment projects. The firm's requiredrate of return is 13%. Use this information for the next 3questions.Year Project A...
- Q CHAPTER CASEConch Republic ElectronicsConch Republic Electronics is a midsized electronicsmanufacturer located in Key West, Florida. The company president isShelly Couts, who inherited the company. The company originallyrepaired radios and other...
- Q Lease versus BuyBig Sky Mining Company must install $1.5 million of newmachinery in its Nevada mine. It can obtain a bank loan for 100% ofthe purchase price, or it can...
- Q A project has annual cash flows of $5,500 for the next 10 yearsand then $7,000 each year for the following 10 years. The IRR ofthis 20-year project is 13.38%. If...
- Q Which of the following statements is NOT CORRECT?a.When a corporation's shares are owned by a few individuals, wesay that the firm is "closely, or privately, held."b.When stock in a closely...
- Q The standard deviation of the market-index portfolio is 45%.Stock A has a beta of 1.20 and a residual standard deviation of55%.a. Calculate the total variance for an increase of0.20 in...
- Q What values are important for mergers and acquisitions?If you are considering acquiring a company, what kind offinancial values, calculations, ratios, etc. would be consideredimportant and why? Something basic, I'm not...
- Q Consider the following table: Stock Fund Bond Fund ScenarioProbability Rate of Return Rate of Return Severe recession 0.05 –32% –11 % Mild recession 0.25 –12 % 17 % Normal growth...
- Q Procter and Gamble? (PG) paid an annual dividend of $ 1.66 in2009. You expect PG to increase its dividends by 7.1 % per year forthe next five years? (through 2014),...
- Q 7. Joe’s Pizza-In-A-Cup recently hired you as a consultant toestimate the company’s WACC. You have obtained the followinginformation. (1) The firm's noncallable bonds mature in 10 years,have an 6.00% annual...
- Q Rosnan Industries' 2013 and 2012 balance sheets and incomestatements are shown below.Balance Sheets:20132012Cash and equivalents$100 $85 Accounts receivable275 300 Inventories375 250 Total current assets$750 $635 Net plant and equipment2,300 1,490 Total assets$3,050 $2,125 Accounts payable$150 $85 Accruals75 50 Notes payable150 75 Total currentliabilities$375 $210 Long-term debt450 290 Common stock1,225 1,225 Retained earnings1,000 400 Total liabilities and...
- Q What is likely to differentiate successes from failures in Kenyacrowdfunding programs? Use an example of a project implemented bythe Kenya Climate Innovation Center (KCIC).
- Q A 7.00 percent coupon bond with 25 years left to maturity ispriced to offer a 5.6 percent yield to maturity. You believe thatin one year, the yield to maturity will...
- 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 $4,900,000 andwould be depreciated straight-line to...
- Q The current capital structure of stewart-line corporation is asfollows:Bonds (7 %, $1000 par 15years) $75,000Preferred stock ($100 par, 7.25%dividend) $1,000,000Common stock:Par value ($2.50par) $500,000Retainedearnings $350,000 $850,000Total $ 2,600,000Other information about Stewart-line corporation:The market price...
- Q Howdoes the U.S. income tax treaty with Japan treat the FIRPTAprovisions?
- Q You are given the following information concerning a stock andthe market:ReturnsYearMarketStock201114%26%2012101020132032014?15?312015351620161518a. Calculate the average return and standarddeviation for the market and the stock.b. Calculate the correlation between the stockand the...
- 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 The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed$2.85 million in long-term debt, $750,000 in the common stockaccount, and $6.05 million in the additional paid-in surplusaccount. The 2018 balance...
- Q A project has annual cash flows of $7,000 for the next 10 yearsand then $8,000 each year for the following 10 years. The IRR ofthis 20-year project is 12.96%. If...
- Q You write one MBI July 135 call contract (equaling 100 shares)for a premium of $15. You hold the option until the expirationdate, when MBI stock sells for $142 per share....
- Q 1) Choose five stocks—any five stocks you find interesting. Listthe company, the ticker symbol, and the percentage of your totalportfolio that this stock makes up. 2) Find and report the...
- Q Mr. Simpson buys a $1000 bond paying bond interest at j2= 6.5%and redeemable at par in 20 years. He desires a yield rate of j4=7%. (a) How much did he...
- Q 1.Todd Corp. manufactures train components. On January 1, 2011,management provided the following forecast of income for the nextfive years:YearForecastedNet Income2011$53,5762012$65,8532013$77,9852014$88,6462015$97,672Thomas' common shareholders' equity was $422,174 on January 1,2011. The firm...
- Q What is the goal of China's 2011-2020 Anti-Poverty ProgramWhy do Li and Sicular (2014) believe China's minimum wage hasnot been effective in reducing inequality and poverty?What has happened to life...
- Q You are attempting to value a put option with an exercise priceof $100 and one year to expiration. The underlying stock pays nodividends, its current price is $100, and you...
- Q A pension fund manager is considering three mutual funds. Thefirst is a stock fund, the second is a long-term government andcorporate bond fund, and the third is a T-bill money...
- Q Problem 11-11A pension plan is obligated to make disbursements of $10million, $2 million, and $10 million at the end of each of the nextthree years, respectively. The interest rate is...
- Q 1. Burton, a manufacturer of snowboards, is consideringreplacing an existing piece of equipment with a more sophisticatedmachine. The following information is given.The proposed machine will cost $120,000 and have installationcosts...
- Q Calculate the future value of an? annuity, with case A being anordinary annuity and case B being an annuity due.??CaseAnnuityInterestRate? (%)DepositPeriod? (Yrs)FutureValue? ($)A19,00058B9,000910CaseAnnuityInterestRate? (%)DepositPeriod? (Yrs)FutureValue?
- Q Winchell Investment Advisors is evaluating the capital structureof Ojai Foods. ? Ojai's balance sheet indicates that the firm has$51.75 million in total liabilities. Ojai has only ?$40.09 millionin? short- and?...
- Q Problem 11-24A 30-year maturity bond making annual coupon payments with acoupon rate of 14% has duration of 10.53 years and convexity of192.2. The bond currently sells at a yield to...
- Q Photochronograph Corporation (PC) manufactures time seriesphotographic equipment. It is currently at its target debt-equityratio of .60. It’s considering building a new $65 millionmanufacturing facility. This new plant is expected to...
- Q Consider the following premerger information about a biddingfirm (Firm B) and a target firm (Firm T). Assume that both firmshave no debt outstanding. Firm B Firm T Shares outstanding 5,6002,200...
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