Hello can you please assist with solving this in excel?Cost of common stock equity CAPM

Netflix common

Question

Hello, can you please assist with solving this in excel?

Cost of common stock equity: CAPM Netflix common

stock has a beta, b, of 0.8. The risk-free rate is 3%, and the market return is 10%.

a. Determine the risk premium on Netflix common stock.

b. Determine the required return that Netflix common stock should provide.

c. Determine Netflix’s cost of common stock equity using the CAPM.

Finance

I have tried this question multiple times and I can’t get the right answer The

Question

I have tried this question multiple times and I can’t get the right answer.

The

2014 balance sheet of Jordan’s Golf Shop, Inc., showed long-term debt of $5.2 million, and the 2015 balance sheet showed long-term debt of $5.45 million. The 2015 income statement showed an interest expense of $170,000. The 2014 balance sheet showed $520,000 in the common stock account and $5.5 million in the additional paid-in surplus account. The 2015 balance sheet showed $560,000 and $5.7 million in the same two accounts, respectively. The company paid out $415,000 in cash dividends during 2015. Suppose you also know that the firm’s net capital spending for 2015 was $1,380,000, and that the firm reduced its net working capital investment by $71,000.

What was the firm’s 2015 operating cash flow, or OCF?

1
Question:
2
What was the firm’s 2015 operating cash flow, or OCF?
3
4
cash flow -dept
5
Cash Flow to Creditors = Interest Paid -(Ending Long Term Debt – Beginning Long Term Debt)
6
-80000…
Finance

(A)

Bradley hates taking risk with his money
I hate shares and property, I know a lot of people who have lost

Question

(a) Bradley hates taking risk with his money; I hate shares and property, I know a lot of people who have lost

money in those investments. As a result he will only consider bank guaranteed investments. Bank guaranteed investments are returning 1%. Bradley has a marginal tax rate of 32.5% and pays medicare levy of 2%.

  1. Assuming he pays tax at 32.5% plus medicare levy, on the income from his investment, is he preserving the real dollar value of his investment if inflation is 2.5% per annum? Show your workings to justify your answer. (2.5 marks)
  2. When considering your calculations, how would you explain the benefits of risk to Bradley? (2.5 marks)

(b) Explain the Australian dividend imputation credit system and how it applies in Australia. Include an analysis of how the receipt of franking credits will result in differing returns for Australian resident and international investors. (10 marks)

Finance

Hello!Can you help with the below? Thank you!Kelso Electric is an

Question

hello!

Can you help with the below? Thank you!

Kelso Electric is an

all-equity firm with 53,750 shares of stock outstanding. The company is considering the issue of $365,000 in debt at an interest rate of 7 percent and using the proceeds to repurchase stock. Under the new capital structure, there would be 33,500 shares of stock outstanding. Ignore taxes. What is the break-even EBIT between the two plans?

Finance

Hello Help needed Firen Inc is an allequity firm that has 500 000 shares of stock

Question

Hello Help needed,

Firen, Inc. is an all-equity firm that has 500,000 shares of stock

outstanding. The company has decided to borrow $8 million at 9% interest to repurchase 200,000 shares of outstanding stock.

a. Suppose that Firen operates without taxation (or financial distress). What is the value of this firm in its current all-equity state. What will the firm’s value be after the recapitalization?

b. Under MMI, in a world with no taxes (nor financial distress), would the value of the levered firm above (i.e. Firen with $8 million of debt after the recapitalization) increase or decrease if only $4 million was borrowed to buy back 100,000 shares of stock? Explain your answer.

Finance

Which of the following is not a potential problem faced by developing nations that borrow from

Question

Which of the following is not a potential problem faced by developing nations that borrow from

abroad?

Select one:

a. Foreign borrowers may place conditions on loans that effectively transfer some control over resource-allocation decisions away from domestic residents.

b. Interest payments on the debt obligations are transfers from domestic residents to foreign residents.

c. Funds obtained from foreign borrowing are often used to finance acquisitions of capital resources.

d. Foreign shorter-term investment and loans can be highly volatile.

Economics

WACC = Weighted Cost of Equity + Weighted Cost of debt*(1tax

Question

WACC = Weighted Cost of Equity + Weighted Cost of debt*(1-tax

rate)

(7.69%*37%)+(6.79%*63%)*(1-20%) = 6.27%

Recalculate the market value WACC, but now assume that Tesla is a profitable firm, with a tax rate of 22%:

Finance

Mickey’s Wizarding Co Is debating between a leveraged and an unleveraged capital structure The allequity

Question

Mickey’s Wizarding Co. Is debating between a leveraged and an unleveraged capital structure. The all-equity

capital Structure would consist of 150,000 shares of stock. The debt and equity option would consist of 90,00 shares of stock plus $1,080,000 of debt with an interest of 8 percent. What is the break-even level of earnings before interest and taxes between these two options? ignore taxes

a. $216,000

b. $ 92,400

c. $237,000

d. $158,000

e $165,875

Finance

Question ABC sold $350 000 of 5% (annual interest payments) convertible 5 year bonds

Question

Question:ABC sold $350,000 of 5% (annual interest payments) convertible 5 year bonds

at par. The market interest rate on the sale date was 7%. Each $1,000 bond was convertible into 20 shares of KER Ltd. no-par value common shares on any interest date after the end of the first year from the date of issuance.

Required:

Using IFRS, prepare the journal entry at issuance using the proportional method. Assume that the option pricing model placed a value of $73,675 for the conversion feature. Hint: pv,5,0.07 is .71299; pva,5,0.07 is 4.10020

Finance

Country Analysis of INDIA (a)

Macroeconomic trends and risks

Discuss Balance of

Running Head: COUNTRY ANALYSIS OF INDIA Country Analysis of India
Students Name
Institution Affiliation 1 COUNTRY ANALYSIS OF INDIA. 2 1. Balance of payment is a record of a country’s overall…
Finance

This question relates to material covered in Topic 1 particularly the Australian taxation system and interest

Question

This question relates to material covered in Topic 1 particularly the Australian taxation system and interest

rates. This question addresses the 1st, 2nd, 3rd and 4th subject learning outcomes.

Students are expected to conduct their own research and develop their own opinions about the merits of this topic. There is no single correct answer and students will be marked on the depth of their research, the quality of their arguments (for and against), and their demonstrated understanding of the issues involved in this complex area of financial policy.

(a) James is applying for a new home loan. He wishes to borrow $250,000 and make his repayments monthly. The interest rate the bank has quoted him is 4% per annum.

  1. Is this the real rate of interest or the notional rate of interest?
  2. Explain the difference between the real rate of interest and the notional rate of interest.
  3. Calculate the real rate of interest and the notional rate of interest for James.
  4. Is it possible for the real rate of interest to equal the notional rate of interest? Explain. (8 marks)

(b) The Reserve Bank of Australia has announced a 0.25% decrease in the cash rate. What effects does this have on the economy and the financial markets? Provide examples of who might benefit from this decrease and those that do not. (12 marks)

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Finance

Question 1Suppose you invest $50 000 in a special savings account

Question

Question 1

Suppose you invest $50 000 in a special savings account

where, for the first ten years, interest of 6% is

paid annually at the end of each year and, thereafter, interest is continuously compounded at an annual

equivalent rate of 7%. How much money do you have in the account after 14 years if you remove no money

from it during that period?

Question 2

You plan to invest an amount C of capital. Every year the current amount will earn interest at r% per year,

compounded annually. You will also add an amount 0.1 C at the end of every year. Set up a recurrence

relation for yt, the amount you have after t years. Find an expression for yt and determine when you will

have 10 C capital.

Finance

NOTE

This assignment is in two parts, one is quantitative problem, the other a short paper. You

Question

NOTE: This assignment is in two parts, one is quantitative problem, the other a short paper. You

need to turn in both Part I and Part II to receive full credit for this assignment.

Part I: This part of the assignments tests your ability to calculate present value.

A. Suppose your bank account will be worth $15,000.00 in one year. The interest rate (discount rate) that the bank pays is 7%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is only 4%?

B. Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $6,500.00 in one year. Account B will be worth $12,600.00 in two years. Both accounts earn 6% interest. What is the present value of each of these accounts?

C. Suppose you just inherited an gold mine. This gold mine is believed to have three years worth of gold deposit. Here is how much income this gold mine is projected to bring you each year for the next three years:

Year 1: $49,000,000

Year 2: $61,000,000

Year 3: $85,000,000

Compute the present value of this stream of income at a discount rate of 7%. Remember, you are calculating the present value for a whole stream of income, i.e. the total value of receiving all three payments (how much you would pay right now to receive these three payments in the future). Your answer should be one number – the present value for this gold mine at a 7% discount rate but you have to show how you got to this number.

Now compute the present value of the income stream from the gold mine at a discount rate of 5%, and at a discount rate of 3%. Compare the present values of the income stream under the three discount rates and write a short paragraph with conclusions from the computations.

Part II: Read the following three sample business plans:

Ice Dreams

R J Wagner Associates Realty

Interstate Travel Center

Which of these three projects do you think should have the highest risk from the point of view of investors (potential providers of funds) and would therefore be evaluated using the highest discount rate? Which one do you think should have the lowest? Write a paper explaining your reasoning.

In your assessment of the business plans consider the possible risk of each plan. Risk is one of the main considerations when deciding whether a plan should be evaluated and discounted to present value using a high or a low discount rate.

Note: you are not expected to fully analyze the numbers and financial statements in these business plans. There are only forecasts and projections. Nobody really believes them anyway. Use your intuition rather than calculations to assess risk and potential of each of these plans.

Assignment Expectations

Turn in both Part I and Part II in one Word document when completed. Part I should be two pages long and contain your calculations. Part II should be two pages long.

Running Head: Basics of Finance Student Name:
Professor Name:
College Name: PART-1
Solution-a
Rate 7%
PV = FV/ (1+R) n
PV = $15,000(1/1.07)
PV = $15,000(0.9346)
PV = $14,019
Rate 4%
PV…
Business

Question 2 SurvivalNEED A VERY DETAILED ANSWER WITH

Question

Question 2: Survival

NEED A VERY DETAILED ANSWER WITH

REFERENCING

You are now 18 months into your new venture. You have made some mistakes but at last you have your first satisfied customers, some new products are nearly ready to add to your first offerings, and you are beginning to attract the attention of the business press. Jeb has taken on a more strategic role in the company while you have focused on operations. He has convinced you that you need to lease some expansion space to accommodate your impending growth. He happens to have an aunt that has space available and that is reasonably priced. Although you have probably taken on more space than you will need for at least two years under even the most optimistic scenario, you both have just signed a five year lease.

You both realize that you will need some more cash to fund the business; in fact it looks like you will need up to a $1 million within six months. Jeb has spoken with the bank and they indicated that they will provide a line of credit for half this amount if a) you and Jeb use your houses as collateral to secure the debt, and b) you raise the other half of the needed cash from equity. Jeb suggests that he approach his Aunt Marie again, as she just might be interested in making an equity investment. You both meet with her. She is clearly a shrewd businessperson and sees that your company may be an interesting investment. She immediately picks up that your weakness is the thinness of the management team, and suggests that you find someone with experience to take over the sales management role while you go back to doing what you are best at – product innovation and mentoring new hires. In fact, she has a close friend, Alex, who may be the perfect fit – she suggests that you take a look at him for the role. Alex is the sales manager for a direct competitor called Great Guns located in a nearby town. He is willing to join your company as he is disenchanted with the management at Great Guns and your company offers an upside if you are willing to provide him with some stock rights in the company. He is willing to take a salary cut in moving.

Jeb is enthusiastic about this hire; you feel that his judgment may be clouded a little by the need to get the funding. When you meet Alex alone, you are not entirely comfortable with him, but you cannot find any real reason why he could not have done a good job, and frankly, you are getting really frazzled with the 16 hour days that you are putting in. Alex can relieve the stress immediately.

a) Do you agree to hire Alex? Provide your reasoning. If yes, how would you structure his compensation package at this stage of the company? If no, how would you handle the situation with Jeb? His Aunt Marie? You still need a sales manager; what would you do to find and hire an alternative to Alex?

Whether or not you hire Alex you still need to sell $500,000 of equity in the company, and Jeb’s Aunt Marie hasn’t made any firm commitments one way or the other. A couple months go by, and through a chance meeting at a local fund raiser for the area Humane Society animal shelter you make the acquaintance of Dr. Lucas Furber, a noted orthopedic surgeon who has built a highly successful sports medicine clinic and who has a soft spot for young go-getters trying to carve out their own places in the world. He is incredibly well-connected in the local entrepreneurial finance community, has made a number of Angel investments in the past, likes your story, and is willing to consider investing in your company. However, in exchange for the $500,000 he wants a 33.33% stake in the company and a seat on the board. He argues this equity stake is justified, given the early stage of your company and the risk he’d be taking (and knowing your lack of concrete alternatives and need for an investor in order to get the bank financing). He points out that this puts the valuation of your company at $1.5 million, and that your own $200K investment has just increased in value 150%.

About this time, Jeb informs you that the cash is running out faster than anticipated and the company needs to close on funding within four weeks. The bank seems to be lined up, and Jeb has offered to use his new house as collateral. For the sake of the partnership you have decided, with some trepidation, to match this with your home as an additional pledge against the loan. Your spouse is not too happy about this but agrees to go along. You have both set up a meeting with Aunt Marie at the end of the week to go over your progress and see whether or not she is interested in investing in the company, and what terms she will be seeking.

b) How are you going to handle this meeting? Assuming Aunt Marie is interested in investing, what kind of terms do you offer her? Which potential equity partner is more attractive to you, and why? How will you use the two potential equity investors in your negotiations with each of them? What terms and conditions are you willing to accept from each investor? Are they the same? Explain why or why not.

Entrepreneurship

Can you please help to find the answer to the below? Can you also put in the equations to help determine the

Question

Can you please help to find the answer to the below? Can you also put in the equations to help determine the

answer? If there is work that is done in excel, can you show the formula as well?

Valuing Callable Bonds. Assets Inc., plans to issue $5 million of bonds with a coupon rate of 7 percent, a par value of $1,000, semiannual coupons, and 30 years to maturity. The current market interest rate on these bonds is 6 percent. In one year, the interest rate on the bonds will be either 9 percent or 5 percent with equal probability. Assume investors are risk-neutral.

Finance

11 The key aspect of the agency relationship for the corporate form of business is that A the firm’s

Question

11. The key aspect of the agency relationship for the corporate form of business is that:

A: the firm’s

owners will always act in the best interests of the managers

B: the managers will always act in the best interests of the firm’s owners

C: with their management contracts the managers have the incentive to act in the best inter-ests of the shareholders

D: the managers have different incentives from the shareholders.

Finance

6Always Quick Manufacturing Limited is a small business that manufactures metal and plastic components for

Question

6

Always Quick Manufacturing Limited is a small business that manufactures metal and plastic components for

a variety of industries. The bulk of the business is in the computing industry, although the occasional contract is for the automotive industry. Jose, the owner, would like to expand the business so that he can bid on larger contracts. This requires an investment of about $500,000 to finance capital assets and about $300,000 for a working capital loan. Jose has financed the business himself to this point, and has been given some alternatives by the bank. The alternatives pertain to which assets are used as guarantees, and whether Jose also guarantees the loans personally (as he has substantial personal assets). The bank also stated that if Jose personally guarantees the loan, the company will only require a review engagement, whereas if the loan is only secured by corporate assets, then an audit of the company will be required.

Jose understands the differences among the guarantees, but is not sure about the difference between a review and audit engagement. Presently, the company financial statements are prepared using a compilation engagement. Required Explain to Jose the difference among a compilation engagement, a review engagement, and an audit engagement.

Business

Look at Table Assume interest rates in the

Question

Look at Table. Assume interest rates in the

market (yield to maturity) increase from 9 to 12%.

a. what is the bond price at 9%

b. what is the bond price at 12%

c. what would be the percentage of return on the investment if you bought when rates were 9% and sold when rates were 12%?

(Please include formula as well as work)

Finance

A

Question

A

$1,000 par value bond was issued 20 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,020. Further assume Ms. Bright paid 25 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to cover the interest costs on the loan.

Finance

The directors of Vision Tech have reorganised their business William Davis is now Chairman Vijhay Singh is

Question

The directors of Vision Tech have reorganised their business. William Davis is now Chairman, Vijhay Singh is

finance manager, and Irene Rogers is the floor in charge (supervisor).

Keeping in view the above situation, answer the following questions:

1. What is meant by the hierarchy of management? 2. How does William Davis know about any problems on the factory floor? 3. Who determines the objectives for the business? 4. Who will ensure that the work is carried out properly and on time?

Operations Management

Question 1The Randolph Limited has decided to acquire a new truck One

Question

23

The current dividend for the company is $ 50/share and is expected to grow at 3% per year in the foreseeable future. The equity shares trade at $ 450/share. The preferred shares trade at $ 104/share. The convertible debt has a conversion privilege of 2 shares per $ 1 000 face value at maturity. The debt currently trades at $ 950.

The firm’s income tax rate is 30%

Required:

2.1. Calculate the firm’s weighted average cost of capital (WACC).

2.2. Discuss the firm’s dividend payout policy and whether it has an impact on share price.

2.3. Explain why the different sources of capital have different levels of risk and return.

Finance

Andy’s Fishing Charters is considering the purchase of a new boat costing $80 000 the boat is expected to

Question

Andy’s Fishing Charters is considering the purchase of a new boat costing $80,000. the boat is expected to

increase profits by $12,000 per year for each of the next 8 years. After 4 years, the boat will require maintain of $6,000. After the 8 years, the boat will be sold for $32,000.

Calculate the NPV of the boat using a cost of capital of 12%. fund your answer to the nearest dollar.

Finance

You have inherited $50 000 and want to invest for retirement Alice your close friend working at a local

Question

You have inherited $50,000 and want to invest for retirement. Alice, your close friend working at a local

investment bank shared with you two products available for investment.

The first, Forever Axia Fund, will pay its investors 3% per year for the first 5 years and 7% per year thereafter. The second, Rocket High Dividend Fund, pays its investors 6% per year forever.

Required:

(a) Calculate how much you will have in each fund in 12 years’ time.

(b) Analyse which investment product you will choose if you wanted to retire in 30 years’ time.

(c) Calculate the year in which both funds will have equal value.

Finance

a)

Explain how World Bank functions (what does the World Bank do) Include descriptions

Question

a) Explain how World Bank functions (what does the World Bank do) Include descriptions

of the following in your answer.

i) International Bank for Reconstruction and Development (IBRD)

ii) International Development Association (IDA)

iii) International Finance Corporation (IFC)

iv) Multilateral Investment Guarantee Agency (MIGA)

v) International Center for the Settlement of Disputes (ICSID)

Golden Oil (GO) expects to have earnings per share of $3 50 in year 1 GO decides to retain all of its earnings

Question

Golden Oil (GO) expects to have earnings per share of $3.50 in year 1. GO decides to retain all of its earnings

for years 1 and 2. For the next 3 years, GO will payout 40% of its earnings as dividends. GO will then payout 70% of its earnings as dividends from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 15% per year. In other words, the return on equity is expected to be 15% per annum for each year. Assume GO’s shares outstanding remains constant and all earnings growth comes from the investment of retained earnings. If the required rate of return on GO shares is 10%, what price would you estimate for GO shares?

Finance

Dear Tutors I am having a hard time to deal with those 2 questions Please

Question

Dear Tutors,

I am having a hard time to deal with those 2 questions.

Please

give me an advice.

a) Distinguish among beta (or market) risk, within-firm (or corporate) risk, and stand-alone risk for a project being considered for inclusion in a firm’s capital budget.

b) In theory, market risk should be the only relevant risk. However, companies focus as much on stand-alone risk as on market risk. What are the reasons for the focus on stand-alone risk?

Finance

International Investing 14 Tyrone a US investor invests in his friend Richard

Question

International Investing:

14. Tyrone – a US investor – invests in his friend Richard

Burton’s country – UK. Tyrone has $20,000 to invest. He converts all the money to pounds and buys with all of it BP shares selling at £50 per share. After a year he sells all BP shares at £55 per share. If exchange rate at time 0 was $2.00 per £, and $2.10 per £ at the end of the year, what is Tyrone’s one-year US rate of return? (10)

(a) Find £ obtained:

(b) Find # of BP shares bought:

(c) Find £-denominated return:

(d) Find $-denominated return:

Finance

Assume that MM’s theory holds except for taxes There is no growth and the $80 of debt is expected to be

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Finance

My fiancé and I want to save for the down payment on the purchase of a new house in one year’s time We have met

Question

My fiancé and I want to save for the down payment on the purchase of a new house in one year’s time. We have met

with our bank, who have indicated they will lend us 97% of the purchase price of our new home, which means we require a 3 % down payment.

To save for the down payment, we plan to invest $1500 in an investment account each month for one year (starting at the end of this month). The investment account has an APR of 8% compounded monthly. At the end of the year, all of these funds will be used for a down payment.

  • calculate what we are able to save as a down payment.
  • based the first answer, what is the maximum mortgage we can secure from the Bank?
  • we have been quoted a rate of 5% for a 5-year, we have two options:

Option #1: 25 year amortization with monthly payments — Option #2: 20 year amortization with monthly payments

What are the monthly mortgage payments under option #1?

Finance

Hello!Can you please help with the break even part? I was able to get all the answers except

Question

Hello!

Can you please help with the break even part? I was able to get all the answers except

for that one. I was able to confirm my answers were correct.

Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding and $2.6 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes.

a.If EBIT is $575,000, what is the EPS for each plan?

b.If EBIT is $825,000, what is the EPS for each plan?

c.What is the break-even EBIT?

A- Plan I; 3.19 Plan II; 2.82

B- Plan I; 4.58 Plan II; 4.75

Thank you!

Finance

Hello Professionals please help me with below questions Two bonds A and B have the same credit rating the

Question

Hello Professionals, please help me with below questions.

Two bonds A and B have the same credit rating, the

same par value and the same coupon rate. Bond A has 30 years to maturity and bond B has 5 years to maturity.

– Discuss which bond will trade at a higher price in the market

– Discuss what happens to the market price of each bond if the interest rates in the economy go up.

– Which bond would have a higher percentage price change if interest rates go up?

– Try to substantiate your argument with a numerical example.

As a bond investor, if you expect slowdown in the economy over the next 12 months, what would be your investment strategy?

Finance

28 Which item is a key consideration regarding the role of a business banker in the customerbank

Question

28.Which item is a key consideration regarding the role of a business banker in the customer-bank

negotiation?

Select one:

a. a business banker must keep in mind the goals and needs of both the bank and the customer

b. a business banker is responsible for negotiating terms that enhance the customer’s profitability

c. a business banker should focus exclusively on what the bank wants in order to represent the interests of its depositors and investors

d. a business banker is responsible for negotiating terms that yield to the customer’s risk appetite

Finance

1​(Bond valuation) Calculate the value of a bond that matures in 19 years and has a $ 1 comma 000 par

Question

1​(Bond valuation) Calculate the value of a bond that matures in 19 years and has a $ 1 comma 000 par

value. The annual coupon interest rate is 11 percent and the​ market’s required yield to maturity on a​ comparable-risk bond is 9 percent.

2 Bond valuation) A bond that matures in 10 years has a ​$1 comma 000 par value. The annual coupon interest rate is 7 percent and the​ market’s required yield to maturity on a​ comparable-risk bond is 12 percent. What would be the value of this bond if it paid interest​ annually? What would be the value of this bond if it paid interest​ semiannually?

3 ​(Bond valuation) ​Pybus, Inc. is considering issuing bonds that will mature in 16 years with an annual coupon rate of 9 percent. Their par value will be ​$1 comma 000​, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds​ and, if it​ does, the yield to maturity on similar AA bonds is 11 percent. ​ However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A​ rating, the yield to maturity on similar A bonds is 12 percent. What will be the price of these bonds if they receive either an A or a AA​ rating?

4 (Yield to​ maturity) The market price is ​$1 comma 050 for a 12​-year bond ​($1 comma 000 par​ value) that pays 11 percent annual​ interest, but makes interest payments on a semiannual basis ​(5.5 percent​ semiannually). What is the​ bond’s yield to​ maturity?

5 Doisneau 18​-year bonds have an annual coupon interest of 12 ​percent, make interest payments on a semiannual​ basis, and have a ​$1 comma 000 par value. If the bonds are trading with a​ market’s required yield to maturity of 13 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds?

6 ​(Bond valuation) ​Fingen’s 14​-year, ​$1 comma 000 par value bonds pay 15 percent interest annually. The market price of the bonds is ​$950 and the​ market’s required yield to maturity on a​ comparable-risk bond is 17 percent.

a. Compute the​ bond’s yield to maturity.

b. Determine the value of the bond to​ you, given your required rate of return.

c. Should you purchase the​ bond?

7 ​(Yield to​ maturity) Abner​ Corporation’s bonds mature in 17 years and pay 7 percent interest annually. If you purchase the bonds for ​$750​, what is your yield to​ maturity?

8 ​(Bond valuation) The 15​-year ​$1 comma 000 par bonds of Vail Inc. pay 12 percent interest. The​ market’s required yield to maturity on a​ comparable-risk bond is 15 percent. The current market price for the bond is $ 910.

a. Determine the yield to maturity.

b. What is the value of the bonds to you given the yield to maturity on a​ comparable-risk bond?

c. Should you purchase the bond at the current market​ price?

Finance

Problem 92

After-Tax Cost of Debt

LL Incorporated’s currently outstanding 7%

Question

Problem 9-2

After-Tax Cost of Debt

LL Incorporated’s currently outstanding 7%

coupon bonds have a yield to maturity of 14%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL’s after-tax cost of debt? Round your answer to two decimal places.

Problem 9-4

Cost of Preferred Stock with Flotation Costs

Burnwood Tech plans to issue some $60 par preferred stock with a 7% dividend. A similar stock is selling on the market for $55. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock? Round your answer to two decimal places.

Problem 9-5

Cost of Equity: Dividend Growth

Summerdahl Resort’s common stock is currently trading at $22.00 a share. The stock is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75), and the dividend is expected to grow at a constant rate of 8% a year. What is the cost of common equity? Round your answer to two decimal places.

Problem 9-6

Cost of Equity: CAPM

Booher Book Stores has a beta of 0.7. The yield on a 3-month T-bill is 4.5% and the yield on a 10-year T-bond is 6%. The market risk premium is 6%, and the return on an average stock in the market last year was 12%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.

Problem 9-7

WACC

Shi Import-Export’s balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi’s tax rate is 35%, rd = 6%, rps = 7.7%, and rs = 13%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.

Finance

There are three parties that we identified as being influential in determining the composition of the collateral

Question

There are three parties that we identified as being influential in determining the composition of the collateral

pool and the sizing of the tranches of a CMBS securitization. Two of them are

a) Master Servicer and Special Servicer

b) The Controlling Class and Issuer

c) The rating agencies and the investment grade investors

d) The B-note holder and the Lead Manager

Finance

Scenario You are the director of operations for your company and your vice president

Question

Scenario:

You are the director of operations for your company, and your vice president

wants to expand production by adding new and more expensive fabrication machines. You are directed to build a business case for implementing this program of capacity expansion. Assume the company’s weighted average cost of capital is 13%, the after-tax cost of debt is 7%, preferred stock is 10.5%, and common equity is 15%. As you work with your staff on the first cut of the business case, you surmise that this is a fairly risky project due to a recent slowing in product sales. As a matter of fact, when using the 13% weighted average cost of capital, you discover that the project is estimated to return about 10%, which is quite a bit less than the company’s weighted average cost of capital. An enterprising young analyst in your department, Harriet, suggests that the project be financed from retained earnings (50%) and bonds (50%). She reasons that using retained earnings does not cost the firm anything, since it is cash you already have in the bank and the after-tax cost of debt is only 7%. That would lower your weighted average cost of capital to 3.5% and make your 10% projected return look great.

Question:

Is Harriet’s suggestion of using the cost of debt a good or bad idea? Why?

Finance

After college you started your own commercial landscaping business and the business is growing but you

Question

After college, you started your own commercial landscaping business, and the business is growing, but you

are concerned. You have had to invest all of your profits back in the business to purchase more equipment. You are now at a point where business is good, and there is extra money left over after all the expenses are paid. You’ve never invested before, but a good friend has suggested mutual funds. After some internet research, you know there are a lot of different kinds of funds. Which type of fund do you think can help you obtain your investment goals? Explain.

Finance

This is for Managerial Finance Two years ago a company issued $10 Million in bonds with a face value of $1 000

Question

This is for Managerial Finance. Two years ago a company issued $10 Million in bonds with a face value of $1,000

and a maturity of 10 years. The company is supposed to put aside $1 million in a sinking fund each year to pay off the bonds. Dolly Frisco, the finance manager, of the company, has found out that the bonds are selling at $800 apiece on the open market now when a deposit to the sinking fund is due. How much would Dolly save (before transaction costs) by purchasing 1,000 of these bonds in the open market instead of calling them in at $1,000 each?

Finance

What about being disciplined in order to follow through?Managers need to be disciplined to monitor its

Question

What about being disciplined in order to follow through?

Managers need to be disciplined to monitor its

employees regarding progress and employees need be disciplined in order to fulfill their job duties. For example, when I am working in one of our business offices due to being short-staffed – Even though I do have a lot of deadlines to meet in my other areas I am responsible for in the Finance department, but since the business office needs to be open to serve our students (customers) this has priority. When that is happening I am literally pushing myself to the maximum to complete other tasks at the same time – multi-tasking, but I do know I will need to work late on those days in order to meet my other time sensitive deadlines – goals. This is what I am calling being disciplined – to stay on target, not to slow down, but to keep on going.

Business

ACME Wholesalers LLC

is considering whether to discontinue offering credit to customers who are more than 10

Question

ACME Wholesalers, LLC. is considering whether to discontinue offering credit to customers who are more than 10

days overdue on repaying the credit extended to them. Current annual credit sales are $10 million on credit terms of net 30. Such a change in policy is expected to reduce sales by 10 percent, cut the firm’s bad-debt losses from 5 to 3 percent, and reduce its average collection period from 72 days to 45 days. The firm’s variable cost ratio is 0.70 (profit contribution ratio is 0.30) and its pretax return (i.e. opportunity cost) on receivables investments is 12%. Determine the net effect of this credit tightening policy on the pretax profits of ACME Wholesalers, LLC. When converting from annual to daily data or vice versa, assume that there are 365 days per year.

Finance

Calculating Cost of EquityThe Graber Corporation’s common stock has a beta of 1 15 If the

Question

Calculating Cost of Equity

The Graber Corporation’s common stock has a beta of 1.15. If the

risk is 3.5 percent and the expected return on the market is 11 percent, what is the company’s cost of equity capital? PLEASE SHOW ALL WORK.

Estimating the DCF Growth Rate

Suppose Stark, Ltd., just issued a dividend of $2.08 per share on its common stock. The company paid dividend of $1.71, $1.82, $1.93, and $1.99 per share in the last four years. If the stock currently sells for$45, what is your best estimate of the company’s cost of equity capital using the arithmetic average growth rate in dividends? What if you use the geometric average growth rate? PLEASE SHOW ALL WORK.

Calculating WACC

Mullineaux Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity is 11 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 35 percent. a.) What is Mullineeaux’s WACC? b.) The company president has approached you about Mullineaux’s capital structure. He wants to know why the company doesn’t use more preferred stock financing because it costs less than debt. What would you tell the president? PLEASE SHOW ALL WORK.

Finance

Which of the following statements is INCORRECT All else equal 1 If a bond’s yieldtomaturity

Question

Which of the following statements is INCORRECT. All else equal,

1.If a bond’s yield-to-maturity

(YTM, i.e., market interest rate) is greater than its coupon rate, then the bond is trading at a premium.

2.The estimated market price of a bond is the sum of its future discounted cash flows.

3.Duration measures the sensitivity of a bond’s price to changes in interest rate.

4.If a bond’s market value is equal to its par amount, then its YTM will be equal to its coupon rate.

Finance

Dynabase Tool has forecast its total funds requirement for the coming year as shown in the following

Question

$3,000,000

a) Divide the firms monthly funds requirements into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of those components.

b) Describe the amount of long-term and short-term financing used to meet the total funds requirements under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that, under the aggressive strategy, long-term funds finance permanent needs and short-term funds are used to finance seasonal needs.

c) Assuming that short-term funds cost 5% annually and that the cost of long-term funds is 10% annually, use the averages found in part a to calculate the total cost of each strategies describes in part b. Assume that the firms can earn 3% on any excess cash balances.

d) Discuss the profitability-risk tradeoffs associated with the aggressive strategy and those associated with the conservative strategy.

Finance

Which of the following statements is most correct?Question 17 options A ) Since

Question

Which of the following statements is most correct?

Question 17 options:

A.) Since

stockholders do not generally pay corporate taxes, corporations should focus on before-tax cash flows when calculating the weighted average cost of capital (WACC).

B.) When calculating the weighted average cost of capital, firms should include the cost of accounts payable.

C.) When calculating the weighted average cost of capital, firms should rely on historical costs rather than marginal costs of capital.

D.) Answers a and b are correct

E.) None of the answers above is correct.

Finance

4 Rollins Corporation is constructing its marginal cost of capital (MCC) schedule Its target capital structure

Question

4- Rollins Corporation is constructing its marginal cost of capital (MCC) schedule. Its target capital structure

is 30 percent debt, 20 percent preferred stock, and 50 percent common equity. Its bonds have a 12 percent coupon rate of interest, semiannual interest payments, a current maturity of 20 years, and a market value equal to their par value of $1,000. The firm’s marginal tax rate is 40 percent. What is Rollins’ after-tax cost of debt?

a. 7.2%

b. 12.0%

c. 8.4%

d. 3.6%

e. 4.8%

5- Alpha Inc.’s beta coefficient is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Based on the capital asset pricing model (CAPM), what should be Alpha’s cost of retained earnings?

a. 18%
Finance

Financing S&amp

S Air’s Expansion Plans with a Bond Issue

Samp
S Air was

Question

Financing SS Air’s Expansion Plans with a Bond Issue

SS Air was

founded 10 years ago. The company has manufactured and sold light airplanes over this period, and the company’s products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own airplanes. The company has two models: The Birdie, which sells for $53,000, and the Eagle, which sells for $78,000. SS Air is not publicly traded, but the company needs new funds for investment opportunities. Mark Sexton and Todd Story, the owners of SS Air, have decided to expand their operations. They instructed their newly hired financial analyst, Chris Guthrie, to enlist an underwriter to help sell $20 million in new 10-year bonds to finance construction. Chris has entered into discussions with Renata Harper, an underwriter from the firm of Crowe Mallard, about which bond features SS Air should consider and what coupon rate the issue will likely have.

Although Chris is aware of the bond features, he is uncertain as to the costs and benefits of some features, so he isn’t clear on how each feature would affect the coupon rate of the bond issue. Describe the effect of each of the following bond features on the coupon rate of the bond. Also list any advantages or disadvantages of each feature.

a.
The security of the bond—that is, whether the bond has collateral.

b.
The seniority of the bond.

c.
The presence of a sinking fund.

d.

(Cost of Debt) Sincere Stationary corporation needs to raise %451 000 to improve its manufacturing plant It has

Question

(Cost of Debt) Sincere Stationary corporation needs to raise %451,000 to improve its manufacturing plant. It has

decided to issue $1,000 par value bond with an annual coupon rate of 11.1% with interest paid semiannually and a 15 year maturity. Investors require a rate of return of 9.6%.

  • Compute the market value of the bonds
  • How many bonds will the firm have to issue to receive the needed funds?
  • What is the firms after-tax cost of debt if the firm’s tax rate is 34%?

Show all work.

Finance

The effect of tax rate on WACC K Bell Jewelers wishes to explore the effect on its cost of capital of the

Question

The effect of tax rate on WACC— K. Bell Jewelers wishes to explore the effect on its cost of capital of the

rate at which the company pays taxes. The firm wishes to maintain a capital structure of 35% debt, 20% preferred​ stock, and 45 % common stock. The cost of financing with retained earnings is 15%, the cost of preferred stock financing is 11%, and the​ before-tax cost of debt financing is 11​%. Calculate the weighted average cost of capital (WACC​) given a tax rate of 35 %. You must MUST use at least one of the following Excel functions to answer at least one part of the question: FV, PV, PMT, RATE, NPER, NPV, AVERAGE, STDEV, and IRR.

Finance

A firm has the following bookvalue balance sheet

Debt =$ 17 ,000, Common Stock ($1 par)= 18 and Retained

Question

A firm has the following book-value balance sheet; Debt =$ 17 ,000, Common Stock ($1 par)= 18 and Retained

Earnings = $ 38 ,000. The book value of assets is the total of Debt, Common Stock and Retained Earnings. The firm’s bonds are currently selling at par and the firm’s stock is currently selling for $ 15 . The firm’s tax rate is 30 %. What is the value of the firm’s tax shield (i.e. the change in firm value due to the use of leverage in the capital structure)? Show your answer to the nearest $1. Do not use commas or the $ sign in your answer.

Finance

6 Barone Sanitation is considering buying Ramsey Sports Under current market conditions Barone will have to pay

Question

6. Barone Sanitation is considering buying Ramsey Sports. Under current market conditions, Barone will have to pay

a premium in the amount of $29,000,000 in order to get the deal done, in addition to transaction costs and fees of $4,000,000. The acquisition will allow the company to avoid a capital expense this year in new machinery of $8,000,000 that they had been planning on spending. A careful analysis has shown that the merger will permanently reduce combined regular (i.e. non capital) annual expenses by $1,300,000. Based on this information, how much will incremental revenue need to increase each year in order to justify this transaction? Assume that the revenue and regular expense changes will remain the same each year for perpetuity, that the appropriate discount rate is 13%, and that that all taxes should be ignored.

Finance

Which of the following should be included in the cash flow projections for a new product?

I. Money

Question

Which of the following should be included in the cash flow projections for a new product?

I. Money

already spent for research and development of the new product

II. Capital expenditures for equipment to produce the new product

III. Increase in working capital needed to finance sales of the new product

IV. Interest expense on the loan used to finance the new product launch

Multiple Choice

a. I, II, III, and IV

b.II and IV only

c. II and III only

d. I, II, and III only

e. II, III, and IV only

f. None of the options are correct.

Finance

You are offered an investment with returns of $ 1 313 in year 1 $ 4 274 in year 2 and $ 3 210 in year 3 The

Question

You are offered an investment with returns of $ 1,313 in year 1, $ 4,274 in year 2, and $ 3,210 in year 3. The

investment will cost you $ 5,420 today. If the appropriate Cost of Capital (quoted interest rate) is 8.8 %, what is the Profitability Index of the investment? Enter your answer to the nearest .01. Do not use the $ sign or commas in your answer. If the NPV is negative, use the – sign.

Finance

Easy Car Corp is a grocery store located in the Southwest It paid an annual dividend of ​$3 00 last year to

Question

Easy Car Corp. is a grocery store located in the Southwest. It paid an annual dividend of ​$3.00 last year to

its shareholders and plans to increase the dividend annually at the rate of 3.0​%. It currently has 1,000,000 common shares outstanding. The shares currently sell for ​$14 each. Easy Car Corp. also has 30,000 semiannual bonds outstanding with a coupon rate of 7​%, a maturity of 26 ​years, and a par value of ​$1,000. The bonds currently have a yield to maturity​ (YTM) of 6%. What is the weighted average cost of capital (WACC) for Easy Car Corp. if the corporate tax rate is 40%? When answering this problem enter your answer using percentage notation but do not use the % symbol and use two decimals (rounding). For example, if your answer is 0.10469 then enter 10.47; if your answer is 10% then enter 10.00

Finance

Calculating Cost of Debt

Jiminy’s Cricket Farm issued a 30-year, 6.5 percent semiannual bond 7

Question

Calculating Cost of Debt. Jiminy’s Cricket Farm issued a 30-year, 6.5 percent semiannual bond 7

years ago. The bond currently sells for 107 percent of its face value. The company’s tax rate is 35 percent. a.What is the pretax cost of debt? b.What is the aftertax cost of debt? c.Which is more relevant, the pretax or the aftertax cost of debt? Why?

Finance

People who fear the FED is stoking inflation to stimulate the economy fear a rapid employment growth

Question

People who fear the FED is stoking inflation to stimulate the economy fear:

a. rapid employment growth

will shrink the wealth gap reported over the past 20 years;

b. increased funds available in the US will be used to purchase overseas products harming our global competitiveness;

c. that the FED will not be able to time, recognize and/or control the removal of over-expansionary funds in the system;

d. their wealth will disappear in the lowering of the tax structure to repay the debt.

Finance

1

Why do analysts sometimes use retail spending as a factor in measuring market demand for a sport

Question

1. Why do analysts sometimes use retail spending as a factor in measuring market demand for a sport

facility? What are the pros and cons of using it?

Finance

Need some more help need to understand the reasoning too please Screen</a

Question

Need some more help, need to understand the reasoning too please.

(Gordon growth model) to find the value of each firm shown in the following table. Firm Dividend expected next year Dividend growth rate Required return A $1.20 8% 13%
B 4.00 5 15
C 0.65 10 14
D 6.00 8 9
E 2.25 8 20 P7—9 Common stock value: Constant growth McCracken Roofing Inc. common stock
paid a dividend of $1.20 per share last year. The company expects earnings and divi—
dends to grow at a rate of 5% per year for the foreseeable future. a. What required rate of return for this stock would result in a price per share of
$2 8 P b. If McCracken expects both earnings and dividends to grow at an annual rate of
10%, What required rate of return would result in a price per share of $28?

P7—8 Common stock value: Constant growth Use the constant—growth dividend model
(Gordon growth model) to find the value of each firm shown in the following table. Firm Dividend expected next year Dividend growth rate Required return A $1.20 8% 13%
B 4.00 5 15
C 0.65 10 14
D 6.00 8 9
E 2.25 8 20 P7—9 Common stock value: Constant growth McCracken Roofing Inc. common stock
paid a dividend of $1.20 per share last year. The company expects earnings and divi—
dends to grow at a rate of 5% per year for the foreseeable future. a. What required rate of return for this stock would result in a price per share of
$2 8 P b. If McCracken expects both earnings and dividends to grow at an annual rate of
10%, What required rate of return would result in a price per share of $28?
Finance

Multiple choice1

What is the difference between a put seller’s profit and

Question

multiple choice

1. What is the difference between a put seller’s profit and

payoff?

The seller’s profit = payoff

The seller’s profit = payoff + put premium

The seller’s profit = payoff – put premium

The seller’s profit = put premium – payoff
Finance

(A)

Define and explain the Payback method of project evaluation. Over 50% of chief financial officers surveyed

Question

(a) Define and explain the Payback method of project evaluation. Over 50% of chief financial officers surveyed

indicate that their firm uses this method of project evaluation. Discuss the advantage and disadvantages of this method. Use numeric examples to assist your explanations.

(b) Define an Efficient Market. What factors would tend to promote efficiency? Outline the implications of market efficiency for (i) Directors and Managers of firms and (ii) Market regulators.

Please show how to work for understanding, TKS

Finance

3 Netflix &amp

Chill, a new themed restaurant, is comparing two different potential capital structures. Plan I

Question

3. Netflix Chill, a new themed restaurant, is comparing two different potential capital structures. Plan I

would result in 13,000 shares of stock and $130,500 in debt. Plan II would result in 10,400 shares of stock and $243,600 in debt. The interest rate on the debt is 10 percent.

A. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $56,000. The allequity plan would result in 16,000 shares of stock outstanding. What is the EPS under each of the three options? What is the breakeven EBIT levels (as compared to the all equity plan) for each of the proposed debt options?

B. Repeat Part A assuming that the corporate tax rate is 40 percent.

Finance

A bank that makes most of its longterm loans at adjustable interest rates is Select

Question

A bank that makes most of its long-term loans at adjustable interest rates is:

Select

one:

a. reducing both interest rate and credit risk.

b. increasing credit risk and reducing interest rate risk.

c. reducing credit risk and increasing interest-rate risk.

d. increasing both interest-rate and credit risk.

Finance

Situational Questions A debtor has missed six months of payments When you call

Question

Situational Questions:

A debtor has missed six months of payments. When you call

the individual, they bring up financial difficuies and get emotional. How do you handle this?

What payback plan would you recommend for a long-term client whose payments are due to be collected in X months?

If you called a client to update them on their payment status and they were aggressive or rude to you, how would you handle it?

Can you think of a few common excuses that debtors make? How would you respond to each of them?

Finance

Correct Inc is a publicly traded firm with 100 million diluted shares outstanding trading at $37 50 per

Question

Correct Inc. is a publicly traded firm with 100 million diluted shares outstanding trading at $37.50 per

share. The company has $1 billion of debt outstanding with a cost of debt at 6.5% at a marginal tax rate of 40%. The company has $100 million of cash on its balance sheet. What is the enterprise value of Correct Inc.?

Using the same information from before, please calculate the WACC of Correct Inc. assuming a risk free rate of 2.5%, a company Beta of 1.2 and a market risk premium of 6%.
Finance

You have invested in an office building located in NC at a cost of $50 million You paid for 40% of the building

Question

You have invested in an office building located in NC at a cost of $50 million. You paid for 40% of the building

in cash and financed 60% with an interest only loan. For a variety of reasons you decided to denominate the loan in British pounds. At the time of the loan origination $1 could buy 0.81 British pounds. If you have a clause within your loan stating that your loan-to-value must never exceed 70%, what conversion rate will trigger a defau? For simplicity, assume that the value of your property does not change.

Finance

1 Under the pecking Order Theory of finance a company will get funds to finance a project in the order

Question

1 . Under the pecking Order Theory of finance, a company will get funds to finance a project in the order

of:

  • Internally-generated funds, stretch net working capital, borrow from bank, public debt, common stock, preferred stock
  • Internally-generated funds, stretch net working capital, borrow from bank, common stock, preferred stock, public debt
  • Internally-generated funds, stretch net working capital, public debt, borrow from bank, common stock, preferred stock
  • Internally-generated funds, stretch net working capital, borrow from bank, public debt, preferred stock, common stock,
  • None of the other answer

2 . The goal of finance is to maximize shareholder weah, and the dividend policy that goal is

  • Constant dividend policy
  • Dividend smoothing policy
  • Stable dividend policy
  • Residual dividend policy
  • None of the other answers.

3 . A company will institute a stock repurchase for any of the following reasons EXCEPT

Finance

Basic ratio analysis in the spreadsheet with the real company example

Question

Basic ratio analysis in the spreadsheet with the real company example.

Fawaz Abdulaziz Al Hokair amp; Co.
TOC
S.No. Name of the Tab 1 Summary 2 Income Statement 3 Balance Sheet 4 Cash Flow 5 Quarterly 6 Drivers (IS) 7 Drivers(BS) 8 Valuation 9 Assumptions HOLD Fawaz…
Finance

Question Bank Asset Bond A Bank Liability

Question

basis 0

  1. Assume that the only bank asset is the bond A above and the only bank liability is the liability L above.
  2. What happens to bank capital (also called net worth) if the market yields increase by 100 basis points
    Finance