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

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

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

(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

(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

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

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

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

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

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)

Home Money Market
Nominal
interest
MS
rate, is
Real money supply,
Mus / Pus
LAN
2
1
W
MD
Real money demand,
Mus /Pus = L(is) Yus
Mus
Real money
Pus
balances, Mus/ Pus
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)

Home Money Market
Nominal
interest
MS
rate, is
Real money supply,
Mus / Pus
LAN
2
1
W
MD
Real money demand,
Mus /Pus = L(is) Yus
Mus
Real money
Pus
balances, Mus/ Pus
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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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)

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

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

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

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

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

OP LU email
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Saved
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Save amp; Exit
Here are book – and market-value balance sheets of the United Frypan
Company:quot;
\Book – Value Balance Sheet
Net working capital
BB
$
Debt
80
Long- term assets
70
Equity
20
180
$
108
\Market – Value Balance Sheet
88
Net working capital
$
BB
Debt*
Long – term assets
170
\Equity
120
2 0 0
\2 80
$
Assume that MM’s theory holds except for taxes. There is no growth , and
the $80 of debt is expected to be permanent . Assume a 32% corporate tay
rate .
a . How much of the firm’s market value is accounted for by the debt –
generated tax shield ?quot;
PV tax shield
lt; Prey
4 Of 4
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Finance

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

OP LU email
}}) LU lib YTD Swapsy
Saved
Help
Save amp; Exit
Here are book – and market-value balance sheets of the United Frypan
Company:quot;
\Book – Value Balance Sheet
Net working capital
BB
$
Debt
80
Long- term assets
70
Equity
20
180
$
108
\Market – Value Balance Sheet
88
Net working capital
$
BB
Debt*
Long – term assets
170
\Equity
120
2 0 0
\2 80
$
Assume that MM’s theory holds except for taxes. There is no growth , and
the $80 of debt is expected to be permanent . Assume a 32% corporate tay
rate .
a . How much of the firm’s market value is accounted for by the debt –
generated tax shield ?quot;
PV tax shield
lt; Prey
4 Of 4
Next
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

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

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

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

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

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