Stepbystep Solution To Problem Set 9 Dcf Free Cash Flow1

Problem 1. GoPro –


STEP-BY-STEP SOLUTION TO :Problem Set 9: DCF: Free Cash Flow1.

Problem 1. GoPro –


GoPro’s earnings before interest and taxes (EBIT) was $190 million.

Assuming GoPro’s tax rate is 35%, what is their net operating profit after taxes (NOPAT) for 2014 expressed in million of dollars?

*Make sure to input all currency answers without any currency symbols or commas, and use two decimal places of precision.


Q5 Gecko Life Assurance Company Has Received Premium Payments On Policies That Greatly Exceeds The Amount That It


Q5. Gecko Life Assurance Company has received premium payments on policies that greatly exceeds the amount that it

anticipates that it will need to pay out on life insurance policies this year. It is considering investing the surplus in either 10-year bonds or 20-year bonds and is considering the following two investments:

Option 1: A 4% coupon rate bond that matures in 10 years (par value $1,000), or

Option 2: A 5% coupon rate bond that matures in 20 years (par value $1,000)

a. If the market rate of interest is 3% on 10-year bonds, what is the most that Gecko should be willing to pay for each of these bonds?

b. Gecko is worried that continued U.S. government raise the interest rate to 4% in the next few weeks. How would this affect the price of these two bonds? Which one is going to be affected more? Explain in words. Calculation is not needed.


(A) Imagine That The Yield Curve Is Currently Flat The Treasury Announces That They Will No Longer Issue


(a) Imagine that the yield curve is currently flat. The Treasury announces that they will no longer issue

securities with maturities longer than two years. As a result, long-term government bonds will be refinanced using only relatively short-term debt. If the market segmentation theory of the yield curve is correct, what will happen to the slope of the yield curve as a result of this policy change? Explain briefly. (b) True, False, or Uncertain and Explain. According to the liquidity preference theory of the yield curve, if the yield curve is flat, rates investors expect to be available in the future are the same as current rates


Describe A Typical Fed Funds Transaction

olgtltligtWhy do you think small banks have a higher proportion of assets in investments than do large


olliWhy do you think small banks have a higher proportion of assets in investments than do large

banks?/liliDescribe a typical fed funds transaction. Why do you think small banks sell more fed funds as a proportion of total assets than large banks?/li/ol


Worldwide Widget Manufacturing Inc Decided To Go Ahead With Its Plan To Expand It Issued $30 Million In Debt


Worldwide Widget Manufacturing, Inc., decided to go ahead with its plan to expand. It issued $30 million in debt

due in 30 years to finance the expansion at an 8 percent coupon rate. The company makes interest-only, semiannual payments of $1,200,000 on this debt. Debt issued today would cost only 7 percent interest. You have been asked to determine whether the company should issue new debt (for 25 years) to pay off the old debt. If the company does so, it will have to pay $1.7 million as a call premium to the existing debt holders, and also $1.4 million to its investment bankers to float the issue. If the new debt was issued, what would be the semiannual interest payment savings or cost? What is the cost to refinance the debt? What would be the present value of the semiannual savings in interest pay- ments over the life of the debt? Should you advise the company to replace the old debt with new debt? Why?


An American Buys A Japanese Car Paying By Credit Card How Would This Be Accounted For In The Balance Of Payments


An American buys a Japanese car, paying by credit card. How would this be accounted for in the balance of payments

of Japan? A) a credit in the current account and a debit in the current account B) a credit in the current account and a debit in the financial account C) a debit in the financial account and a credit in the financial account D) a debit in the current account and a credit in the financial account

In an open economy, if private savings equals domestic investment, then a government (public) saving must be equal to A) government tax revenue B) domestic consumption C) current account surplus D) government expenditure

Suppose prices in the U.S. increase. If euro prices are constant and with no change in the nominal exchange rate, the euro has undergone: A) Real appreciation B) Real depreciation C) Nominal appreciation D) Nominal depreciation E) None of these


In The Context Of The Financial System Economies Of Scale Refers To A) Less Risk For Small


In the context of the financial system, economies of scale refers to:

A) less risk for small


B) The ability of the government to make better decisions about capital allocation

C) A reduction in volatility for liquid securities

D) The ability of banks to trade stock efficiently

E) Costs being negatively related to size


My Wife And I Are Planning To Go Into Business Together Which Of The Following Statements


My wife and I are planning to go into business together. Which of the following statements

is Not True?

Group of answer choices

We can both form a Sole Proprietorship, since we file our taxes jointly.

We can both form a Partnership, with each of us as partners.

IF we both form a Partnership, one of us could be a limited partner.

We can both for a Corporation, with either one, or with each or both, of us as shareholders.

We can both for a Limited Liability Company (LLC), with each of us as members.


Reaching A Financial Goalallison And Leslie Who Are Twins Just Received $25 000 Each For



Allison and Leslie, who are twins, just received $25,000 each for

their 25th birthdays. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her early retirement fund on her birthday, beginning a year from today. Allison opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 20% per year in the fund’s relatively short history.

a. If Allison’s fund earns the same returns in the future as in the past, how old will she be when she becomes a millionaire? Do not round intermediate calculations. Round your answer to two decimal places.


b. If Leslie’s fund earns the same returns in the future as in the past, how old will she be when she becomes a millionaire? Do not round intermediate calculations. Round your answer to two decimal places.


c. How large would Allison’s annual contributions have to be for her to become a millionaire at the same age as Leslie, assuming their expected returns are realized? Do not round intermediate calculations. Round your answer to the nearest cent.


d. Is it rational or irrational for Allison to invest in the bond fund rather than in stocks? CHOOSE ANSWER BELOW


Polycorp Is Investigating Two Projects The Risk Free Rate Is 06 And The Market Premium Is 0 06 Project


Polycorp is investigating two projects. The risk free rate is .06 and the market premium is 0.06. Project

A has a beta of .75 and Project B has a beta 1.6 times that of the average for the firm’s existing projects. Projects A and B are independent. If accepted the projects will initially be funded by borrowing at 7%pa. Calculate the beta of project B to two decimal places. The firm’s current weighted average cost of capital is 11% pa (before taking either or both A and B). Assume no taxes.


A Loan Commitment Of $4 37 Million With An Upfront Fee Of 60 Basis Points And A Backend Fee Of 25 Basis Points


A loan commitment of $4.37 million with an up-front fee of 60 basis points and a back-end fee of 25 basis points.

The take-down on the loan is 40 percent.

What is the total fees you will pay on this loan commitment.

Problem 18-06 Calculating Costs of Issuing Debt (LG18-4)

Harper’s Dog Pens, Inc. with the help of its investment bank, recently issued $192.6 million of new debt. The offer price on the debt was $1,000 per bond and the underwriter’s spread was 6 percent of the gross proceeds.

What is the amount of capital funding Harper’s Dog Pens raised through this bond issue.

Problem 18-03 Calculating Costs of Issuing Stock (LG18-4)

Husker’s Tuxedo’s, Inc. needs to raise $256 million to finance its plan for nationwide expansion. In discussions with its investment bank, Husker’s learns that the bankers recommend an offer price (or gross price) of $40 per share and they will charge an underwriter’s spread of $2.05 per share.

What is the net proceeds per share to Husker’s from the sale of stock. (Round your answer to 2 decimal places.)

How many shares of stock will Husker’s need to sell in order to receive the $256 million needed?

Problem 17-4 Total Dividend Amount (LG17-2)

Suppose a firm has a retention ratio of 65 percent and net income of $9.9 million. How much does it pay out in dividends? (Enter your answer in dollars not in millions.)

Problem 17-2 Payout Ratio (LG17-2)

Suppose a firm pays total dividends of $686,000 out of net income of $4.9 million. What would the firm’s payout ratio be? (Round your answer to 2 decimal places.)


Evaluate The Choices In Purchasing Stock Via Online Brokerage Accounts (Where You Can Buy And Sell Stock Via The


evaluate the choices in purchasing stock via online brokerage accounts (where you can buy and sell stock via the

Internet) and the use of dividend reinvestment plans (known as DIPs and DRIPs) or mutual funds or index funds.

For online brokers, what is the the requirements to open the accounts: costs, minimum balances, and other features. Because most DIPs or DRIPs are available from publicly traded companies, you can search their Web sites or a search engine on these plans and their requirements.


1 A Common Stock Of General Motors Closed At $38 16 Today 7/03/19 The Company Paid $0 40 Last Quarter And The


1. A Common stock of General Motors closed at $38.16 today 7/03/19 The company paid $0.40 last quarter and the

growth rate is expected to be 5.5%. What will be the investor’s price assuming she has a required rate of 9.5%? What would be the yield the yield on the investment based on an annual (4x$0.40) dividend? Would she buy, sell, or hold if she is interested in trading for a profit? Explain fully.

2. ATT 10-year bonds paying 8% currently sells for 0.96 which is equivalent to $960 in dollar terms.

a. What is the current yield?

b. What is the yield to maturity?

c. What is the investor’s price assuming she is requiring 11% return

d. Would she invest in the bond? WHY?__________________


In General The Capital Structures Used By Nonfinancial U S Firmsa Typically Result In


In general, the capital structures used by non-financial U.S. firms

A. typically result in

debt-to-asset ratios between 60 and 80 percent.

B. tend to converge to the same proportions of debt and equity.

C. tend to be those that maximize the use of the firm’s available tax shelters.

D. vary significantly across industries.

E. None of the options are correct.


Discussion And Review Question Page 326 Question 7some Japanese Firms Have A Policy Of


Discussion and review Question – page 326, Question 7

Some Japanese firms have a policy of

rotating their managers among different managerial jobs. In contrast, American managers are more likely to specialize in a certain are (e.g , finance or operations). Discuss the advantages and disadvantages of each the approaches. Which do you prefer? and why?

Operations Management

1 The Great Physicist Albert Einstein Was Credited With The Observation That Compound Interest Is The Most


1. The great physicist, Albert Einstein was credited with the observation that compound interest is the most

powerful force in the universe. Explain by using an example and a

graph to make your points (Hint: use say $100 over a 50 year period with a non-compounding interest of 12% and a compound interest of 5%

At what value ($) will the investment be indifferent (FV non-compounding = Compounding)

2. A student is saving towards a long term financial objective. She sets aside $100 per month and is matched by her employer 1:1 (1 to one). She is estimated to earn 12 % on her savings. What price would you pay for her accumulated funds at the end of 50 payments?

[Work space]

Explain your results

PV ————————————————————— F

3. You are interested in purchasing a new automobile valued at $40,000 to get your CA

project off the ground. The dealer would finance at 8% with monthly repayment for 5

years but you must take a 10% stake in the financing (your down-payment, if you will).

a. What would be your quarterly repayment amount rounding to the nearest dollar?

b.. What is the outstanding principal balance at the end of the second repayment?

4.You are seeking to purchase a building site in the 5 years’ time based on your CA project. The business is today valued at $100,000 and is expected to grow in price at 3% per year compounded. You wish to set aside annual monthly payments to buy the building for cash at the end of the 5th year. What would be the monthly amount to set aside (invested) assuming a rate of return of 12% so you can purchase the business for cash when the 5th year has been completed? Round to the nearest $.

a. Future value of the asset:

b. Monthly set aside amount:

Explain briefly:



Can You Please Provide The Process Steps As Well Thank You!

You have applied for a home mortgage of $75,000 to finance the purchase of a new home for 30


1. You have applied for a home mortgage of $75,000 to finance the purchase of a new home for 30

years. The bank requires a 14% interest rate. What will be the annual payment?

*** Can you please provide the process steps as well, Thank you!

The Pecking Order Theory Of Capital Structure Implies That I When A Firm Uses External Finance It Means That The


The pecking order theory of capital structure implies that: I. When a firm uses external finance it means that the

firm did not have enough abundant internal finance II. Firms prefer debt to equity when using external finance III. Firms issue securities based on the trade-off between financial distress costs and interest tax savings

a. I, II, III b. I c. II d. I,II e. II,III


Gluon Inc Is Considering The Purchase Of A New High Pressure Glue Ball It Can Purchase The Glue Ball For


Gluon Inc. is considering the purchase of a new high pressure glue ball. It can purchase the glue ball for

$220,000 and sell its old low- pressure glue ball, which is fully depreciated, for $40,000. The new equipment has a 10-year useful life and will save $48,000 a year in expenses. The opportunity cost of capital is 10%, and the firm’s tax rate is 40%. What is the equivalent annual savings from the purchase if Gluon uses straight-line depreciation? Assume the new machine will have no salvage value. Round 2 decimals

Equivalent annual savings:


Investigate Two Investment Choices That Interest You From The List Below And Provide Your Fellow Students With


Investigate two investment choices that interest you from the list below and provide your fellow students with

insights into those two investments, how they work, the level of risk, the potential for gain, regulations covering them, etc.

o CDs

o Money Market Funds

o Stocks

o Mutual Funds

o Government Bonds

o Derivatives

o Gold

o Savings accounts

o Land

o Antiques

o A Home


Hello I Need Help Solving This Problem Thank You! I Investment X For 100 000 Is Invested At A Nominal Rate Of


i. Investment X for 100,000 is invested at a nominal rate of

interest j, convertible semiannually. After four years, it accumulates to 214,358.88. ii. Investment Y for 100,000 is invested at a nominal rate of discount k, convertible quarterly. After two years, it accumulates to 232,305.73. iii. Investment Z for 100,000 is invested at an annual effective rate of interest equal to j in year one and an annual effective rate of discount equal to k in year two. Calculate the value of investment Z at the end of two years.


Midland Utilities Has A Bond Issue Outstanding That Will Mature To Its $1000 Par Value In 12 Years The Bond Has A


Midland Utilities has a bond issue outstanding that will mature to its $1000 par value in 12 years. The bond has a

coupon rate of 11% and pays interest annually.

a. Find the value of the bond if the required return is (1) 11%, (2) 15%, and (3) 8%

b. Plot your findings in part a on a set of required return (x-axis)-market value of bond (y-axis) axes.

c. Use your findings in parts a and b to discuss the relationship between the coupon rate on a bond and the required return and the market value of the bond relative to its par value

d. What two possible reasons could cause the required return to differ from the coupon rate?


Consider Three Bonds With 5 90% Coupon Rates All Making Annual Coupon Payments And All Selling At Face Value The


Consider three bonds with 5.90% coupon rates, all making annual coupon payments and all selling at face value. The

short term bond has a maturity of 4 yrs, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 yrs.

a. What will be the price of the 4 year- bond if its yield increases to 6.90%? Round 2 decimal points

Bond price

b. What will be the price of the 8-year bond if its yield increases to 6.90% Round 2 decimal places

Bond price

c. What will be the price of the 30-year bond if its yield increases to 6.90% Round 2 decimals

Bond price

d. What will be the price of the 4-year bond if its yield decreases to 4.90% Round 2 decimals

bond price

e. What will be the price of the 8- year bond if its yield decreases to 4.90? Round 2 decimal places

Bond price

f. What will be the price of the 30-year bond if its yield decreases to 4.90% Round 2 decimal places

bond price


Hi Can I Please Have Some Help With The Following Question? Thanks Bdj Ltd Wants To


Hi can I please have some help with the following question? Thanks.

BDJ Ltd wants to

issue new 25-year bonds for some much-needed expansion projects. The

company currently has 7.8% coupon bonds on the market that sell for $1125, make semi-annual

payments and matures in 20 years. What coupon rate should the company set on its new bonds if

it wants them to sell at par? The current bonds have a face value of $1000.


Wwt Is Considering Replacing A $5 Million Piece Of Equipment The Project Will Generate Pretax Savings Of


WWT is considering replacing a $5 million piece of equipment. The project will generate pretax savings of

$1,500,000 per year, and not change the risk level of the firm. The initial expense will be depreciated straight-line to zero salvage value over 5 years; the pretax salvage value in year 5 will be $500,000. The firm can obtain a 5-year $3,000,000 loan at 12.5% to partially finance the project. If the project were financed with all equity, the cost of capital would be 18%. The corporate tax rate is 34%, and the risk-free rate is 4%. The project will require a $100,000 investment in net working capital. Calculate the APV.


Jbl Industries Is An Allequity Financed Corporation With A Current 12% Cost Of Capital And $200m Market


JBL Industries is an all-equity financed corporation with a current 12% cost of capital and $200m market

capitalization (risk free rate is 5% and the company’s stock beta is 1). JBL business has become stable and the firm has been generating a stable stream of cash in recent years. 2) Management contemplates to replace 25% of the equity with debt through issuing risk-free debt and repurchasing stock. What would be the required return on equity after this change? Assume no taxes and efficient capital markets.

a. 14.33%

b. 12.00%

c. 13.75%

d. 19.00%


Caviar Fishfarm Ltd (‘Cfl’) Is Unlevered (All Equity) Has An Equity Beta Of 1 25 And Unlevered Cash Flows Of


Caviar Fishfarm Ltd (‘CFL’) is unlevered, (all equity) has an equity beta of 1.25 and unlevered cash flows of

$76,800 per annum that will continue in perpetuity.

The expected market return is 10%p.a and Treasury bills earn 2%p.a.

CFL is currently considering issuing $300,000 in new debt with an 8% interest rate. CFL would repurchase $300,000 of its own shares, using the proceeds of the debt issue. There are currently 32,000 shares outstanding and the company’s effective marginal tax rate is 34%.

The value of a share in the company before it announces the capital restructure is closest to:

Select one:

a. $18.87

b. $20.00

c. $13.20

d. $22.00

EBIT = $ 76800
( 1= 0. 34 )
116363. 64
Before Reconstruction
116363+ 64
11 6 363 . 64
( 30 0 0 0 0 X 8 % )
92363. 67
( – Han @ 34 %
39563, 64
31403 ….Finance

Och Spa Is Considering A Project That Will Result In Initial After Tax Cash Savings Of €3 5million At The End Of


Och SpA is considering a project that will result in initial after tax cash savings of €3.5million at the end of

the first year, and these savings wilk grow at a rate of 5%/year indefinately. The firm has a target debt-equity ratio of 0.65, a cost of equity of 15% and an after tax cost of debt of 5.5%. The cost saving proposal is somewhat riskier than the usual project the firm undertakes. Management uses the subjective approach and applies an adjustment factor of 2% to the cost of capital for such risky ptojects. Under what circumstances should Och take the project?


Question 1 (Without Taxes) • You Are Considering An Investment Opportunity For An Initial Investment Of $800


Question 1 (Without Taxes) • You are considering an investment opportunity. – For an initial investment of $800

this year, the project will generate cash flows of either $1400 or $900 next year, depending on whether the economy is strong or weak, respectively. Both scenarios are equally likely. • The project cash flows depend on the overall economy and thus contain market risk. As a result, you demand a 10% risk premium over the current risk-free interest rate of 5% to invest in this project. • What is the NPV of this investment opportunity? • If you finance this project using only equity, how much would you be willing to pay for the project? • What is the return on unlevered equity? • Suppose you decide to borrow $500 to finance the project, how much do you owe debtholders in 1 years’ time • What price E should the levered equity sell for? • Which is the best capital structure choice for the entrepreneur? • What is the return on levered equity?


1 Julie Receives A Cash Settlement Of $12 000

She invests the money in a mutual fund that provides an annual


1.Julie receives a cash settlement of $12,000. She invests the money in a mutual fund that provides an annual

return of 12.4%. What will her investment be worth in 3 years?


1 When A Firm Is Liquidated Who Are The Last In Line To Be Paid?A The Government B The Suppliers C


1. When a firm is liquidated, who are the last in line to be paid?

A. The government. B. The suppliers. C.

The stock holders. D. The bond holders. E. Derivative contract counterparties.

2. If you own a stock of a firm, and if this firm is liquidated, what is the most you can you lose on this entire investment?

A. Nothing. B. Your original investment. C. Your entire investment, plus potentially more to cover unpaid bills of the company.

3. Of the following financial instruments, which one has the longest possible maturity?

A. Mortgage Backed Security B. A Treasury Bond C. Commercial Paper D. A Stock

4. Consider two investors who are identical, save for the marginal tax rate they face on investment income. Which one of the investors is likely to hold a larger share of their portfolio in Munis?

A. Both equally likely because they both want to be as diversified as possible. B. Investor with a high marginal tax rate. C. Investor with a low marginal tax rate.

5. Which has the longest maturity at issuance?

A. Treasury Bonds. B. Treasury Notes. C. Treasury Bills.


Edsel Research Labs Has $27 Million In Assets Currently Half Of These Assets Are Financed With Longterm Debt At


Edsel Research Labs has $27 million in assets. Currently half of these assets are financed with long-term debt at

5 percent and half with common stock having a par value of $10. Ms. Edsel, the Vice President of Finance, wishes to analyze two refinancing plans, one with more debt (D) and one with more equity (E). The company earns a return on assets before interest and taxes of 5 percent. The tax rate is 30 percent.

Financial Accounting

Creating A Retirement Fund Personal Finance Problem To Supplement Your Retirement You Estimate That You Need To


Creating a retirement fund Personal Finance Problem: To supplement your retirement, you estimate that you need to

accumulate $280,000 exactly 44 years from today. You plan to make equal, end of year deposits into an account paying 12% annual interest.

a. How large must the annual deposits be to create the $280,000 fund by the end of 44 years?

b. If you can afford to deposit only $180 per year into the account, how much will you have accumulated 44 years?


According To The Managerial Entrenchment​ Theory Managers Choose Capital Structure So As To Preserve Their


According to the managerial entrenchment​ theory, managers choose capital structure so as to preserve their

control of the firm. On the one​ hand, debt is costly for managers because they risk losing control in the event of default. On the other​ hand, if they do not take advantage of the tax shield provided by​ debt, they risk losing control through a hostile takeover. Suppose a firm expects to generate free cash flows of $ 87 million per​ year, and the discount rate for these cash flows is 12 %. The firm pays a tax rate of 35 %. A raider is poised to take over the firm and finance it with $ 620 million in permanent debt. The raider will generate the same free cash​ flows, and the takeover attempt will be successful if the raider can offer a premium of 26 % over the current value of the firm. According to the managerial entrenchment​ hypothesis, what level of permanent debt will the firm​ choose?


Inflation Represents An External Impact Upon Future Returns Purchasing Power Decreases In Times Of Inflation


Inflation represents an external impact upon future returns. Purchasing power decreases in times of inflation.

When an investor considers future returns of his or her portfolio, it is critical to consider inflation and build this variable into their analysis. In many cases, the impact can be significant especially in terms of retirement portfolios where the time horizon can be 10, 20 or more years.

Taxes represent another variable to consider for investors. Depending on the investment, taxes are either paid upfront (i.e. IRA) or upon withdrawals (i.e.401K). External impacts such as taxes and inflation can prevent any investments from being considered ‘riskless’.

Are there any other external impacts an investor should consider?


Describe What It Means To Have Efficient Capital Market Including

  • Describe the behavioral


Describe what it means to have efficient capital market, including:

  • Describe the behavioral

challenges in achieving efficiency.

  • Discuss the three forms of market efficiency.
  • What are the implications to corporate finance?
  • Would you consider the real estate market an efficient capital market? Please explain why or why not.
  • I am having a little bit of difficulty understanding these bullet points and need help. Thank you.


    Worldwidewidgetmanufacturing Inc Is Doing So Well It Decides It’S Time To Become An International Company As The


    WorldwideWidgetManufacturing,Inc.,is doing so well it decides it’s time to become an international company. As the

    chief financial officer (CFO), you’re tasked with raising $340 million of new capital to open offices around the world. In researching the matter, you learn that if bonds due in 20 years are used for raising the capital, they’ll be rated AA and will need to offer a yield of 6.5 percent. How many bonds will it be necessary to issue to raise the needed capital? What will Worldwide Widget Manufacturing have to make as a semiannual interest rate payment?


    Ou Have $5 000 To Invest For The Next Year And Are Considering Three Alternatives A Money Market Fund


    ou have $5,000 to invest for the next year and are considering three alternatives:

    1. A money market fund

    with an average maturity of 30 days offering a current yield of 2.0% per year

  • A 1-year savings deposit at a bank offering an interest rate of 4.0%
  • A 20-year U.S. Treasury bond offering a yield to maturity of 4.0% per year
  • A 20-year corporate bond offering a yield to maturity of 7.
  • What is the risk profile of each of these assets?

    What role does your forecast of future interest rates play in your decisions?


    Bond Prices And Interest Rate Changesconsider Two 12 Per Cent $100 Government Bons That Differ Only In That


    Bond prices and interest rate changes

    Consider two 12 per cent $100 government bons that differ only in that

    one matures in 2 years’ time and the other in 5 years’ time. Both bonds are currently selling for $100 and pay coupon interest annuity.

    A) What will be the price of each bond, given an immediate fall in the required yield to 10

    Per cent per annum?

    B) What will be the price of each bond, given an immediate increase in the required yield to 14 per cent per annum?

    C) Explain the relative price movements in response to interest rate changes as evidenced by parts a) and b)


    Part 1 Company J Is Considering A Project With A 4year Lifespan The Initial Cash Flow Estimate Is $125million


    Part 1: Company J is considering a project with a 4-year lifespan. The initial cash flow estimate is $125million

    in the first year increasing by $125million in each of the years 2 through 4. To begin the project, the company will need to invest $1billion dollars. Company J would like to cover the initial investment amount with existing internal resources and thereby not borrow. As such it remains an all-equity firm. The unlevered cost of its equity is 10%, similar to other firms in the industry sector. There will be no terminal value of significance at the end of year 4. Using the domestic APV equation below, construct a spreadsheet model to determine whether it makes sense for Company J to proceed with this project.


    Part 2: Now, imagine that company j finances the project with $600,000,000 of debt at= 8 percent. As such the company becomes a levered firm due to its acquisition of debt. What do the debt and related interest expense mean for the project if the tax rate is 40 percent? Update your spreadsheet model from above to demonstrate the effect of this debt on your decision.

    C D
    2 Cost of Equity
    3 WACC
    0 – – –

    Allied Biscuit’S Dividend Payout Ratio Will Be (72 27% 81 91% 96 36% 106 00) If It Follows A Residual Dividend Policy

    residual dividend policy approachis based on the theory that a company’s optimal


    The residual dividend policy approach is based on the theory that a company’s optimal

    distribution policy is a function of its target capital structure, the investment opportunities available to the firm, and the availability and cost of its external capital. The firm makes distributions to its shareholders based on its residual earnings.

    Consider the following example:

    Allied Biscuit Company has generated earnings of $1,400,000. Its target capital structure consists of 60% equity and 40% debt. It plans to spend $85,000 on capital projects over the next year and expects to finance this investment in the same proportion as its capital structure. The company makes distributions in the form of dividends.

    Allied Biscuit’s dividend payout ratio will be (72.27% , 81.91% , 96.36% , 106.00) if it follows a residual dividend policy.


    Problem Set 1 You Are The Owner Of A Large Dataservices Firm And Are Deciding On The Purchase Of A New Hardware


    Problem Set 1 You are the owner of a large data-services firm and are deciding on the purchase of a new hardware

    cooling system that you expect will yield $233,300 in cost-savings per year for the next 15 years. The installation of this cooling system will cost $3,000,000.

    1. At face value, does this system seem profitable? By how much?

    2. Assume that your company uses a discount rate of 6%.

    a. What is the Net Present Value (NPV) of this project?

    b. How does the NPV of this project change as you assume a higher or lower discount rate? Why?

    c. What is the IRR/ROI of this project?

    d. How much should the yearly cost-savings be in order to break even? i. (hint) use goal-seek/what-if analysis

    3. Suppose that you decide to finance the purchase of this system through a loan from the bank. The bank is willing to loan this money over an 8 year term at an interest rate of 4% per year.

    a. Using a 70/30 debt-to-equity ratio, what is the NPV of this project? i. (hint) calculate the yearly payment using excel function PMT

    b. How does the NPV of this project change if a larger portion is financed through equity (e.g. debt-to-equity ratio of 60/40)? Why?


    Delta Partners Is An Investment Firm Specialising In Corporate Advice Particularly In Regard To Raising Finance


    Delta Partners is an investment firm specialising in corporate advice, particularly in regard to raising finance

    and company valuation. One of its clients, Pagoda Industries Ltd, has approached Delta Partners seeking advice and assistance.

    Pagoda Industries Ltd is a large company listed on the Australian Stock Exchange. It is a diversified company with manufacturing and trading divisions operating in a number of industries. Pagoda has recently developed a new product which is the first of its kind and which is expected to make a significant contribution to the company’s future earnings. Pagoda needs additional finance to bring the product to market. The company is seeking to raise $20 million in debt finance through a bond issue. Pagoda would like to issue bonds with a face value of $1000, a maturity of 20 years and an 8 per cent annual coupon rate. Interest would be paid semi-annually. Pagoda is considering offering an 8 per cent coupon because it is not sure what rating its bonds would receive. Delta Partners has advised that similar bonds with an AA rating currently have a yield to maturity of 7.5 per cent and similar bonds with an A rating have a yield to maturity of 8.5 per cent. Required:

    (a) Calculate the price of the bonds, and the number of bonds Pagoda would need to issue, if the company was to receive an AA rating

    (b) Calculate the price of the bonds, and the number of bonds Pagoda would need to issue, if the company was to receive an A rating

    Pagoda Industries Ltd expects its new product will give it a significant first mover advantage in the market and that is expected to provide growth in earnings per share of 400% within the coming year, and 75% growth in each of the subsequent 3 years. After that time, it is expected competitors will have developed and brought to market similar products with the result that Pagoda would expect earnings growth to drop back to its normal level of 3% per year forever. Pagoda’s cash dividend was 10 cents per share last year and is expected to remain at that amount for each of the next 5 years as the company builds it retained earnings to finance research and development. In the sixth year, it is expected shareholders will be rewarded with payout ratio will be 80% of the earnings per share, and the payout ratio is expected to remain at that level forever. The required rate of return on Pagoda’s ordinary shares is 20% per year and the latest earnings per share was 25 cents. Required:

    (a) Calculate the price that Pagoda Industries Ltd ordinary shares should be selling for in the market, assuming Pagoda’s growth projections are accurate.

    (b) Delta Partners is concerned that Pagoda’s earnings growth projections, as a result of the new product, might be too optimistic in the first four years. Delta Partners is in favour of a more conservative approach and recommends the growth rates should be half (ie reduced by 50%) of those projections before growth returns to its normal 3% level. Calculate the price that Pagoda Industries Ltd ordinary shares should be selling for in the market, using Delta Partners growth projections.

    Calculation of present value of bond
    1. When YTM is 7.5%
    3 PMT
    =7.5/2 =-PV(3.75%,40,40,1000,0)
    2. when YTM is 8.5%
    =8.5/2 =-PV(4.25%,40,40,1000,0)Finance

    Fran Wishes To Prepare For Her Retirement In 15 Years’ Time Currently She Has A House Which She Estimates Will Be


    Fran wishes to prepare for her retirement in 15 years’ time. Currently she has a house which she estimates will be

    worth $1,000,000 in 15 years. She anticipates being able to deposit $40,000 at the end of each year until retirement. When she retires, she plans to downsize to a unit worth $800,000. Assume an interest rate of 4% pa and ignore tax in your calculations.


    Show how much Fran can expect to live on per year (assuming end-of-year withdrawals) after she retires and if she wishes to maintain her capital to pass on to her heirs.


    Hi Dear Professorwould I Like To Know The Company’S Roe &Amp

    ROIC ?



    Hi Dear Professor

    Would I like to know the company’s ROE ROIC ?


    company’s net income is $25,000, its interest expense is $5,000, and its tax rate is 40%. Its notes payable equals $25,000, long-term debt equals $75,000, and common equity equals $250,000. The company finances only with debt and common equity, so it has no preferred stock. What are the company’s ROE and ROIC?

    Briefly comment on the usefulness of these two ratios for measuring the company’s financial performance.


    Which Of The Following Is A Case Of Resource Crowding Out?The Government Builds A New Road

    The increase


    Which of the following is a case of resource crowding out?

    The government builds a new road. The increase

    in government demand for cement raises its price, meaning some private companies cannot afford to build new factories.

    The economy is in a boom so the government increases corporate profit taxes

    The economy is in a slump so the government increases spending on health care

    The government borrows to finance debt, therefore placing upward pressure on interest rates

    The government builds a new road, making it cheaper for private businesses to transport its


    Hi Can I Please Have Some Help With The Following Questions? Thanks Interest


    Hi can I please have some help with the following questions? Thanks.


    Rate Risk:

    Both Bond Bill and Bond Ted have 7% coupons, make half-yearly payments,

    have a $1000 face value, and are priced at par value. Bond Bill has three years to maturity, whereas

    Bond Ted has 20 years to maturity.


    Considering no change in time;

    if interest rates suddenly rise by 2%, what is the percentage

    change in the price of Bond Bill and Bond Ted?


    Considering no change in time;

    if rates were to suddenly fall by 2%, what would the

    percentage change in the price of Bond Bill and Bond Ted?


    Illustrate your answers by graphing bond prices versus YTM.


    What does this problem tell you about the interest rate risk of longer-term bonds?

    For Bond Ted
    Coupon : 7 1. = 1600 xfy. = Fo yearly.
    Half yearly : 35
    Bond forice calculated as : C

    U + Ka ) quot;
    (+ k )
    As When price = face value
    intorest rate would be equal to Coupon…Finance

    Help Neededholding All Else Constant What Do Mm’S Theories Predict About The Movement Of The


    Help needed

    Holding all else constant, what do MM’s theories predict about the movement of the

    following variables if a levered firm in the 34% tax bracket totally unlevers itself?

    Cost of Equity ________________________________

    Financial Distress Costs ________________________________

    WACC ________________________________

    Total Firm Value ________________________________

    Marginal Tax Rate ________________________________


    Wendy Buys A Bond With A Face Value Of $100 A Time To Maturity Of Three Years A Coupon Of 6% Pa With Semiannual


    Wendy buys a bond with a face value of $100, a time to maturity of three years, a coupon of 6% pa with semi-annual

    payments and a yield of 3% pa. 12 months later (just before the second coupon is to be paid), the Reserve Bank of Australia unexpectedly increases the cash rate. The yield on Wendy’s bond increases to 3.3% pa.


    Calculate the buying price, the price 12 months later and explain why the price has changed.


    Locate The 2014 2015 &Amp

    2016 Annual Reports for Kimberly-Clark.

    Based upon your


    Locate the 2014, 2015 2016 Annual Reports for Kimberly-Clark.

    Based upon your

    review, would you argue that KMB’s debt-to-capital ratio deteriorated or improved from 2014 to 2015; did it deteriorate or improve from 2015 to 2016? What conclusion would you offer from this review concerning KMB’s financial health?

    If you were the financial manager for Kimberly-Clark, how would you determine


    Hi I Need Some Help On The Following Two Questions The City Of Mountain View Had The Following


    Hi I need some help on the following two questions.

    The City of Mountain View had the following

    transactions during the year, none of which have been recorded yet. Some of the transactions affect governmental activities.

    1. Mountain View issued $6 million worth of serial bonds at 98 plus accrued interest in the amount of $50,000. The premium and accrued interest were recorded in the Debt Service Fund. Accrued interest on bond sold must be used for interest payments.
    2. The city’s General Fund collected and transferred $650,000 in tax collections to the Debt Service Fund. $450,000 of this amount was used to retire outstanding serial bonds and the remainder was used to make interest payments on outstanding serial bonds.

    Prepare in general journal form the necessary entries in the governmental activities and appropriate fund journals for each transaction.Finance

    Please Refer The Document Attached For The Question

    please send answer to my email :

    Ideas in 5 mins: (Hot spots are bolded)
    I think that the first policy regarding finance is completely reasonable especially the part where the
    parents only get to receive community assistance when…English

    X2 X2 A

    Table 2.2

    The results below were obtained from a use-dilution test of two

    Word File Edit View Insert Format Tools
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    67% Mon 12:28 PM QE
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    20 C, then subcultured in nutrient media without disinfectants.
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    Disinfectant 1
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    MSU Study
    lab 13
    In Table 2.2, what is the minimal bacteriostatic concentration of each disinfectant? Whi
    compound is bactericidal? At what concentration? (2 pts)
    Cumulative lab
    reports 7-13
    Page 2 of 4 1002 Words X
    English (US)

    Hi I Need A Brief

    respond to this doesn’thave to be long, 200 words should beRunning head: TAX REDUCTION 1 Tax reduction
    Institution TAX REDUCTION 2
    Tax reduction Low-class people are the ones who get affected more when it comes to paying taxes. If
    taxes were lowered,…English

    Follow The Rubric

    to achieve the paper justice.

    follow whats written in the proposal to write the

    Running Head: ELDERLY CARE Elderly Care
    Student’s Name
    Institution ELDERLY CARE 2 The Charles and Margre Durham Booth Manor offer 47 agreeable and reasonable lofts
    for seniors with low salaries….English

    Assignment 3 Persuasive Paper Part 1 A Problem Exists


    Running head: CHANGE IN TAXES 1 Change in Taxes
    Student Name
    Professor Name
    Course Name
    August 7, 2017 CHANGE IN TAXES 2
    Introduction In general, economic changes are usually controversial…English

    Hi This Is Sara!

    Are you able to complete my essay based on a article.

    Last Name 1 Name:
    Analytical Response
    After a review of Terry’s argument, I agree that slavery adversely affected the identities of the
    African slaves. Most of the…English

    ENG 125 Literature
    Marlena Fitzpatrick-Garcia
    October 9, 2015 LITERATURE ANALYSIS 2 Table of Contents
    I. Introduction / Thesis
    A. What you…English Literature

    This Is Part Of My Graduate Literature Review Paper Introduction The Last Two Lines In The Following Paragraph


    This is part of my Graduate Literature Review paper introduction. The last two lines in the following paragraph

    are my own, so no citation is needed. But I do not know how the questions should be formatted.

    According to Morley and Germano (2019), Managing cybersecurity is a complex challenge that requires an interdisciplinary, risk-based approach, involving an organization’s business leaders, as well as their internal and external technical and legal advisors. This finding underscores the magnitude of responsibility all businesses, including public utilities must now become aware and perform at expert level. One of the topics that will be reviewed will be Is it reasonable for all companies to create, train, and maintain an expert-level staff devoted to cyber and information security? In reference to the prior, Are the Water and Wastewater Utilities adequately protecting the Public?


    What Do You Think About My Short Expository Essay?Paragraph</a


    What do you think about my short expository essay?can choose to study online in the comfort of your home or anywhere worldwide. It can be a bit
    expensive but studying online also has its advantages. For example; you can use quot;yourquot;
    computer to perform all the requested tasks, you don’t have to attend the class live, since you can
    watch the recording later, virtual library without the need for additional book costs and effective
    online communication with teachers and academic advisers. There are many people in the
    professional workplace who have completed their studies online. If you want to achieve all your proposed goals, online university will be your best optioln.

    Type of paragraphs: Expository paragraph or essay Title: Online University is the best option. Online university are good for all people. If you work and do not have enough time, you
    can choose to study online in the comfort of your home or anywhere worldwide. It can be a bit
    expensive but studying online also has its advantages. For example; you can use quot;yourquot;
    computer to perform all the requested tasks, you don’t have to attend the class live, since you can
    watch the recording later, virtual library without the need for additional book costs and effective
    online communication with teachers and academic advisers. There are many people in the
    professional workplace who have completed their studies online. If you want to achieve all your proposed goals, online university will be your best optioln. English Literature

    Hazel A 16year Old High School Student Is Given Plenty Of Time In Her English Composition Class To Work On


    Hazel, a 16-year old high school student, is given plenty of time in her English Composition class to work on

    writing. However, she usually does not complete her writing assignment within the time allotted during the class period. She rarely completes her English composition homework either.

    Engaging your knowledge of principles of reinforcement and punishment, consider the concepts of generalization, discrimination, and stimulus control, and propose procedures that could increase Hazel’s English composition classwork completion and homework completion behaviors.Social Science

    By Reading Emotional Cues Teachers Determine A Whether To Engage In Interactions Or Wait Quiety To See


    A, B and C

    Which of the following is/are true?

    A. emotion and cognition work together, jointly informing the child’s impressions of situations and influencing behavior

    B. children under two years of age are not yet able to express empathy

    C. infant care teachers do not need to worry about facilitating interactions between peers until they are three years of age or older

    D. a child’s temperament does not play a significant role in his expression of emotions

    E. A,C and D

    F. B,C and D


    In The Article The Cognition Of Discovery Defining A Rhetorical Problem Flower And Hayes Declare That


    In the article The Cognition of discovery: Defining a Rhetorical Problem, Flower and Hayes declare that

    problem-finding inspires creative thinking.

    They also claim that better writers consider more aspects of the rhetorical situation when setting their goals for the writing task and thinking about their purpose than novice writers. They suggest that this creativity happens because people will solve only the problem they give themselves to solve;

    in fact, they predict that while an audience and exigency can jolt a writer into action,..the force which drives composing is the writer’s own set of goals, purposes, or intentions. [And] a major part of defining the rhetorical problem then is representing one’s own goals English

    Read The Following Description Of A Meeting Between A College Student And Her Adviser In This Example We


    Read the following description of a meeting between a college student and her adviser. In this example, we

    consider the role attributions of motives play in the attribution of deviance and how this can unfold through social psychological processes like stereotyping, labeling, and resistance.

    Yidan has been called into Dr. Smith’s office because he believes he has evidence she cheated on the last test. Yidan waited nervously in the line of students outside her adviser’s door until it was her turn. Yidan is a 20-year-old international student from China whose spoken English is a little shaky. Her adviser, Dr. Smith, is a white man in his 50s with a New England accent. While neither of them had discussed with the other their ethnic backgrounds or age and gender differences, they were both aware of them from their physical appearance, manner of dress, and speech. Yidan knew that Dr. Smith was one of several faculty members who had a reputation among students as being harsh graders. Some students even suspected that Asian students were more likely to copy work and help each other on assignments, but he took pride in being fair and actively tried to treat all students the same.

    As Yidan entered the office, Dr. Smith closed the door for privacy because what he had to say he didn’t want other students to hear. He got right to the point. He told Yidan that he had reviewed results of the recent online test and several tests showed identical responses including making the same mistakes. One of the tests was hers. He then showed her four essays side by side with identical wording, saying that, to him this appears she deliberately cheated. Then he asked her what she had to say that could explain this.

    Yidan at first said nothing. Then, fighting back tears, Yidan pleaded with Dr. Smith to ignore the infraction, saying she could never return home if she was accused of cheating. Her family would disown her and she could never get a good job.

    She said she was not like those other students. Most of the students in the class cheat, she said. They cheat all the time. They choose to cheat because it is easier and they think they can get away with it. But this, she said, was the only time she ever cheated. She is normally a good student and just made a tragic mistake. She had broken up with her boyfriend the week before, and was emotionally devastated, making it impossible to study for the test. No one would be hurt if she got a better grade. After all, she was just trying to make up for the way the test is biased against students for whom English is a second language. She said to Dr. Smith, if you don’t want us to cheat you should not have had the test on the Internet.

    Dr. Smith told her he would think about the situation and decide whether he would report her to the Provost’s office for cheating and possible disciplinary action. She made one last plea before leaving, asking him not to report her. She had changed, she said. She learned her lesson and was never going to cheat again. She is sorry for cheating, she apologizes for her mistakes, and seeks his forgiveness.

    Use the information from this meeting to answer the following:

    • Identify at least one case in which a situational or dispositional attribution is made and indicate whether it corresponds to primary deviance or secondary deviance.

    • Identify at least two schemata in this example including one related to a stereotype.

    • Identify one or more identity markers that distinguish categories of people and may be the bias for prejudice and stereotypes.

    • Identify whether anyone is labeled as a deviant and whether it leads to stigma.

    • Identify at least one strategy of destigmatization and at least three strategies of neutralization Yidan uses to resist being labeled as a deviant.

    For each of these, provide both a definition of the concept and a quotation or close paraphrase from the description above which provides evidence of each concept.

    Social Science