The company estimates that its cost of capital is 14%. Calculate the payback period for Machine A and B (answers must be expressed in years, months and days). 2.1 (5 marks) Calculate the accounting...

FV() is an Excel function that is used for savings situations when you are earning interest. PMT() is an Excel function that is used for loan situations when you are paying out interest. Choose FV()...

Calculate free cash flows to the firm using the forecasted financial statements provided. Calculate the terminal value using the growing perpetuity formula. What is the enterprise value of the firms...

Create spreadsheet models to price coupon bonds, compute duration, and examine reinvestment risk. The purpose of this assignment is to get comfortable with basic spreadsheet modeling and to reinforce...

Anne Murray is planning to buy a rental property, in addition to the family home she and Henry own. She is considering a property in Bristol costing 210,000. She has savings of 85,000 which she will...

What is your appraisal of Netflixs operating and financial performance based on the data in case Exhibits 1, 2, 5, 6, and 7? What positives and negatives do you see in Netflixs performance? Use the...

Cathy Company is a retail store that started operations on June 1. For purposes of budget preparation, assume the following: Expected sales for the first four months are: June. . $10,000 July......

Not surprisingly, Tarek still has several thousand dollars in student loans outstanding. When he graduated from college, he had federal loans of $48,100, with an average APR of 5.40%. Six months...

2. What about associates who joined the firm four years ago? If the salaries for new associates increased by $20,000, what would you recommend for other levels in the structure? Explain. 3. Partners...

You intend to install a gas system in your company's car. Use known investment evaluation methods (using the time value of money) and financial assumptions (additional costs, savings, changes in...

Ex. 1 Value of Information A venture capital (VC) is deciding whether to invest firm 1. The investment cost is 1 and upon investment, the VC gets 2 if the firm has a success and 0 if the firm has a...

The triplets are now three and a half years old and Jamie Lee and Ross, both 38, are finally beginning to settle into a regular routine now that the triplets are a little more self-sufficient. The...

XYZ is a calendar-year corporation that began business on January 1. 2020. For the year, it reported the following intormation in its current-year audited income statement. Notes with important tax...

A firm estimates that its annual sales will be $196,000 and its variable costs will be 65% of sales. These cash flows are expected to remain the same forever. The firm has a debt-equity ratio of...

Project Alpha requires an immediate investment of $16,000 and an additional investment of $12,000 in three years. Net returns are estimated to be $8,000 after two years, $24,000 after four years, and...

Facing dramatically declining sales and decreased turnover, retailers such as Saks Fifth Avenue and JCPenney are rethinking their pricing strategies, scaling back inventories, and improving the...

Your client owns $7,000 of Stock A with a beta of 1.8 and $5,000 of Stock B with a beta of 1.1. If the market rises by 22%, this portfolio would be expected to rise by approximately what percentage?...

You are on hold with an insurance company to work through a rejected claim for a patient standing at the counter when you feceive a rush of customers. You've already been on hold for 10 minutes, and...

27 months (2.25 years) ago, your institution entered into a threeyear crosscurrency interest rate swap with a certain virtuous Australian airline company. The swap agreement was overthecounter with...

The Treasury Manager of G.E. receives word that a payment in the amount of 50,000,000 to Hitachi will be due in June 2020, Hitachi requires the payment to be made in Japanese Yen (). The Treasury...

Irene has come to you for help in calculating her Total Federal Tax for 2022. Irene is a single mother to a 10-year old boy. She pays her ex-husband $800 per month spousal support and $2,200 per...

Luther Industries had sales of $980 million and a cost of goods sold of $560 million in 2020. A simplified balance sheet for the firm appears below: Luther IndustriesBalance SheetAs of December 31,...

What is the weighted-average cost of capital for SKYE Corporation given the following information? Equity shares outstanding Stock price per share Yield to maturity on debt Book value of...

Consider a two-date economy where there are three states of the world at date 1. There is a risky asset and a risk-free asset. The pay-off of the risky stock at date 1 will be $3, $6, or $4, and it...

Consider the following two-factor model for the returns of three well-diversified assets (i.e., with no idiosyncratic risk): = 0.12 +6F +4F2, 0.04 + 1F+2F2, 0.01 - 1F + 3F2. TB = rc = (a) (10...

Question 1 (30 points) Consider the following two-factor model for the returns of three well-diversified assets (i.e., with no idiosyncratic risk): TA = 0.01-3F - 1F2, 0.05+2F13F2, TB = TC = 0.03...

For the following values, S = 100, = 8%, o = 15% K = 100 R = 3% 25% Implied volatility T = 1 Year No dividends Calculate the delta hedge for a sold position of 100,000 call options like in the book...

An American firm has the opportunity to acquire a target company in Mexico. The firm anticipates owning the subsidiary for 8 years. Is this a profitable investment, and if so, what is the projected...

Drexel University (for-profit) makes an investment in a property. The property was closed on 12/31/2019. The property is 200,000 sf and has 3 tenants that came into their lease at the end of 2019 on...

1. Summer has a universal life (UL) insurance policy with a face value of $300,000. The policy has a cash surrender value (CSV) of $30,000 and offers a level death benefit plus account value....

Question 8 (15 points): It is the end of 2019 and you have just been hired as CFO of BREW Inc, the world's leading maker of home brewing supplies, which plans to have its IPO next year. As one of...

Tropikana Inc., a U.S firm, has just borrowed 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate in is 5.50% per year and the Euro depreciates...

Wombat Bank charges 1% per annum loan origination fee, and price its loans based on the inter-bank lending rate, which is currently 4.0% per annum, plus the risk premium. The bank classifies its...

1. A firm can choose between two projects, Project A and B. The payoffs to each project depend on whether the world turns out to be in State 1 or State 2, each of which occurs with a 50% chance. The...

The on-the-run issue for ABC Company is shown below: Maturity 123 Yield to maturity Market price 7.50% 100 7.60% 100 7.70% 100 Using the bootstrapping methodology, the spot rates are: Spot rate...

Choose an asset that you like on which options are available. Select ITM, ATM, and OTM with at least three different expiration dates Check the asset price and its options that you have selected on a...

Lox, Stock and Bagel Company (LSB) is determining its cost of capital. It uses a risk free, medium term bank loan and equity financing. Part a: The current balance on the bank loan is $8,000,000. It...

Costing Models You work for XYZ trucking and your boss has asked you to figure out how much the firm should charge a new customer to make a full Truckload delivery and make a 15% profit. The firm...

The database below summarizes financial information for 32 companies and their perceived risk of default. Convert these data into an Excel table. Use table-based calculations to find the average debt...

Lets assume there is a mean annual return of 13.5% and a standard deviation of 22% for large company common stocks. In any one year, what is the probability of a portfolio invested solely in...

You are a Head of M&A with LVMH (owns Louis Vuitton, Hermes and other clothing and jewelry brands). Describe your M&A goals by answering the following questions: 1. What would be your target?...

Consider a 6-year 5.5% coupon bond that is rated BBB when issued at par (i.e., $1,000) at the beginning of this year. Assume that the recovery rate is 46% of the face value in the case of default....

A publishing company develops different textbook packages that are downloadable from their servers on the internet. They need to make sure the download speed of their servers is as planned and adjust...

The convertible bonds were issued at par on April 1, 20X1 and are convertible into Prince's common stock at a ratio of 25 shares of stock to 1 bond. Prince did not have any treasury stock at December...

Your firm invested $2,504,600 in 270-day commercial paper today. At the end of the investment period (in 270 days) the firm will receive $2,585,000. a. What is the 270-day holding period rate of...

During the first full week of 2019, the Payroll Department of Quigley Corporation is preparing the Forms W-2 for distribution to its employees along with their payroll checks on January 4. In this...

D The following four question relate to these three bonds: Issuer: US Treasury Microsoft Merck Issuer Credit Rating Face Amount Term Semi-Annual Coupon Question 21 Choose th AAA $1,000 5 years $45...

In November 2015, Martina Bellucci, managing director of Fonderia del Piemonte S.p.A., was considering the purchase of a Thor MM-9 automated molding machine. This machine would prepare the sand molds...

Many mortgage company allow you to "buy down" your interest rate of your loan by buying points. A point is equal to 1% of your mortgage amount. You're essentially paying some interest up front in...

Jennifer has been offered a 30-year $500,000 fixed mortgage from her bank with an interest rate of 6.5%. What would be her monthly mortgage payment?

a. Write a SQL query that would enable the user 'ww10_StaffMember' to view all of the data in the ww10_student table. 1b. (1 query) Assuming the SQL query from #5 has executed, write a SQL query that...

The Frank Stone Company is considering the introduction of a new product. Generally, the company's products have a life of about 5 years, after which they are deleted from the range of products that...

The following table shows the forecast cash flows for two projects: Co A -$1,000 B -1,000 It C1 $20 50 C2 $20 50 Req A1 Now suppose that the term structure is upward sloping and investors demand a...

1. Ms. Jones now asks Rosa to look at the ratio analysis of Readers' Publishing's balance sheet for the last quarter and interpret the result. "Our balance sheet showed cash of $20,000, cash...

Honolulu Shirt Shop has very seasonal sales. Assume that for next year management is trying to decide whether to establish a sales budget based on average sales or on sales estimated by quarter. The...

Assume now that JP Morgan announces that it plans to acquire Ameritrade in a cash transaction. The stock prices of the two firms had the following reaction to the announcement: JP Morgan Ameritrade...

Suppose you are a Chief Financial Officer (CFO) of a UK based listed Part A - company. The company is currently trading at 10 per share and 10 million shares in issue. The total market value of the...

You are the Divisional Lead of Human Resources at a large international mining firm with operations located throughout the world. The senior leadership team wants to move away from providing a 100%...

1. Assuming a discount rate of 7% for large pharmaceutical companies, what do you estimate as Genzyme?s intrinsic market value for the management scenario? Express in terms of firm value and as price...

ABC Company provided the following information for the year ended December 31, 2021: ABC Company Statement of Financial Position As of December 31, 2021 and 2020 Assets Current assets Cash and cash...

4. The table below shows the daily closing values of the S&P 500 index, along with the daily prices for the S&P 500 futures contract with maturity date October 29 of the same year. The futures...

Dino's 2014 and 2015 balance sheets and income statements, together with projections for 2016, are given in Tables 1 and 2. In addition, Table 5 gives the company's 2014 and 2015 financial ratios,...

A company with EBIT of $5,000,000 is considering two financing alternatives. The first alternative would have $23 million of bonds at 7% interest and 900,000 common shares outstanding, whereas the...

Isorait Co is a company which installs kitchens and bathrooms to customer specifications. It is planning to invest KShs. 4,000,000 in a new facility to convert vans and trucks into motorhomes. Each...

CARLIN: Has been renting a two-bedroom apartment with her husband and 3 kids; wants to move into a three-bedroom home instead Took her five years, but she has saved $20,000 for a down payment ...

Iranzo Ammunition is an all-equity firm that currently has 6,000,000 shares outstanding worth $50 per share. The company's considering converting to a capital structure that is 50.0% debt. The firm...

The correct answers are based on the set of facts and tables provided below. All the data you need to perform the necessary calculations are contained in the tables following the three paragraphs...

You are debating buying a junk bond with a CCC credit rating. The market should discount expected cash flows of this bond at 8%. The bond is a zero coupon bond with YTM (implied by its market price)...

You saw an advertisement on the website of ABC Bank about a new product called "Best Protection Deposits". The information about the product is listed below: Deposits Required Guaranteed Interest...

Jona Kenson, your good friend, has come to you for financial advice regarding their retirement which will occur in (20 + E) years. They expect that post retirement, they will live for (20 + A) years....

Assume that the continuously compounded zero rate curve is t re(0, t) = 0.02 +0.01- 1 + t (i) find the instantaneous interest rate curve; (ii) compute the corresponding annually compounded zero rate...

In The Super investors of Graham-and-Doddsville, Warren Buffett asks readers to imagine 225 million investors competing in a national coin-flipping contest. Which of the following statements is/are...

Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Cobre Company is considering the purchase of new equipment that will speed up the process for...

Looking for the excel function in Yellow on Q9 Question 9 Annual 3.000% Semi-Annual 3.022% Quarterly 3.034% Monthly 3.042% 4 points Question 10 14.2 14.2 4 points 9) After reviewing the compounding...

Heavy Duty, a manufacturer of hydraulic tipper trailers for the mining business and its competitor Bullmaster are located in Folfanga. Folfanga does not charge corporate taxes. In the local stock...

The Gabriel James Company manufacturers two types of boats. The company provides the following data pertinent to allocating its annual overhead cost of $460,000. Units per year Machine hours/unit...

2-year $100 Treasuries paying an annual coupon of $5 are trading at a rate of 5% per year (so priced at par). 2-year Zero-coupon bonds are trading at 5.1% per year. What rate would a one year zero...

It is March 9, and you have just entered into a short position in a soybean meal futures contract. The contract expires on July 9 and calls for the delivery of 100 tons of soybean meal. Further,...

The yield to maturity on 1-year zero-coupon bonds is currently 7%; the YTM on 2-year zeros is 8%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon...

Ray Flagg took out a 60-month fixed installment loan of$12,000 to open a new pet store. He paid no money down and began making monthly payments of $232. Ray's business does better than expected and...

During 2019 four individuals are employed by Ellipses Corp. These employees are as follows: Social Federal W/H State W/H Marital Name Address Security # Allowances Allowances Status Hunter Cranston...

Suppose that spot gold is at 350. Suppose the volatility of the return on gold is 15%, and the 90-day risk free rate is 4% (not annualized). a. Compute Gamma, Vega and Theta, for call and puts for...

Hasan Fareed, a 24-year-old college graduate, never took a personal finance class. He pays his bills on time, has managed to save a little in an investment account, and with the help of an...

Consider the data for Lavare in Problem 1. We now assume that Lavare can change the size of the workforce by laying off or hiring employees. Hiring a new employee incurs a cost of $1,000; laying off...

Mark has a credit card with a $5,000 balance. His interest rate is 19%, and the credit card company requires a minimum monthly payment of $100 per month. This interest calculator will show how much...

Your company wants to invest its cash surplus of $1m. in a Treasury bill for a period of 6 months. The T-bill rate is 5.5% p.a. continuous compounding. The company's treasurer, has asked you to...

At your daughter's 6th birthday party she tells you that she wants to go to Princeton. It will cost you $30,000 per year for her to attend this four year program. You start putting money into an...

Nutrition is often talked about in everyday pop culture. Nutrition science, however, is not always part of the conversation. Respond to the following in a minimum of 175 words: Discuss some examples...

An FRA market maker sells a EUR 100 million 3v6 FRA at a rate of 7.52%. He is exposed to the risk that interest rates will have risen by the FRA settlement date in three months' time. a. b. The...

Zim Company uses the following cost function: Y = $4200 + $5.25X. If the number of units produced in a month is 100, what would be the total cost?

Consider the perfectly competitive wheat sector in Pakistan. To begin with, consider that the economy is closed to trade. The government imposes a consumption tax of $10 per unit, consumers pay $20...

Alice's optimal portfolio puts weight 0.1 on Apple, 0.06 on Tesla, and 0.1 on the risk free asset. Bob's optimal portfolio has a weight -0.5 on the risk free asset. What is Bob's portfolio weight on...

Implied Volatility. Replicate the Implied Volatility Smile Figure on Page 12 of LN3, using current Call options data on the S&P500 (SPX) maturing on January 20, 2023. Please state the assumptions you...

Perhaps more surprising to Mr. Pitkin was a proposal by the VP of Marketing to make a major investment in market share by increasing promotional expenditures by $2.5 million during 1998-2000. Sales...

Research and explain how stranded asset risk is expected to impact the share price of BHP and Woodside in the next 5 years, 10 years, and 20 years. (70%) What the question requires you to do is...

In the following table, you are provided eight common audit objectives for accounts payable or purchases. For each given objective, identify the management assertion and indicate Y for yes or N for...

Once you've run solver for the global minimum variance portfolio, look at positions C331:C350. These are the weights you would invest in each country to get the minimum variance portfolio. Are these...

Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a new childrens toy. The machine will increase EBITDA by $215,000 per year for...

assume the underlying asset is a stock worth $55 today. Also assume the following spot prices will be realized in the future S 1 =$62 and S 2 =47. Also assume that C(50,1)=$7 and P(50,2)=$3. r=15%....

A company's debt is given by a bond that will mature in two years. After two years the company will terminate all activity. The company unlevered equity value in two years can be $17 millions with a...