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Finance Questions and Answers April 24, 2016

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The YTM on a bond is the interest rate you earn on your investment if interest rates dont change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy a bond with an annual coupon rate of 11 percent for $1,200. The bond has 19 years to maturity. What rate of

Kandia Inc. expects to generate free-cash of $50000per year forever. If the firm's cost of capital is 0.17 percent, the firm cost of equity capital is 0.2 the market value of debt is $350000, the market value of preferred stock is $185000, and the company has 150000 shares of stock outstanding. What is the value of Kandia's stock? what is the
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need help 2 XYZ Co, issues $1,000 par value, 5.6% annual coupon bonds, with 15 years to maturity. The compamy sells the bonds for $750. Find the after-tax cost of debt assuming a tax rate of 35%. 5.61%9.14%6.20%4.30%
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(Bondholders' expected rate of return) You own a bond that has a par value of $1,000 and matures in 18 years. It pays an annual coupon rate of 11 percent. The bond currently sells for $1,000. What is the bond's expected rate of return? The bond's expected rate of return is %. (Round to two decimal places.)
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Answer the following and show complete solutions. The correct answer is exactly one of the choices there, so please show your calculations. The answer is there in the choices. For the last 10 years Piotr has been saving $78.75 at the start of every day. The interest rate is 5.950% compounded semi-annually. If Piotr stops making deposits now, how
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What is the time value of money and why is it so important in finance? If you won the lottery for $10 million and you had the choice to take a lump sum or payments over 20 years, a. which option would you choose? Why? b. What questions do you need answered before you decide? c. What situations may change your decision? Banks and other lenders are

Westeros Inc., is a constant growth company (growing about 5% every year), would like to obtain $5 million to fund a project. If the company invests on this project today, the growth rate will go up to 6% per year going forward. Company has two options. Issue Bond : 10-year bonds to be issued today, each with a face value of $1,000 and a coupon

Capital Expenditure Proposals Background: General Hospital has a total capital expenditure budget for next year of five million dollars. Of this amount, three million is already committed as spending for capital assets that have already been acquired and are in place. The remaining two million dollars is available for new assets and for new

2. (10 points) Granite Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $80,000 and $16,000 hours respectively, for the year. In June, Job #315 was completed.
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FCFE Valuation A company's most recent free cash flow to equity was $130 and is expected to grow at 4% thereafter. The company's cost of equity is 12%. Its WACC is 7.81%. What is its current intrinsic value? Round your answer to the nearest dollar
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An investment manager based in Germany hedges a portfolio of UK gilts with a 3-month forward contract. The current spot rate is GBP0.833/EUR and the 90-day forward rate is GBP0.856/EUR. At the end of 3 months, the gilts have risen in value by 2.50% (in GBP terms), and the spot rate is now GBP0.82/EUR. What was the true cost of the forward
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Super Duper Retail is considering buying some new cash registers from Registers R Us to use in its stores. Super Duper currently pays annual interest of $200,000 per year on its debt. It just agreed to pay $20,000 for a consultant from Registers R Us to come out and give the recommendations on which registers will work best so that they can go

Dreamers inc has 230,000 shares of common stock outstanding at a market price of $40 a share. next quarter, dreamers is expected to pay an annual dividend in the amount of $1.80 per share. the dividend growth rate is 3 percent. dreamer also has 8000 bonds outstanding with a face value of $1,000 per bond. the bonds are selling at 102 percent of

Use the information below to calculate the expected gain or loss on the carry trade strategy for an initial borrowed amount of 1,000,000 (you will have to determine the currency of borrowing). Keep at least two decimals in your calculations but round up or down at the end (enter the final answer without decimals). Current spot rate of Polish zloty
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If there was one thing the folks at Creative Products Corporation (CPC) knew well, it was how to come up with useful and unique products in the midst of economic adversity. With current year revenues considerably lower and profit margins shrinking due to severe price competition, the firm's engineers had been pushed hard to develop a prototype of
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Today, one share of Smith & Wesson Brands Inc (ticker symbol: SWBI) sells for $46.20. SWBI is expected to grow its dividends by 4.4% indefinitely. To hold SWBI shares, investors require a rate of 11.4%. Given this information, the dividend SWBI just paid was: Multiple Choice o $2.78 O O $3.23 $3.03 O O $3.09 O O $3.60
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Question 15 (2 points) Saved Please identify the proper name of the financial ratio or identity defined by the formula show below: Interest Expense + Net Income (1-ferage Tax Rate) Sales ROA EBIT
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Your firm is considering a project that requires in investment of $ 1 5 8 , 0 0 0 today. It is projected to pay $ 4 3 , 0 0 0 at the end of the year and at the end of the next two years after that ( i . e . , the cash flows at t = 1 , 2 , and 3 are all $ 4 3 , 0 0 0 ) . Four years from today, the project is projected to pay $ 7 2 , 0 0 0 . If the

17. (Insuring a portfolio with options) Portfolio insurance describes a position in which an investor buys put options to insure that the value of his por does not fall below a certain point. Suppose Jerry has a portfolio tan of 100 shares of RTY stock. The current market price of RTY is $35 per share. The following options are also traded on RTY
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1) Model ( 3marks per question) and solve (2 marks per question) the following scenarios using "solver" tool in excel Note that you must submit the excel document to get credit for this question a) Soundex produces three models of satellite radios. Model A requires 15 min of work on assembly line 1 and 10 min of work on assembly line 2. Model B
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8. A call option on US dollar is available with a strike price of GHS 3.900. Esther, a speculator, purchased the option for a premium of 0.2500. The USD spot rate on the day of expiration is 4.0500. a. Is the call option in the money? Explain. b. How much profit/loss per unit did Kofi make on this call option? c. What is the net profit per unit to
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Primare Corporation has provided the following data concerning last month's manufacturing operations. Required: 1. Prepare a schedule of cost of goods manufactured for the month. . 2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold. Complete the question by
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Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. Current dividends are $720. What value would Dritter place on the stock and what about Zehnte who has a 10-year horizon? (Do not round
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Julia has a mortgage on her house with a balance of $ 1 5 0 , 0 0 0 and the APR on the loan is 4 % . She is currently paying $ 1 , 5 0 0 a month on the loan, at this rate how many years will it take to repay the loan?
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The current continuously compounded risk free rate is 1% per annum for all maturities. The interest rate may fluctuate randomly in the future. A company XYZ will not pay dividend in the next ten years. (3 points) (7.1) The two-year forward price of XYZ is $55 per share. Assuming no arbitrage exists, find the five-year forward price of XYZ. (1

Consider the following two projects: Projects Alpha & Beta Seven-Year Cash Flow Year Ol Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discnt Project C/ FC/ FC/ FC/ FC/ FC/ FC/ FC/F Rate Alpha -79 20 25 30 35 40 N/A N/A 16% Beta -80 25 25 25 25 25 25 25 17% The net present value (NPV) for project alpha is closest to ____ $12.25 $14.41 $21.62
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The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to the new tax legislation. This machine is being depreciated on a straight-line basis, and it has 6 years of remaining life. Its current book value is $2,400, and it can be sold for $2,600 at this time. Thus, the annual depreciation expense is $2,400/6

briefly explain the principles you follow Assignmenttest2 A Home ABESU Inert Drew Page Layout Formulas Calibri Body 11 A A BTU BOA Duta Review View = = > ESSE Share . 0. Comments 4 . . . . . . 2 4 LU PR Test Merye & Corner General -% . condition to C D MN ame Date of birth ddim 1 Sales will grow 1012 Next War Filthe numbers for 2018 based on
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2. Problem 5-8 Assume that a lender offers a 30-year, $150,000 adjustable rate mortgage (ARM) with the following terms: 10 points eBook Initial interest rate = 7.5 percent Index = one-year Treasuries Payments reset each year Margin = 2 percent Interest rate cap = 1 percent annually; 3 percent lifetime Discount points = 2 percent Print References
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Axis Corp. is studying two mutually exclusive projects Project Kelvin involves an overhaul of the existing system, it will cost $52,500 and generate cash inflows of $24,500 per year for the next 3 years. Project Thompson replaces the existing system, it will cost $220,000 and generate cash inflows of $50,000 per year for 6 years. Using a(n) 11.36%
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Duce Bank will likely assess Mr . Smith's creditworthiness, his ability to repay the loan, and the value of the newly constructed building. They may consider his payment history on the existing $ 8 0 , 0 0 0 mortgage, his income, and his credit score. If these factors demonstrate his ability to service the new loan, Duce Bank may approve the $ 1 6

The following table presents the Degrees of Operating Leverage (DOLs) and Degrees of Financial Leverage (DFLs) of Firm A and Firm B. DOL DFL Eum A 15 2.0 Firm B 2.0 3.0 Which of the following statements is NOT true according to the information above? If the Sales of Firm A Increase by 10%, its EBIT will increase by 15% of the Sales of Firm
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Question 2 Value at Risk (Historical Data Method) Suppose ABC insurance company invests $500,000 in the S\&P 500 index in the period Jan 1, 2007 to December 31, 2008 (2008 Financial Crisis time). Step 1: Please go to website, get the daily adjusted close price. Step 2: Please calculate the daily return: rt=PtPt+1Pt Step 3: Please determine the
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(Cost of short-term bank joan) On July 1, 2018, the Southwest Forging Corporation arranged for a line of credit with the First National Bank (FNB) of Dallas. The terms of the agreement call for a $110,000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 17 percent compensating balance in its demand
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Suppose that Ally Financial Inc issued a bond with 10 years until maturity a face value of $1,000, and a coupon rate of 75 (annual paymentu) The yield to maturity on this bond when it was issued was 69 a. What was the price of this bond when it was issued? b. Assuming the yield to maturity remains constant, what is the price of the bond
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Capital Structure Analysis Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $11.16 million, and its tax rate is 15%. Pettit can change its capital structure either by increasing its debt to 70%

PLEASE MAKE SURE YOU USE THE CURRENT MARKET VALUE Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of solar-charged motorcycles (who wants to ride on a cloudy day anyway?) The proposed project has the following features; The firm just spent $300,000 for a marketing study to

Greta has tisk aversion of A=3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S\&P 500 and a hedge fund, as well as a number of one-year strategies. (All rotes are annual and continuousty compounded.) The S8P 500 fisk premium is estimated at 9% per year, with a standard deviation of 17%. The hedge
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