Finance Questions and Answers December 26, 2021

For Valentine's Day, the student council is going to sell single roses and chocolate hearts. The council must first buy roses and hearts to sell. Each rose costs $0.75 while each chocolate heart costs $0.50 at the store . The council has at most $270 to spend on this fundraiser. On average, it takes two minutes to make a rose by wrapping it with a

Once again, you are a CEO newly appointed for the Continuing Care Retirement Community that is under the Hospital System from previous weeks. A board retreat is coming up and you must help with a critical decision: relocate the facility to a more suburban area, or stay in its current metropolitan area location. In Week 7-8, do some research on

A cash flow is a growing annuity for the first 20 years and a simple perpetuity thereafter.The discount rate is 8%. The growth rate for the growing annuity portion is 12% and the first cash flow being $1000 received one year from today. All subsequent cash flows are at one year intervals. What is the present value of this cash flow?

The Surf shack has 11,600 shares of common stock outstanding at $66 a share with a return rate of 11.25%. They have 350 outstanding bonds, with a par of $1000. Their cost of debt is 5.95 and the bonds sell for 94.5 % of par. With a tax rate of 40% calculate their WACC?

Discuss why the free cash flow (FCF) excludes interest payments. Does it have to be done this way? If not, what other changes would have to be made, if any? Why are changes in net operating working capital (NOWC) subtracted from the operating cash flow (OCF) in deriving the FCF? Also, explain why the terminal value of a project must be taken into

Beaver is a canadian fashion shop with operations aboard. Beaver has formed a joint venture with a U.K. firm.Beaver! Expects receive cash dividends from the joint venture over the next four year. The first dividend will be paid one year from now with an amount of 50,000 for the following the end of year dividend is expected to increase by 10%

Suppose you are given the following quotes by a dealer: Brazilian Real/U.S. Dollar = 3.914 U.S. Dollar/Australian Dollar = 0.735 Chinese Yuan/U.S. Dollar = 7.594 You plan to make a 15-day trip to China after your final exam. You have saved 18,689 U. S. dollars for your trip. How many Chinese Yuan will you get if you convert your U.S. dollars to

If you are given: a current yield to maturity on 30 year treasury bonds (eg 2%), a current yield to maturity on 3 month treasury bills (eg 1%), most recent one year return on the S&P 500 (eg 5%), and an estimate of expected average return on the S&P 500 over the next 30 years (eg 8%), and you are instructed to calculate the cost of equity

Consider three risky assets described by the following covariance matrix Find the correlation coefficients P12 P13 P23 and the standard deviations 01 02 03 C 0.0005 0.0625 0.0005 0.01 0.0015 0.0012 0.0015 0.0012 0.0225

You have $50,000 in cash and you would like to allocate it between the common stock of American International Group, Inc. (AIG) and Citigroup, Inc. (C) or (CITI). Before making your investment, you have decided to examine the past performance of these stocks under the assumption that their performance from Jan. 1, 2019 - Dec. 31, 2019 is

Mark, a consultant for ZZZ Inc., has been hired to calculate the WACC for YYY, an App development firm. YYY's shares are trading at $22 and the firm has 1 billion shares outstanding. Based on their balance sheet, YYY has long-term debt of $10 billion (the underlying bonds have 9 years until maturity, a face value of $1,000, and annual coupon of

Young Consultants maintains a retention ratio of 60% for its earnings to be invested in new projects. The company's ROE is 15%. If the next dividend is $0.50 and the required rate of return is 13%. What should Young Consultants stock price be today? Can you show me how to solve it?

Suppose Apple wants to borrow money at the floating rate of interest and Blackberry wants to borrow at the fixed rate of interest. The two companies face the following borrowing costs: Apple: Fixed 2%, Floating 6-month LIBOR Blackberry: Fixed 3.5%, Floating 6-month LIBOR + 0.5% Question 1: If Apple and Blackberry cannot sign a SWAP contract, what

You run a profitable conglomerate that is considering a long-term pop-up investment into the $1 billion (annual revenue) gelato market. You spent $2 million to obtain the following data. Because of your firm's power you could instantaneously capture 4.8% market share. In addition, this business will have an impact on your firm's current sales. You

Total Sales Gelati Sales NonGelati Food Sales Stock Price (Market) Stock Price (Book) Book Value of Equity Book Value of Firm Bond Credit Rating Beta (Yahoo Finance) Your Firm 300 Million 0 200 Million 30 20 500 Million 800 Million AA 1.4 Gelati Inc 50 Million 48 Million 2 Million 40 35 70 Million 90 Million AA 1.0 Oh Gelato 60 Million 57 Million

Flex Co. just paid total dividends of $1,125,000 and reported additions to retained earnings of $3,375,000. The company has 735,000 shares of stock outstanding and a benchmark PE of 17.50 times. What stock price would you consider appropriate?

Ghost Riders Co. has an EPS of $1.62 that is expected to grow at 8.2 percent per year. If the PE ratio is 18.85 times. What is the projected stock price in 5 years?

The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term annual return of 13%. The expected return of the market index is RM = 10.2%, the volatility of the market index is M = 12%, and the risk-free asset earns Rf = 5.1%. The CFO has studied similar projects of

Lucas builds a portfolio by investing in two stocks only: Samsung (SMSN) and Motorola (MSI). According to the CAPM, the expected risk premium (i.e., the expected return minus the risk-free rate) of SMSN is 12.5% and the expected risk premium of MSI is 5.66%. The beta of SMSN is equal to 1.03. If Lucas puts 78% of his money in SMSN stock and 22% in

The Indianapolis Pacers have several different season ticket packages ranging from over $100 per seat for courtside tickets to upper level seats priced at $10 each. I decided to buy season tickets (there are 41 home games in total) for my family of 4 and settled on the $30 tickets. I have the option of paying the full amount today, or I can take

Obi-wan forms an aggressive growth portfolio by investing 24% of his savings in Ford stock, 20% in Toyota stock, 23% in Kia stock, 14% in an index fund, and the last 19% is allocated on a bond fund. Assume for simplicity that the index fund is a good proxy to the market portfolio and has a beta equal to 1, whereas the bond fund is a good proxy to

A stock's current price is 202 and it has declared dividends of $0.7/share each to be paid in 38 days, 158 days, and 278 days from now. Price a 300-day forward contract assuming that the risk free rate is 2%. Provide the forward price rounded to two decimals?

Alabaster Incorporated wants to be levered at a debt-to-value ratio of 6. The cost of debt is 9 percent, the tax rate is 21 percent, and the cost of equity for an all-equity firm is 12 percent. What will be the firm's cost of equity?

You want to buy a semiannual bond that has 4 years left before maturity. It has a 6% coupon rate and the market yield is currently 5.2%. What is the price you are willing to pay?

Stocks or Bonds, which one is overprived? Use its P/E ratio and Yield spread (the stock yied spread is: earning yield E/P minus yield in the T-bond) to make a call. You do not need to find the data for me, but I hope you can explain the principle for the method required in the question, like how can the P/E and yied spread explain which one is

A zero-coupon bond with a face value of $1,000 is issued with an initial price of $430.84 based on semiannual compounding. The bond matures in 20 years. what is the implicit interest. In dollars for the first year of the bond's life?

You have decided to advance refund $10,000,000 of outstanding debt that is callable in 5 years. The interest rate on these bonds is 8%. You can issue new bonds at 6%. For every dollar of new debt issued, you will incur a 5% issuance cost. Interest payments on the present issue are $800,000 per year with no scheduled principal payments. How much

Bendersick Cumberbad purchased a bond 5 years ago for $945.85. At the time of purchase, it had a coupon rate of 6% with semi-annual payments and 15 years left to maturity. Mr. Cumberbad is selling the bond today, and the market rate for this bond has fallen to 5.5%. What is his realized return on this bondBendersick Cumberbad purchased a bond 5

Suppose you are given the following quotes by a dealer: Brazilian Real/U.S. Dollar = 4.157 U.S. Dollar/Australian Dollar = 0.542 Chinese Yuan/U.S. Dollar = 6.403 You just landed back to USA from your 7-day trip to Brazil. You brought back 5,575 Brazilian Real from your trip. How many dollars will you get if you convert your Brazilian Real to US

Your budget you can afford to service a loan with a maximum repayment of $400 per month over afive-year loan term. If interest rates are 6% p.a. compounded monthly. Can you afford to borrow $20,000 fora new car? Explain?

Nano Media is a young, growing social media company that has just reported net income of 10 million for the most recent year, on revenues of 100 million. The company reported capital expenditures (including acquisitions) of 40 million for the most recent year, significantly higher than the depreciation of 12 million for the year. Finally, noncash

Lowell Inc. has provided the following information at the end of LAST year Net Income 100 million No. of shares 50 million Cosntant dividend payout ratio 50 Cost of equity capital 10 Longrun earnings growth rate 6 What is the estimated stock price Hints Dividend per share EPS Dividend payout ratio PO D1(KsG)

Use Table 1 and the following information on Company X to perform a proforma financial modeling using a percentage sales method, and answers the next questions. Note When applying the percentage sales method, you should assume that the 2023 percentage values with respect to sales of the (i) costs except depreciation, (ii) depreciation, (iii) cash

Use Table 1 and the following information on Company X to perform a proforma financial modeling using a percentage sales method, and answers the next questions. Note When applying the percentage sales method, you should assume that the 2023 percentage values with respect to sales of the (i) costs except depreciation, (ii) depreciation, (iii) cash

If you invested the same amount of money in each of three stocks at the beginning of the time period from Part One (and you rebalance at the end of each month so that you have the same amount of investment in each stock), what would be the average monthly return of the portfolio and the volatility (standard deviation) of the portfolios monthly

What is the average estimated stock price of Lowell Inc. using the PriceEarnings (PE) and MarketBook (MB) ratio The closest competitor has the PE ratio of 20 and MB ratio of 3. Lowell Inc. Total Assets 400 mn Total Liabilities 200 mn Shareholder Equity 200 mn Net income 50 Shares outstanding 20 million

In 2021, Fords Cost of Goods Sold (COGS) was 114.7 billion dollars. Based on the information provided above, how many times a year does Ford through its inventory (Round this answer to a single decimal point). What is the average number of days it takes Ford to sell through its inventory once (Round this answer to the nearest whole number).,For

Consider an investment where the cash flows are 994.39 at time t 0 (negative since this is your initial investment) 331 at time f 1 in years 432 at time r 2 in years 310 at time r 3 in years Problem 2(b) (a) Use Excels Solver to find the internal rate of return (IRR) of this investment. Take a screen shot showing Solver open with your entries

What is this projects discounted payback WACC 9.00 0 Year Cash flows 1095 1 600 2 500 3 400

The balance sheet for the Chrome Corp. is shown here in market value terms. There are 10,600 shares of stock outstanding. Cash Fixed Assets Total 29,900 107,900 137,800 What is the stock selling for today 13 Correct response 130.01 What will the stock sell for tomorrow Market Value Balance Sheet The company has declared a dividend of 1.95 per

Jamie Wong is thinking of building an investment portfolio containing two exchange traded funds (ETFs). Jamie plans to invest 2,500 in Vanguard SP 500 ETF (VOO) and 7,500 in Invesco QQQ Trust (QQQ). Jamie has decided to some historical returns to get a sense for her portfolios possible future risk and return. Six years of historical annual returns

12. A corner lot with commercial zoning currently is improved with a residential dwelling. You are provided with the following information for the property Improved Value 150,000 As if Vacant Value 200,000 Demolition Cost 25,000 Based upon the above information, and assuming that demand for commercial sites in the marketplace is immediately

Given the following Stock equals 100 Stock volatility of 40 Debt maturity of 5 years Debt Face value of 150 Riskfree rate of 3 Use Mertons model to find the asset value and asset volatility What is the riskneutral probability of default over the debts maturity and the annualized default probability What is the market spread for the debt What

8. An investor with 76,000 to invest feels that NextEra Energys (NYSE NEE) stock price will go up over the next six months. The current stock price is 76 and the price of a six month call option with a strike of 75 is 6.4 per share. The investor can invest the money in stocks or in options. a) If the stock price turns out to be 85 per share in six

Why are the prices of put options with strike prices between 19 and 20.50 more expensive than the other put options on the list If the investor sells 10 contracts of 18.50 call options, how much are the total sale proceeds (call premium) Note that 1 option contract trades 100 shares. If an investor expects the stock price of Air Canada to move up

The earnings of an oil and gas company in 2022 were 1,313 million, and the company plans for 552 million capital expenditure, and 539,713 millionacquisition in 2023. Suppose the company had no other large capital spending, and the target debtoequity ratio is 0.38. The company have 162 million common shares outstanding. How much dividend per share

4. An allequity financed firm has aftertax cash perpetual flows of 0.3 million each year and the cost of equity is 15. The firm could borrow 1million at 8 to repurchase part of its equity. Tax rate is 40. a) What is the value of the allequity firm b) What would be the value of the firm if it decided to go ahead and borrow 1million debt c)

2. MoneySmart is an allequity company with a firm value of 30 million, and the cost of equity is 16. The company plans to raise 5 million debt by selling 10 annual coupon bonds to the public, and the sale proceeds will be used to repurchase stocks and change the companys capital structure. a) Assume no taxes or bankruptcy costs, what will be the

(a) ABC is a company that manufactures computer desk. The total costs (in RM000) when x units of computer desk are produced is given by C(x) 12x 3 198x 2 1080x Find the level of x that the cost is at the minimum. What is the minimum cost (8 marks)

You want to invest your annual salary which is LE1,000,000 in a mortgage loan to buy a property. Find a suitable property (it has to be a real property) and specify its price and location. You need to determine the loan to value, loan rate and maturity of the loan in order to answer the following questions: a) What is your monthly P&I? b)

A manufacturer of backpacks plans to introduce a new line. Equipment and production costs will be incurred immediately and will total $7,272,727. The company expects to earn a profit of $20 per backpack, and sales are estimated to be 100,000 in the first year (assume that the cash flow comes in at the end of the year). Sales are then expected to

The annualized Indian rupee (INR) interest rate is 10 for six months, while the annualized USD interest rate is 3 for six months. Khaledi Co., a U.S. firm, entered into a currency swap with a swap dealer, where Khaledi Co. receives 2.0 semiannually in USD and pays 7.0 semiannually in INR. Note the interest rates to be represented are all

You are an analyst for a managed mutual fund. You have been given the task of investigating whether any significant relationship exists between a company's profitability (ROE) and its environmental, social, and governance (ESG) ratings and management (CEO) turnover. A regression is performed with ROE (in percent) as the dependent variable and CEO

Intercept ESG Tenure ANOVA Regression Residual Total Multiple R Adjuste R2 Coefficient 9.442 0.069 0681 SS 240.410 1069.000 1309.410 0.428 0.183 Standard Error 3.343 0.058 0.295 MSS 120.205 28.892 Adjusted R2 tstat 2.8424 1.201 2.308 F 4.161 0.139 p Value 0.008 0.238 0.027 Significance F 0.023

Depending on the adoption of shale gas extraction technology in Poland and Ukraine, world natural gas prices will be either high or low in each of the years 2013- 2016. If they are high, prices will be $0.2 per cubic meter in 2013 and grow at 5% each year. If they are low, prices will be $0.1 per cubic meter in 2013 and grow at 5% each year. The

The table below contains the current prices for calls and puts with various strike prices and a stock currently priced at 129. Todays Date 2202019 Current Stock Price 129 Option expiration 5202019 (Assume T .25) 3 month risk free rate 3.00. (quoted on an annualized basis) 1. Calculate each options Intrinsic Value, Time Value, upper and lower

Joseph King's employment was terminated on May 2, 2021 due to restructuring. In addition to his regular wages, he was paid a bonus of $5,000.00. Where would the bonus be reported on the Record of Employment?

Suppose you go short three contracts of August HRC Steel futures today (Day 0) at a price of $1,725 per ton. The contract size is 20 tons per contract. You opened the position with minimum margin required of $1,600 per contract. The maintenance margin is $1,200 per contract. Transaction costs and taxes make no impact on your net position. (a) If

You just graduated from the University of Arizona. Unfortunately, you have also accumulated a 30,000 student loan over four years. Now you need to start paying it off. Suppose the interest rate on the loan is 6 and you need to pay off the loan in 10 years with equal annual payment every year. a) Figure out what the equal payment amount should be

If you purchased ten July 2020 call option contracts.Today for a premium of $0.45 and you sold them on the expiry date. What is your total profit (or loss) if the stock was trading at spot price of $24.20 at expiry?

Increases or decreases in the riskiness of the future value of an asset have interesting and important effects on the value of call and put options written on the property today. To illustrate this, we consider a given property, which we can regard as a generic asset, which was sold for the price V0 at date t=0. At that time, a call and a put

Calculate the weights of VBTLX and VFIAX that achieve a portfolio allocation that represents an "optimal risky portfolio" on the efficient frontier, as of the end of December 2015. Given these weights, how much of the $5 million would you invest in VBTLX?

A 1 2 Date 3 Jan12 4 Feb12 5 Mar12 6 Apr12 7 May12 8 Jun12 9 Jul12 10 Aug12 11 Sep12 12 Oct12 13 Nov12 14 Dec12 15 Jan13 16 Feb13 17 Mar13 18 Apr13 19 May13 20 Jun13 21 Jul13 22 Aug13 23 Sep13 24 Oct13 25 Nov13 26 Dec13 27 Jan14 28 Feb14 29 Mar14 30 Apr14 31 May14 32 Jun14 33 Jul14 34 Aug14 35 Sep14 36 Oct14 37 Nov14 38 Dec14 39 Jan15 40 Feb15 41

If you invested $53,000 today in exchange for a 15-year annuity that offers 8 percent return on investment, what will the monthly payments be?

A direct listing is an alternative to Initial Public Offerings (IPOs) in which a company does not work with an investment bank to underwrite the issuing of stock. While forgoing the safety net that an underwriter provides, a company uses a quicker, less expensive way to raise capital. However, the opening stock price will be completely subject to

Suppose you want to buy a house that costs $790,000. You are required to put 10% down, which means the amount to be borrowed is 90% of the value of the house. If you want a 30-year mortgage, and the borrowing rate is 7% APR, what would be your monthly payment?

You sold short two index futures contract at the opening price of 2452.25 on July 1. The contract moves 500 in value per point (125 per tic, or, per 14 point). The initial margin requirements is 9,000 per contract and the maintenance margin is 6,000 per contract. The settlement price for July 1 is 2453.75. What is the balance of your margin

A 4item scale has been developed to measure the level of trust distribution channel members have for one another. The results of reliability analysis using SPSS are on the next page. Respond to the following items. 1. What is the reliability of this 4item scale According to the guideline for reliability discussed in class, is this 4item scale

You have taken out a %745,020 unrestricted ARM. The loan rate is set by the 1-year T-Bill plus a margin of 2.66%. At initiation, the 1-year T-Bill is yielding 3.40%. On the first reset date, the 1-year T-Bill is Yielding 5.29%. On the second reset date, the 1-year T-Bill is yielding 6.67%. Calculate the payment that applies on the second reset

Percy Purveyor, a hotel supplier, sat opposite the general manager of the Eastwick Resort, Guy Thorpe. Percy was meeting with him to satisfy his curiosity-and to air a ievance. "I've been in business in this area for a few years now, Guy, and I know competitors' products and prices well. Your property has been using Electrotel products all its

3. Your company produces healthy foods and drinks for highincome consumers. One complaint that many of your consumers have about your products is that they do not taste very good, even though the health benefits are recognized by the consumers. In an attempt to improve this perception of the companys products tasting bad, it has decided to

A BCE bong has 11 years until maturity and a coupon rate of 8.1 payable annually, and sells for 1,090. Face value of the bond is 1,000. a. What is the current yield on the bond (Round your answer to 2 decimal places.) Current yield b. What is the yield to maturity (Round your answer to 2 decimal places.) Yield to maturity 8 8

A project with an Annual Income for the first 9 years =1000, if i=8% per year and n=12 years, then the Equivalent Annual Value for the last 9 years is closest to?

What is this pjects payback Year Cash flows 925 0 1 500 2 525 3 550

The Stansfield Endowment fund had this performance over the past 4 years 2019 20.00 2018 25.00 2017 36.00 2016 50.00 The true average performance of the fund over the past 4 years (i.e. the geometric mean return) is closest to

Q5 Fill out the chart below (i.e., indicate ATM, ITM or OTM) Strike price () Stock price () 57 52 87 65 42 55 74 Option types Call Put Call Put Call Put 72 65 42 43 81 ATM, ITM or OTM

Your futures account had equity of 20,000.00 at the start. Given the following positions, what is the accounts CURRENT equity balance POSITIONS Sep Wheat Dec Gold Dec Cocoa Cash TOTAL QTY 5 1 2 Cost 5720 1,554.70 2,526.00 Price 5592 1,666.50 2,756.00 Initial Equity PrLoss Current Eq. 3,200.00 11,180.00 2,300.00 6,875.00 5,500.00 4,180.00 3,445.00

You plan to open a gold mine at a cost of 800,000 today. In one year it will produce 1,000,000 and in two years 500,000. At the end of the third year you will shut down the project at a cost of 500,000. The rate of return that you would earn from investing in this project is closest to,Shelton Co. purchased a parcel of land six years ago for

Chinglish Dirk (C). Chinglish Dirk Company (Hong Kong) exports razor blades to its wholly owned parent company, Torrington Edge (Great Britain). Hong Kong tax rates are 16 and British tax rates are 33. The markup was 15 and the sales volume was 2,000 units. Chinglish calculates its profit per container as follows (all values in British pounds)

The slider crank mechanism as shown in Fig., below The lengths of crank OB and connecting rod AB are 100 mm and 400 mm respectively. Velocity of the If the crank rotates clockwise with an angular velocity of 10 rads, find slider A. and Angular velocity of the connecting rod AB. onntoutpute A 400 mm 100 mm 45 0 Fr

Consider a small cap value portfolio where the investment manager generates 0.26% of Carhart alpha. The risk-free rate of return is 3.60%, the return of the market is 9.75%, the value risk premium is 3.50% and the size premium is 2.55%. This manager has an exposure to the value premium of 75% and a 50% exposure to the size premium. The consultant,

Given a two-year, semi annual coupon paying bond with face value of $1000, coupon of 5% per annum and yield of 6% per annum: Calculate the duration of the bond. Use the duration measure to estimate the change expected in the bond price if the yield changes to 5.5% per annum.

a call on that stock to his position. Suppose you are given the following inputs So Call Premium Call Strike 52.00 2.50 54.00 Graph the net profit (not the payoff) for the stock, the short call, and the entire covered call position. Vary S, from 48 to 58 in increments of 1. Note The graphs come out a lot better if you use XY Scatterplots and

Discuss four characteristics of a traditional index fund (TIF). (according to John Bogle's book, pages XVII and XVIII of the Introduction) Why are ETFs different from a traditional index fund? What are the primary differences between investment returns and speculative returns? What does Reversion to the Mean (RTM) imply about selecting mutual

Margaret buys $1000 in corporate junk bonds with a nominal interest rate of 13% that pays the coupon annually( you hope). If she can reinvest at the same rate without tarnsaction costs. What will her investment have grown to after 15 years?

Suppose an engineer purchases a home and secures a loan of 2.5M from a commercial bank for 20 years at an annual interest rate of 9%. Find the monthly amortization of the loan. How much is the total amount paid over the life of the loan?

A firm has a debt-to-equity ratio of 0.66 and a market-to-book ratio of 2.0. What is the ratio of the book value of debt to the market value of equity? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Book to-debt-market ratio: Assume a firm's inventory level of $18,500 represents 23 days' sales. Required: a. What

Suppose Westerfield Co. has the following financial information: Debt: 400,000 bonds outstanding with a face value of $1,000. The bonds currently trade at 88% of par and have 15 years to maturity. The coupon rate equals 4%, and the bonds make semiannual interest payments. Preferred stock: 300,000 shares of preferred stock outstanding; currently

An investor A has a welldiversified portfolio. What risk measure is the most relevant in this case, standard deviation or beta Why Explain If riskfree rate is 4 beta of stock ABC is 1.5, and expected return on the market is 8, what is the required rate of return on stock ABC Now, assume you expect to realize an annual return of 12 by holding ABC,

The following actual and standard cost data for direct material and direct labor relate to the production of 2,000 units of a product Actual Costs Standard Costs 23,100 lbs. 4.90 22,000 lbs. 5.20 Direct material Direct labor 31,350 hrs. 9.30 33,000 hrs. 9.50 Determine the following variances Do not use negative signs with any of your answers.

Estimate the value of Runner's MVIC (the entire firm) using a multiperiod discounted cash flow model and assuming the following: Runner's Corporation Company Data Long-term market return: 11.45% ERP: 6.48% Beta: 1.0935 Cost of Equity: 9.5866% Free cash flow to the firm (FCFF) last year: 100,000 Expected annual growth in FCFF for next 4 years:

Purchase Price: $4,100,000 Rents: Tenant Monthly Rent Unit 1 $5,600 Unit 2 $5,600 Unit 3 $5,800 Unit 4 $3,200 Unit 5 $3,200 Unit 6 $3,200 Unit 7 $3,200 Unit 8 $3,200 Year 1 NOI: $259,578 NOI Growth Rate: 3% Loan: LTV: 75% Amortization Period: 27 years, Term: 10 years Interest Rate: 4.35% Lender Points: 2% Selling Costs: 5% Going Out Cap Rate: 6.5%

You are an investment banker trying to value Dell, a private company. You have forecasted Dell's free cash flows, but need to compute its WACC in order to value the firm. Unfortunately Dell is private and so it does not have stock data, so you cannot use CAPM to find its cost of equity. You know the following: Dell has debt of $600 at a cost of

Yesterday, Berryman Investments was selling for $75 per share. Today, the company completed a 7-for-2 stock split. If the total market value was unchanged by the split. What is the price of the stock today?

Consider a market with three assets (one bond, two stocks) that fulfills the assumptions of CAPM. The risky returns R and R2 are correlated with P12 13 and the following data is known R 200 R2 150 shares price 50 8 14 200 12 02 (a) (3pts) Find 2 and such that the market portfolio fulfills M 14 and M 16.5. (b) (3pts) What is the of each

An annuity pays 51 per year for 11 years. What is the future value (FV) of this annuity at the end of those 11 years, given that the discount rate is 8 come,The Sisyphean Companys common stock is currently trading for 27.25 per share. The stock is expected to pay a 2.20 dividend at the end of the year and the Sisyphean Companys equity cost of

1 SOM Deposit 7 (1) 8 9 5 banks offer nominal rates of 6, but differ in their compounding frequency. Aannually Bsemiannually C quarterly Dmonthly and Edaily. (1) EAR 20 21 22 23 24 17 18 03 19 25 26 27 28 29 30 31 32 33 34 35 36 37 6 5,000 B 10 11 12 13 14 15 Q2 What is the real return on an investment that earns a nominal 15 return during a

The Sisyphean Companys common stock is currently trading for 25.75 per share. The stock is expected to pay a 2.70 dividend at the end of the year and the Sisyphean Companys equity cost of capital is 15. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Sisyphean Companys earnings is closest to

The accounting break-even production quantity for a project is 5,799 units. The fixed costs are $92,640, the depreciation is $36,210, and the sales price per unit is $48.29. What is the variable cost per unit?

Rio Inc. company is analyzing a project requiring an initial investment of $20 million. At the end of 7 years the machinery has no further value. The machinery falls into asset Class 38, which has a CCA rate of 30%. The company owns other assets that also fall into this asset class. These other assets will remain in the asset class even after the

Suppose the current spot exchange rate is 1.20. If the inflation rate in the U.S. will be 5 next year, and the inflation rate in Europe be 8, 1. Based on PPP theory, which currency value will be strengthened in the near future 2. What will the spot exchange rate be in next year (Calculation is required, you MUST show your work for credit)

Suppose a risk neutral agent has 100,000 today that he wants to save for one year. Compare the following three savings plans. Bank A offers a standard savings account with 4.2 p.a. (per annum). Bank B offers the following alternative There is a basis interest rate of 1 p.a. and 40 participation on the performance of the SP500. The maximum interest

Given the following exchange rate quotes, find and calculate triangular arbitrage opportunity and its profit level, then set up the strategy. Citi Bank 0.85 British Bank 130 Japanese Bank 120S (1) 6 points Start the trading with 1000, try to calculate the possible triangular arbitrage profit. (MUST show your work for credit) (2) 2 points Describe