Finance Questions and Answers May 31, 2022

Assuming a firm takes out a 11-year loan of $50,000 at a stated annual rate of 7% to be repaid in equal annual end-of-year payments, what will the firm need to pay in fixed annual payments? To determine the periodic fixed payment (FP) on a loan value (LV) over a number of periods (N) at a periodic interest rate (i), the most common and effective

A 6% Transocean bond with annual coupon payments and a $1,000 par value has 12 years to maturity. If investors in this bond require a 10% annual rate of return, what is the market value of this bond? (Note that the rate preceding the firm name is the annual coupon rate.)

You are considering the purchase of a 5% Caterpillar bond with a face value of $1,000, annual coupon payments, and 5 years to maturity. If the current market price of the bond is $918, what is the bond's yield-to-maturity (YTM). (Note: In TVM problems in which you have both cash inflows and outflows, you need to enter cash outflows in your

Financial Statement Information: Sales $1,000 Net Income $50 Total Assets $2,000 Shareholder equity $750 Tax rate 40% Bond Issue: 1500,000 $1,000 par value 20-year 5% coupon bonds with semiannual payments with a yield to maturity of 7%. 100 million shares of stock outstanding Market price per share $20 1 million shares of $8 per share dividend

Ben inherits some money. he puts $1000 savings to an account paying compound interest of 3.5% per annum. Calculate the total amount of money, correct to nearest cent, in his account after 5 years

If last year's retained earnings were $15,000 and this year are $19,000. The company paid $2,500 in dividends. How much would be the net income for this year? (Do not use $ sign or commas)

Assume you invest 4,000 today and expect to earn 14 compounded annually over an investment period of 14 years. How much do you expect your investment will grow to at the end of your 14 year investment period (Note that the textbook approach assumed annual compounding it just didnt define it as such.),Assume you expect to receive 4,000 in 7 years.

Stella Lam (Stella) recently joins the workforce, and her starting salary is $3,500 per month. The CPF contribution rate (both employer and employee) for her age group is 37%, and this is allocated as follows: Ordinary account = 60% Medisave account = 22% Special account = 18% The interest rate paid by CPF Board on members ordinary account is

The 10-year bond yield issued by the Singapore Government has been increasing consistently over the last three years, from 0.84% in 2020, to 1.67% in 2021 and 3.09% in 2022. Examine the implications of the expected return on stocks using the capital asset pricing model in the current economic environment.

Mary buys 50 shares of XYZ stock for $80 per share. A year after, she sells the stock at $100 per share. (1) If she uses cash for this investment, what is the % return? (2) If she uses her margin account with a 60% margin, what is her % return? Now assume she sells at a loss at $60 per share, (3) What is her % loss if it is a cash investment, and

1. stock x just paid a dividend of $5.80. if you require a 15% return on equity, and if you expect dividends to grow indefinitely at 2.5% per year, what is the most that you will pay for stock x? 2. stock y just paid a dividend of $4.20. if the stock sells for $100, and if you expect the stock to grow at 3% per year indefinitely, what is your

The Good Company is considering an acquisition. Following we have the data of the Good Company and of the AVG Company which is a potential target due to high potential synergies. The good company. Current assets Net fixed assets Total The AVG company Current assets Net fixed assets Total 29.000 52.000 81.000 4.500 14.600 19.100 PL Sales Gross

As a factory manager, you are debating on replacing an old piece of equipment. If you do, you expect the replacement equipment to cost 10336.94$ but also believe you can sell the old equipment for 7231$. The new equipment is incrementally more productive than the old equipment but as it is used, it will lose this benefit. You estimate that at the

A payday loan has a quoted rate of 70.3 % APR compounded daily. If you borrow 2447.61 $ from this lender and pay it back in full 35 days later, how much will the payment be?

You stand to inherit 160458$ from a third great aunt twice removed on your uncle's side. You estimate that the estate will settle in 170 days, whereupon you'll receive your inheritance. Unfortunately, the economy is currently experiencing a period of intense inflation and so you feel the appropriate discount rate is 9% per annum (p.a.) continuous.

1. You expect stock x to pay dividends according to the schedule below. you expect to sell the stock for $150 at the end of the holding period. if your opportunity cost of capital is 5.6%, what is the most that you will pay for stock x? Indicate your key strokes as well as your final answer. year(s) dividend ($) 1 - 3 4.75 4-5

Mr. Rampersaud is a single father. He has a daughter, Mary, who is 8 years old and lives with him. Two years ago, Mr. Rampersaud graduated from a Canadian university. He currently has a Canada student loan outstanding. Mr. Rampersaud pays back this loan in monthly instalments of $300. During the year, he paid $450 in interest on this loan.

Bog's Vogue, Inc. had cost of goods sold of P3,000,000 and an inventory turnover of 10. Its current ratio is 3.0, while its quick ratio is 2.5. Calculate Bogs Vogue current assets.

Apple Inc. is a U.S.based company, that designs, manufactures, and markets mobile communication and media devices, and personal computers. It also sells various related software, services, accessories, and thirdparty digital content and applications. The company offers iPhone, a line of smartphones iPad, a line of multipurpose tablets and Mac, a

Apple Inc. is a U.S.based company, that designs, manufactures, and markets mobile communication and media devices, and personal computers. It also sells various related software, services, accessories, and thirdparty digital content and applications. The company offers iPhone, a line of smartphones iPad, a line of multipurpose tablets and Mac, a

Assume that for a portfolio the following Greek Letters have been calculated: Delta = 0, Gamma = -2500 and Vega = -4000. A risk manager would like to make the portfolio Gamma and Vega neutral using the following two options: Option Delta Gamma Vega A 0.6 0.5 2.0 B 0.5 0.8 2.2 What are the quantities w A of Option A and w B of Option B that need to

A three-year sovereign bond issued on 1 January 2030 and maturing on 31 December 2032 pays semiannual coupons of 1.5% per year on 30 June and 31 December each year and has a face value of 100. The market discount rate is 2.0%. For a trade settlement date of 29 August 2031, the flat price of the bond as a percentage of par value, assuming an

A bond with a face value of 100 pays an annual coupon of 12% and matures on Ad14 August 2007. It uses the actual/actual day count convention. For a settlement date of 23 December 2002 and an annual YTM of 9.75%, what is the full price? Assume an actual/actual day count.

A sovereign bond that matures on 1 January 2030 pays an annual coupon of 1.2% and has a face value of 100. For a trade settlement date of 1 January 2020, the bonds are priced at 128. Assume an actual/actual day count. What is the yield-to-maturity as of the settlement date?

What is the beta coefficient of the firms assets, for each of the three firms? (Provide an answer for each of the three, whether or not you feel they are good comparison firms.)

Suppose you have gathered information on the capital structure of the three firms, and estimated the beta coefficients of their debt and equity securities. Firm Equity FixIt 400 SelbstGemacht 40 ISC 150 Value of Securities Debt Issue I 100 10 250 Debt Issue II Equity 1.12 0.70 1.40 200 NA NA Beta of Securities Debt Issue I Debt Issue II 0.14 0.05

You have won the lottery that guarantees you 40 000 for the next 20 years, the first payment due today. You want to sell the contract today to your bank and they have offered to buy it at 7% discount rate. How much will the bank pay you today?

It is never too early to plan for your retirement. Assume today is your 20th birthday and you plan to make monthly deposits into a retirement account at the end of each month. You want to have $800,000 dollars by the time you retire at age 60 (your last deposit is on your 60th birthday). Then you withdraw an equal amount each month for the next 30

How much does it need now for $1 to be received in 1 year, 2 years, 3, 4, upto12 years if the annual interest rate is 5%? and 10%? Plot both cases (5% and 10%) on the same chart with clear labels.

Compute the cost assigned to cost of goods sold to ending inventory using LIFO March 1, 160 units $50 each March 5, 640 units $55 each March 9, 672 units $85 each March 18, 192 unit $60 each March 25, 320 units $62 each March 29, 256 units $95 each

For March of Year 4, compute the cost assigned to cost of goods sold and to ending inventory using LIFO. Important Be sure to click the correct Year at the top of the dashboard. Perpetual LIFO Date March 1 March 5 March 9 March 18 March 25 March 29 Totals Goods Purchased of units 160 640 Cost per unit S 50.00 S 55.00 of units sold 66 Cost of

A. Using the below account entries, prepare a Balance Sheet (BS) for years 2018 thru 2022 (10 points) Accounts Payable Accounts Receivable Accrued Liabilities Cash Common Stock Furniture and Fixtures. Inventory LandBuildings Accumulated Depreciation LongTerm Debt MachineryEquipment Marketable Securities Notes Payable Other Fixed Assets Preferred

Grow More Ltd., is presently operating at 60 level, producing 36000 units per annum. In view of favorable market conditions, it has been decided that from 112023, the company would operate at 90 capacity. The following information is available a) Existing cost price structure per unit is given below Profits Raw Material Wages Overheads (Variable)

ABC Corporation is a publiclytraded company with a net profit of INR 10,00,000 for the fiscal year. The companys management is deliberating on its dividend policy. The shareholders are expecting a dividend payout ratio of 40. The company has 200,000 shares outstanding. Additionally, the company needs to retain INR 2,00,000 for future expansion

Assume that AAA Construction Corp. has a contract to build a ship for 1,000 and a reliable estimate of the contracts total cost is given below Project costs incurred by AAA are as follows AAA Project Costs Year 2011 2012 2013 2014 Total Cost Incurred 355 345 175 Rest 890 Interest Incurred 3 3.50 4.50 3.65 Determine AAAs net income from this

Littlefield Company recently purchased a machine at a cost of 80,000. The machine is expected to have a residual value of 8,000 at the end of its useful life in five years. Calculate depreciation expense for all five years using the double declining balance method and straightline depreciation.

Each of A and B both opened recurring deposit accounts in a bank. If A deposited LR 1,300 per month for 3 years and B deposited LR1,500 per month for 2 12 years find out both maturity amount, and who will get more amount and by how much different The rate of interest paid by the bank is 10 per annum. Please solve it with the annual formula. Note

We R Write has made some changes over the last year, hoping to increase total revenues generated. Specifically, We R Write increased the price of their pencils and decreased the price of their pens. However, We R Write has seen total revenues actually go down. Given the information in the table below, complete the following Calculate the price

Intersect Investment Funds annual returns for the decade (2011 through 2020) are shown below Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Annual Return 1.1 12.2 6.0 3.3 9.0 1.6 14.9 12.0 15.3 7.8 a. Calculate Intersects arithmetic average rate of return over this period. b. Calculate Intersects geometric average rate of return over this

Which one of the following statements is correct? Stocks can only be assigned one dividend growth rate. Preferred stocks generally have variable growth rates. Dividend growth rates must be either zero or positive. All stocks can be valued using the dividend discount models. Stocks can have negative growth rates.

Compute the IRR statistic for Project F. The appropriate cost of capital is 13 percent. Note: Do not round intermediate calculations and round your finalanswer to 2 decimal places. Project F Time: 0 1 2 3 4 Cash flow: $ 10,200 $ 3,900 $ 4,730 $ 2,070 $ 2,700 Should the project be accepted or rejected?

What is a fact you now know about Investing in Green Sectors e.g., Green Energy, Solar, Wind, Geothermal, Biofuel & Hydro/Ocean? Who do you believe will benefit from Investing in Green Sectors e.g., Green Energy, Solar, Wind, Geothermal, Biofuel & Hydro/Ocean? What is a barrier to Investing in Green Sectors e.g., Green Energy, Solar, Wind,

The Peru firm is currently financed with 100 equity and the cost of equity for this unlevered firm is 9. Suppose the cost of debt is 6 (before tax) and its earnings before interest and taxes (EBIT) is 270,000. Peru firm is considering employing 15 debt and 85 equity. Mr. Pau, the owner of Peru, believes that the capital market is perfect and

Calculate the Sharpe Index of the investment. Present your answer as a decimal and round your answer to 2 decimals, e.g. 5.12.,Investment Expected return Standard Deviation Risk free rate Beta Investment Characteristic () 13 18 2 1.3

After 20 trading days of dynamically delta-hedging, you have the following positions on the option expiration day: You short 200 call option contracts. Each contract is on 100 shares of the underlying stock. Strike price is $50. You hold 19,981 shares of the underlying stock. Stock price is $52.11 You have accumulated $1,015,313 worth of debt as

1. A company with sustainable Return on Equity (ROE) of 20% which is reinvesting 75% of earnings can potentially sustain what rate of growth in revenue and profits? 2. Which of the following does not provide an indication of whether a listed company is cheap or expensive? a. Price to cash flow multiple b. Return on Equity (ROE) percentage c. Price

The price of a share of Maxar stock is currently 100. It is known that at the end of 1 year, the Maxar share price will be either 133.33 or 75. The riskless interest rate is 4 per year. A. (10 points) Calculate the price of a 1year European call option on Maxar stock with an exercise price of 100 by applying the replicating portfolio approach. B.

If a resident enters a nursing facility and has $35,000 of his contributed to the entrance fee fund, he is anticipated to live another 7 years, he spends, and is required to pay 60% of the $150 per day charge. How much will the skilled nursing facility be paid for a 20 day stay?

Currently the US$1.00 = C$1.10. The US and Canadian nominal interest rates are expected to be 5% and 2% respectively for the next year. The forward price is: 1. US $ Forward price = 2. Canadian $ Forward price = Prove the exchange rate is arbitrage free Canadian invests C$100 in the US for one year and enters into a forward contract to bring the

Determine the value of inventory as at 31 October 2022 and gross profit for October 2022 from the information supplied below. Show an extract of the Statement of Comprehensive Income to present your answer. INFORMATION You are provided with the inventory record of Compuman, which sells laptops, for the month ended 31 October 2022. The business

Inventory record for laptops for the month ended 31 October 2022 Model Purchase Inventory on Purchases Sales Mecer Asus Dell price R 11 000 13 000 15 000 01 October Units R 21 14 11 and carriage Units R 35 66 39 Units 51 60 40 Price R14 000 R17 000 R19 000 Inventory on 31 October R Units R Note The purchase price was unchanged

Within the next 150 days Julio would like to sell $200,000 T-bill which matures in 365 days. The current annual yield is 3%. He is also thinking about waiting the 150 days, selling his T-bill as an interest rate future contract and by doing so earn at least 5% as annual return on the investment. if Julio waited the 150 days at what price is he

This graph shows the net present value of an investment with annual cash flows of 1,000, 100, 300, 400, and 675 as a function of different costs of capital (interest ). Note that this cash flow returns increasing amounts after the initial investment. Drag left or right on the graph to move the cursors to see the net present value (NPV) for

Consider the call option on Apple stock that expires in 2 years and has a strike price of $140. Moreover, continue to assume that the risk-free rate of interest is 5% and that Apple stock returns have an annual volatility of 35%. But, suppose that the current price of Apple stock in the market were $135 instead of $150. What would be the value of

Create Strategic Asset Allocation for the hypothetical investor Your first client is Jim and Karla Sanders who are 25 and 22, respectively. Jim and Karla have been married for two years and have a one year old son. They plan on adding another baby and dog to their family within the next two years. Jim is an accountant and his salary is $45,000 a

Stock Name Value Google Amazon 9,957.00 9,895.00 9,862.00 9,760.00 5,304.00 9,759.00 Tesla 9,755.00 Exxon 9,788.00 First Energy 5,411.00 Chier Energy 9,789.00 total 89,280.00 Shopify Spotify Paypal Squarespace Date 30Jun 1Jul 2Jul 3Jul 4Jul 5Jul 6Jul 7Jul 8Jul 9Jul SP500 4,451.00

The reported EV/EBITDA of a newspaper publishing firm is 10x. The firm has sales revenues of $780 million, EBITDA of $84 million, excess cash (i.e., marketable securities) of $60 million, $10 million of debt and seeks to issue 15 million shares of stock. What is your estimate of the firm's share price?

1) Calculate the following ratios: for the company EPAM 3 profitability ratios, 3 Asset Utilization ratios, 2 Liquidity ratios and, 3 debt ratios for all 3 years. 2) What is the company's financial analysis of its performance. Provide an explanation

Income Statement Breakdown Total Revenue Cost of Revenue Gross Profit Operating Expense Operating Income Net Non Operating Interest Inc... Other Income Expense Pretax Income Tax Provision Net Income Common Stockhold... Diluted NI Available to Com Stock... Basic EPS All numbers in thousands Diluted EPS Basic Average Shares Diluted Average

Given the following cash flows for projects A and B. A:($10000, $500, $-800, $500, $600), B:($2000, $400, $500, $100, $600). If the required rate of return for the project is 6.3%. The NPV of project A is $_______________.

The current year's dividend (D 0 ) for a share of common stock is $2 and the current price (P 0 ) of the stock is $30. Dividends are expected to grow at 3.9% forever. The rate of return for this stock is _______________%

Your client plans to retire in 16 years. He is going to place $8,902 every year at the end of the year in a saving account at 4.73 percent, compounded annually. What is the accumulated sum of this stream of payments when he retire?

Angela placed a stoplimit order to sell 100 shares of RST stock at 28 when the market price of RST was 31. Shortly after Angela placed her order, trading on RST was halted due to a pending news announcement. When trading reopens RST is priced at 24 a share. Within minutes the price of RST began to drop further until it reached 19 a share. Which

Bob Martino is a new staff person at his firm. His firm audits XYZ, an insurance company with a very strong balance sheet. Which condition would allow him to obtain a life insurance policy from XYZ? A. He will charge less than 20 hours to the audit of XYZ. B. He is not a covered member with respect to XYZ. C. The insurance payout is not material

The required return on Beta stock is 14. The riskfree rate of return is 4 and the real rate of return is 2. How much are investors requiring as compensation for risk Select one OA. 8 B. 14 C. 12 OD. 10

On the EA date, although PLAY announced its earnings higher than analysts' consensus estimate ($1.45 per share actual vs. $1.26 estimated), the executives provided a somewhat pessimistic view for the next several quarters due to recession concerns. Its share price dropped to $31.92 accordingly. If you exercise your options on the EA date, what is

The following table presents results of a simple linear regression (single index) model that was developed to estimate the beta of PEP using the SP 500 index. Using the model evaluate the two statements. 1. The beta estimate is significant at the 0.05 level. II. The intercept is significant at the 0.05 level. Regression Statistics Multiple R R

If the following types of asset classes were ranked by a risk averse investor according to their risk (least risky to most risky). Risk is measured by standard deviation of returns. 1. Preferred Stock 2. Straight Corporate Bonds, 3. Common Stock. 4. Treasury Bonds. 5. Treasury Bills, Select the most correct ranking.,A bond has a market price that

Today is John Tardys 45th birthday and, despite his finance professors advice, he hasnt started to save for retirement. John cant believe time has passed so quickly. John wants to retire on his 65th birthday mortality tables indicate his life expectancy is 85. Therefore, he will need a retirement fund that will sustain him for 20 years, or 240

Juan is a bond research analyst at California Credit Ratings. Which of the following terms would Juan find in a bond contract I. a dividend restriction clause Il a sinking fund clause III. Stocks priceearnings multiple. I Only III Only O I and II only. II and III only,Consider the following information for Road R. Current EPS, is 3.00. Expected

What does each dot on the figure below represent Scatter Diagram for PEP against SP 500 Index. SP 500 15.00 O Ineficient portfolio O Efficient portfolio O Individual Asset 10.00 O A pair of two returns, one for each of two asset 5.00 15.00 10.00 5.00 0.00 5.00 10.00 15.00 ROR PEP R (PEP) 0.0048 0.552 R (SP500 Index) 5.00 10.00 15.00,The variance

The company you currently work for is looking for guidance on several projects they are considering. You have been asked to review the following scenarios and offer your recommendations regarding how to proceed: The following opportunities are being considered as part of their capital budget process (NOTE: they can only choose one): 1. A new piece

Your brother has recently heard about Lego investing. In fact, hes been very persuaded by TikTokers and online graphics such as the following (an actual screenshot taken from brickeconomy.com),Set Value (NewSealed) This chart represents the current newsealed value of the set The Mines of Moria since January 2021. Very high accuracy 500 400 300 200

High.-Tach Lid acquired B5% interest in Chat. Smart Lid on 30 June 2023 Lr 5850,000, when all assets of Chat Smart Ltd were at fair value, except for land that was undervalues by $50,000. Share capital and reserves of Chat Smart Ltd were: Share Capital $500,000 Retained earnings $350,000 The management of High-Tech Lid measures any non-controlling

Sid Gallen is a single resident taxpayer aged 59. It was mutually agreed that his appointment as head coach of the Lesser Eastern Sydney AFL team would be terminated. On termination, Sid received the following: Unused Annual Leave (post 17/8/93) $6800 Severance Payment (including $31255 PAYG tax withheld) $167000 Reportable Fringe Benefit

This year, Bob's employer provided him with an employer-owned automobile costing $55,000 (including HST) for 12 months. His kilometers for personal use were 14,000 out of a total of 19,000 kilometers. Operating costs paid by his employer during this year were $3,700 (including HST) and the stated rate is .29 per km. For each option, indicate if

You have been given the following 6 month comparable Income Statement for Koas Canoes. Units Revenue Materials Direct Labour Rent (20 Office 80 Factory) Sales Staff Profit August September October November December 800 950 700 1,000 650 97,600 115,900 85,400 122,000 79,300 19,520 19,520 19,520 19,520 19,520 29,280 34,676 25,683 36,475 23,884 July

Interest due to Big Bank on the Note Payable for the month of March is $665. As of March 31 OPJ owes Big Bank a total of $1265 for interest ($600 for Feb. + $665 for March). Interest will be paid to Big Bank in June. Post the above transaction in a general journal?

1. Melvin is a recent graduate. It has been his dream to explore the African continent. He intends to go to a lake tour in five years' time . He estimates that he will need to buy a used Toyota (Land Cruiser 76) at R350 000 that has a long-range fuel tank and dual battery system. He will also need an additional R25 000 to pay for fuel and

Vaughn Manufacturing prepared a 2022 budget for 40800 units of product. Actual production in 2022 was 41920 units. Which one of the following is the most useful comparison for this company? It does not matter. All of these choices are equally useful. The actual results for 41920 units with the original budget for 40800 units. The actual results

During the year Freda Ltd sold inventory costing 80,000 for 100,000 on cost to Gwynne Ltd. At balance date Gwynne Ltd had 20 of this inventory still on hand.,On 1 July 2019 Freda Ltd purchased machinery costing 90,000. This machinery had a useful life of 6 years. Freda Ltd sold this machinery for 78.000 on 1 July 2020 to Gwynne Ltd. This was being

Bari Jay, a gown manufacturer, received an order for 650 prom dresses from China. Her cost is 45 a gown. If her markup based on selling price is 71, what is the selling price of each gown (Round your answer to the nearest cent.) Selling price

Calculate EVA (economic value added) Balance sheet Cash and short-term investments 7000 Current liabilities 20000 Other current assets 10000 Long-term debt 35000 Non-current assets 62000 Total assets 79000 Equity 24000 Income statement Operating income 7000 Interest payment 500 Income before taxes 6500 Taxes 1300 Net income 5200 The

Bramble Corporation issued 700,000 of bonds on January 1, 2023, with interest payable each January 1. The bonds carrying amount on December 31, 2023, is 744,377.35. Bramble has chosen to apply the fair value option in accounting for the bonds. An assessment of the companys credit risk at December 31, 2023, shows that it has increased. As a result,

While performing a vertical analysis on a cash flow statement, what would be considered the base? For example, if we have the following accounts: Net income $ 3,363.00 Depreciation and amortization $ 2,213.00 misc reconciling items: Operating activities $ 268.00 Net cash flows: Operating activities $ 5,844.00 Net cash flows: Investing

Calculate the components of the change in Common Shareholder's Equity (CSE) as follow: a. Change due to change in sales at previous level of asset turnover b. Change due to change in asset turnover c. Change in financial assets (2 Marks)

Reformulated Income statement Operating revenue cost of sales Gross margin Foreign exchange gainslosses other expenses Total operating expenses Core operating income (before tax) Tax on operating income Tax as reported Tax on other operating income Tax benefits from net interest expenses Total tax on operating income Core operating income (After

Yordan Inc. had the following information available, as of December 31, 2023 Common Stock (par 10, iss out 50,000 shrs) Paid in Capital in Excess of Par Preferred Stock 6 (par 1,000, iss out 5,000 shrs, cumulative) Yordan Inc. did not paid dividends in 2022. Additional information for 2023 is provided below a) 500,000 1,250,000 5,000,000 b) On

The following account balances existed at 30 June 2025: Lakemba Lid: Dividend Revenue $5,500 and Dividend Receivable $500. Fairlight Lid. Dividend Paid $5,500 and Dividend Payable Snil. Prepare the consolidation elimination journal entry for intra-group dividend for the year ending 30 June 2025 (Narrations are required) (1 mark) During the year

Bank A has the following characteristics: Total assets (earning) 800 Total liabilities 600 Rate earned on assets 5% Rate paid on liabilities 6% Loan loss provisions 20 Non-interest income 120 Non-interest expenses 80 Taxes 0 The Return on Equity and spread of this bank are _____ and ______ respectively.

Pepper Ltd. (Pepper) owns 75% of Sage Corp. (Sage) and uses the equity method to account for its investment. Pepper has a $240,0000 bond issue outstanding that pays 12% interest annually. Interest payment dates are June 30 and December 31 each year. The bonds were originally issued at a discount. The unamortized bond discount is $20,000. The bonds

Chas McCormick started a corporation McCormick Co. on Jan. 1, 2023. Chas starts his business by investing 100,000 of his own money by purchasing 20,000 shares of 1 par value stock and borrowing 250,000 from the bank. The loan has an interest rate of 5, and he will have to make quarterly payments of 25,000 of principle plus accumulated interest, on

You just won the lottery You can either take half of the 65,000,000 in a lump sum today OR you can take yearly payments of 3,000,000 for 25 years (at the beginning of each year). Which option has a higher value to you if you can earn 9 percent per year on your Investments A. You would prefer the lump sum because its present value is 3,032.261

Mike's Precision Lawn Service purchased a pickup truck in 2009 for $28,000. The company expects to keep the vehicle for four years at which time it will be sold for an estimated $4000. Construct a depreciation schedule using the DOUBLE DECLINING BALANCE METHOD.

You decide to invest in a portfolio consisting of 25 percent Stock X, 36 percent Stock Y, and the remainder in Stock Z. Based on the following information, A. Calculate the expected return of your portfolio? b. Calculate the variance and Standard Deviation of your portfolio? c. Your expected return is 15%, Is it the right choice of your portfolio

Your firm is in the business of making food items, primarily desert-type productsthe firm plans to launch a new product, a half-gallon size of cherry vanilla ice cream. The firm has never produced ice cream before. Your job is forecasting the anticipated earnings (i.e., projected revenues, fewer costs) over the next seven years. How would you

Altuve Co. issued 1,000,000 in Bonds on 112023 that matured in 10 years. The bonds had a stated interest rate of 6.25, but the market interest rate of the bonds at time of issuance was 5.95, and the bonds made interest payments semiannually on 11 and 71. Required Determine (a) the cash proceeds from the issuance of the bonds on 112023 and (b) the

You are offered an investment that pays 400 in one year, 500 at the end of the second year, and 200 at the end of the third year. You can earn 11 on very similar investments. What is the most you should pay for this one Roundoff to an integer. Only the answer will be graded.,You think you will be able to deposit 4,000 at the end of each of next

Juanita, a widow, has started giving assets to family members. In 2023, her first and only gift was 102,000 cash to her daughter, Rosa. How much is the gift tax on this gift before applying any credits

Financial data for Lifecycle Fashion is given below. All figures are in dollars. Use this data to construct a Balance Sheet for the company for the year ending December 31, 2022 and use your constructed statement to answer the following 5 questions (i.e., 26 through 30). NOTE Not every item in the list below belongs on the balance sheet you have

Suppose that your values for the three projects, not including the upfront $1,500,000 investment cost, are: Project A = $500,000; Project B =$750,000 and Project C = $900,000. What are the explicit (actual) and implicit (net value of best alternative, or "opportunity") costs for each of the three projects? Which one should you invest in to

Which one of the following statements reflects most accurately the main ideas of the film Inside Job? A. The financial industry without government regulations especially rules meant to reduce the risk of losing other people's money was corrupted by excessive compensation. B. The financial industry with too much government regulations especially

LLOP Corporation just paid a $4 dividend per share, you expect the dividend to grow at 8% for the next 2 years and expect to sell the stock at $50 at the end of year 2. What is the maximum price you would pay to buy the stock? The required rate of return is 15%. The risk-free rate is 4%; the market risk premium is 8%. VVH Company's stock has a

Consider the following data concerning Abby Company What is the company cost of equity Find the company WACC E(TM) Cost of debt, ro Corporate tax rate, Tc Cov(FAbby M) Debt, D Var(M) Riskfree rate, r Equity, E Abby Company WACC 10 8 35 0.13 1,750,000 0.11 2 3,250,000 Section a. Finding the company cost of equity. Equity beta, B Cost of equity, E

The following graph has plots of the net PW of an investment as functions of ge changes in the values of the input variables V1, V2, V3, V4 and V5. V1 V2 V3 504 V 01 V5 30 20 B. Decrease of 25,000 C. Increase of 22 200,000 150,000 100,000 50,000 10 0 50,000 100,000 150,000 Present Worth To which two variables is the present worth most sensitive

With the information below, would this person be better off renting or buying? Explain.

Costs Cashflow considerations Annual rent or mortgage payments Property and liability insurance Private mortgage insurance Real estate taxes Maintenance Other housing fees Less interest earned on funds not used for down payment Cashflow cost for the year Tax and appreciation considerations (using a 25 percent marginal tax rate) Less principal