Miles Hardware has an annual cash dividend policy that raises the dividend each year by 10​%. Last​ year's dividend, Div 0​, was $ 1.50 per share. Investors want a return of 17% on this stock. What is the​ stock's price if a.  the company will be in business for 10 years and not have a liquidating​ dividend? b.  the company will be in business for 20 years and not have a liquidating​ dividend? c.  the company will be in business for 30 years and not have a liquidating​ dividend? d.  the company will be in business for 45 years and not have a liquidating​ dividend? e.  the company will be in business for 90 years and not have a liquidating​ dividend? f.   the company will be in business​ forever? a.  What is the price of this stock if the company will be in business for 10 years and not have a liquidating​ dividend?

You are ready to buy a house and you have $85,000 for a down payment and closing costs. Closing costs are estimated to be 3.5% of the loan value. You have an annual salary of $125,000. The bank is willing to allow your monthly mortgage payment to be equal to 28% of your monthly income. The interest rate on the loan is 4.5% per year with monthly compounding for a 30-year fixed rate loan. How much money will the bank loan you? How much can you offer for the house? Construct a loan amortization table for the mortgage. Please submit the actual Excel spreadsheet with formulas embedded in the spreadsheet.

Midland Petroleum is holding a stockholders’ meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 14 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 30,001 shares. Ms. Ramsey and her friends on the board control 50,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 28,998 shares. The company uses cumulative voting.
a. How many directors can Mr. Clark be sure of electing? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

Number of directors ___

b. How many directors can Ms. Ramsey and her friends be sure of electing? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

Number of directors ___

c-1. How many directors could Mr. Clark elect if he obtains all the proxies for the uncommitted votes? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

Number of directors ___

c-2. Will he control the board?

• Yes

• No

d. If ten directors were to be elected, and Ms. Ramsey and her friends had 58,001 shares and Mr. Clark had 38,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect? Assume the same number of total shares as the original question. (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

number of directors _____

1. If an investor borrows money to invest in risky portfolio, where will the combination portfolio (the leveraged portfolio) be positioned?

a. Above the CAL

b. Below the CAL

c. On the CAL to the left of risky portfolio

d. On the CAL to the right of risky portfolio

2. An investor’s utility function for expected return and risk is U = E(r)−4σ^2. Which of the following would this investor prefer to invest in?

a. a risk-free security offering a return of 8 percent per year

b. a risky portfolio with expected return of 14 percent per year and standard deviation of 25 percent per year

3. Cathy Chu has $10,000 in a savings account that guarantees her a return of 5% per year. Cathy was offered an investment opportunity that has an expected return of 5% but possible returns range from −30% to 40%. Cathy declined the investment opportunity in favor of her savings account. Cathy is

a. risk adverse

b. risk avoider

c. risk intolerant

d. risk averse

8. Cogswell Cogs (CC) produces cogs – surprise! The estimated cost to produce cogs is
   ($4 + $18/(x+2)) per cog, where x is the number of cogs produced/sold. CC can currently sell 20 cogs for $10 each. What is the current profit per cog and total profit for CC? What is the marginal cost of producing the next cog? A new customer has offered to buy an additional 10 cogs, but wants a discount of $1 per cog, should you sell the 5 cogs to the new customer? Assuming your old customers find out and also demand the discount, should you still sell the 5 cogs to the new customer? What is CC’s total profit if they take the new customer

Covered Interest Arbitrage. Assume the following information:

Suppose an initial investment of 1,000,000 pesos. Given this information, Mexican Investors would generate a yield of ???

Assume the following information:

interest rate parity doesn’t exist and covered interest arbitrage by U.S. investors results in a yield of _______ which is above what is possible domestically

Allison and Leslie, who are twins, just received $40,000 each for their 24th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Allison opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 15% per year in the fund's relatively short history.

1. If the two women’s funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire? Do not round intermediate calculations. Round your answers to two decimal places.
   Allison:  
   Leslie:  

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

3. Is it rational or irrational for Allison to invest in the bond fund rather than in stocks?

Bond valuation

An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 8% annual coupon. Bond L matures in 16 years, while Bond S matures in 1 year.

Assume that only one more interest payment is to be made on Bond S at its maturity and that 16 more payments are to be made on Bond L.

1. What will the value of the Bond L be if the going interest rate is 5%? Round your answer to the nearest cent.
   $   
   
   What will the value of the Bond S be if the going interest rate is 5%? Round your answer to the nearest cent.
   $   
   
   What will the value of the Bond L be if the going interest rate is 8%? Round your answer to the nearest cent.
   $   
   
   What will the value of the Bond S be if the going interest rate is 8%? Round your answer to the nearest cent.
   $   
   
   What will the value of the Bond L be if the going interest rate is 11%? Round your answer to the nearest cent.
   $   
   
   What will the value of the Bond S be if the going interest rate is 11%? Round your answer to the nearest cent.
   $   
   
2. Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?
   
   1. The change in price due to a change in the required rate of return decreases as a bond's maturity increases.
   2. Long-term bonds have lower interest rate risk then do short-term bonds.
   3. Long-term bonds have lower reinvestment rate risk then do short-term bonds.
   4. The change in price due to a change in the required rate of return increases as a bond's maturity decreases.
   5. Long-term bonds have greater interest rate risk then do short-term bonds.
   
   -Select-IIIIIIIVV

Identify and describe the six major building blocks of financial statement analysis. What is the initial step in applying the building blocks to analysis of financial statements? (300 words minimum)

8. Mulligan Manufacturing (MM) is a fast growing firm with expected earnings of $3 million next year. MM expects earnings to grow 10% per year indefinitely and MM’s cost of capital is 14%. MM has creative accounts, so it pays no taxes. What is the market value of MM? If MM has no debt, then what is its P/E ratio? If MM has $25 million in debt with an interest rate of 8% (cost of capital (WACC) remains 14%), what is the new P/E ratio?

8. A friend, Ms. Michelle, was renting a house for $1,000 per month, but recently purchased a

   comparable home for $200,000 plus 1% for various fees, inspections, etc. Ms. Michelle’s opportunity cost of capital is 6% per year and she will have to pay a 5% commission when she sells the house. Assuming that she has to move and sell the house in one year, how much the house appreciate in value for her to be better off than renting?

8. I just bought a $1 lottery ticket with a promised jackpot of $90 million dollars. The lottery claims that my odds of winning the jackpot are 1 in 20 million, so it seems like a good deal. The jackpot is paid in 30 equal annual installments with the first one paid today. The winnings are also taxable; my marginal tax rate is 25% and the appropriate discount rate is 5% annually. Was the lottery ticket a good investment? What is the expected value of the lottery ticket?

1. Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project?

Year Project

0 ($11,368,000)

1 $ 2,157,589

2 $ 3,787,552

3 $  3,200,650

4 $ 4,115,899

5 $ 4,556,424

Round to two decimal places.

2. McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $817,500, and $1,245,000 over the next three years. What is the payback period for this project? Round to four decimal places.

3.

An investment of $83 generates after-tax cash flows of $38.00 in Year 1, $66.00 in Year 2, and $127.00 in Year 3. The required rate of return is 20 percent. The net present value is

Round to two decimal places.

4. Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $815,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? Round to two decimal places.