4) A client wants to finance the purchase of a house costing $50,000 over a period of 10 years. The annual interest rate is 10%. There are two repayment term options. Option 1 allows for annual repayments and option 1 allows for monthly repayments. Please determine what the annual payment would be and what would be the monthly payment would be. Hint, the monthly payment with NOT be 1/12th of the annual payment.

1. Imagine that you want to obtain a loan from a bank for a business that you operate through a corporation. The bank wants assurances that the loan will be repaid. It gives you a choice to advance the loan to the corporation and for the bank to obtain from the corporation a mortgage registered against land owned by the corporation, or to advance the loan to the corporation but to ask you to give the bank a personal guarantee of the loan. What are the advantages or disadvantages under either scenario?

It’s April 2020. You are an oil distributor, planning to buy 500,000 barrels of crude oil from British Petroleum (BP) in April 2021 in exchange for a spot price prevailing at that time. Because April 2021 spot price is unknown today, yourobjective is to hedge this risk. Suppose that the only available contract is for May 2021 delivery. Today the futures priceof crude oil for May 2021 delivery is $105.37. Contract size for crude oil is 1000 barrels. Assume that there is noexcessive volatility during delivery month.

1. If you were to hedge using futures market, would you enter short or long futures position in April 2020?Explain. (5 pts)

2. What contracts and how many contracts do you need? (5 pts)

Suppose that in April 2021 the futures contract’s price turns out to be $95.00 a barrel and spot price turns out to be$90.00 a barrel

3. Calculate total profit or loss on your futures position (6 pts)

4. What is the overall price per barrel paid by the oil distributor in April 2021 after taking into account profits orlosses on the futures position? Show your calculations. (6 pts)

Now suppose that in April 2021 the futures contract’s price turns out to be $115.00 a barrel and spot price turns out tobe $125.00 a barrel

5. What is the overall price per barrel paid by the oil distributor in April 2021 after taking into account profits orlosses on the futures position? Show your calculations. (6 pts)

8% coupon bond with $1,000 face value, maturing in 20 years. Payments are paid annually.

A. If the market rate is 9%, what is the value of this bond?   
B. If the market rate is 7%, what is the value of this bond?

with explanation please

The HUANG Company currently has one bond issue outstanding. This bond pays a coupon rate of 8% ($80 per year) and matures in six years, and has a par value of $1,000. If you require a 14% rate of return,

What is the capital gain yield of this bond in the first year?

a. 3.57%

b. 3.92%

c. 4.09%

d. 4.18%

Gruber Corp. pays a constant $8.50 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 9.5 percent, what is the current share price?

The value of an index on shares is currently at 350. The risk-free interest rate is 8% per year (continuous compound) and the dividend rate of the index is 4% per year (continuous compound).

Calculate the price of the future for a four-month contract. Reply

The value of a futures contract at the moment signed is zero, but at a later time its value can be positive or negative. The value depends on the exercise price and the underlying price according to the expression: f = S − Ke − rT (for assets that do not pay income)

What will be the expression for assets that pay a known dividend rate? f = Answer

If in the previous year the exercise price is K = 450, what is the initial value of the contract? Reply

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $720,000 is estimated to result in $240,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $105,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $4,500 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 35 percent and its discount rate is 16 percent, what is the NPV for this project? (Do not round your intermediate calculations.) rev: 09_18_2012 $-106,139.92 $-103,318.84 $-170,365.41 $-111,446.91 $-100,832.92

The expected pretax return on three stocks is divided between dividends and capital gains in the following way:

a. If each stock is priced at $190, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains?

b. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity.

If each stock is priced at $190, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Mike and Mary Jane Lee have a yearly income of ​$77,389 and own a house worth ​$98, 600​, two cars worth a total of $ 19,025 and furniture worth ​$7,963. The house has a mortgage of ​$59,193 and the cars have outstanding loans of ​$2,216 each. Utility​ bills, totaling ​$147 for this​ month, have not been paid. Calculate or use Worksheet 4 to determine their net worth and explain what it means. How would the​ Lees' age affect your assessment of their net​ worth? The value of Mike and Mary​ Jane's total assets are ​$ nothing. ​(Round to the nearest​ dollar.)

Steve Sullivan was recently promoted to loan officer at the first national bank. He has authority to issue loans up to $50,000 without approval from a higher bank official. this week two small companies, Handy Harvey, Inc. and Sheila’s fashion, Inc, have each submitted a proposal for a six-month $50,000 loan. In order to prepare a financial analysis of the two companies Steve has obtained the information summarized below.

Handy Harvey, Inc. is a local lumber and home improvement company. Because sales have increased so much during the past two years, Handy Harvey has had to raise additional working capital , especially as represented by receivables and inventory. The $50,000 loan is needed to assure the company of enough working capital for next year. Handy Harvey began the year with total assets of $740,000 and stockholders equity of $260,000 and during the past year the company had a net income of $40,000 on sales of $760,000. The company’s current unclassified balance sheet appears as follows:

Sheila’s Fashions, Inc. has for three years been a successful clothing store for young professional women. The leased store is located in the downtown financial district. Sheila’s loan proposal ask for $50,000 to pay for stocking a new line professional suilts for working women during the coming season. At the beginning of the year, the company had total assets of $200,000 and total stockholders’ equity of $114,000. Over the past year, the company earned a income of $36,000 on sales of $480,000. The firm’s unclassified balance sheet the current date appears as follows

Required

1. Prepare a financial analysis of both companies’ liquidity and after receiving the proposed loan. Also, compute profitability ratios before and after as appropriate. Write a brief summary of the effect if the proposed loan on each company’s financial position.
2. To which company do you suppose Steve would be most willing to make a $50,000 loan? What are the positive and negative factors related to each company’s ability to pay back the loan in the next year? What other information of a financial or non-financial nature would be helpful before making a financial decision?

The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike except that they are located in different towns. The end-of-period value of each firm is determined by the weather, as shown below. There will be no synergy to the merger.

The weather conditions in each town are independent of those in the other. Furthermore, each company has an outstanding debt claim of $580,000. Assume that no premiums are paid in the merger.

a. What are the possible values of the combined company? (Do not round intermediate calculations.)

b. What are the possible values of end-of-period debt and stock after the merger? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)

c. How much do stockholders and bondholders each gain or lose if the merger is undertaken? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.)

3.

A. What techniques can a firm use to optimize demand deposit holdings?

B. How do a firm’s current asset investment policies impact the firm’s ROE? (For example: how would a restricted investment policy affect ROE, versus a relaxed policy?)

Kilgore Natural Gas has $1,000 par value bonds outstanding at 12% interest. The bonds will mature in 50 years. Compute the current price of the bonds if the yields to maturity (YTM) is 14 percent. Assume annual coupon payments.