Why as a Finance Major do you have to understand corporate finance? why should every finance student know this course?

Find the duration of a 8.4% coupon bond making semiannually coupon payments if it has three years until maturity and has a yield to maturity of 6.0%. What is the duration if the yield to maturity is 11.0%? Note: The face value of the bond is $100. (Do not round intermediate calculations. Round your answers to 4 decimal places.)

Exercise 4.34. Suppose that you sell for $15 a call option with a strike price of $49, sell for $7 a call option with a strike price of $59, and buy for $10 each two call options with a strike price of $54. Assume a zero rate of interest.

(a) What is the maximum profit possible on the exercise date?

(b) What is the maximum loss possible on the exercise date?

(c) What is the maximum stock price at the exercise date that will result in you breaking even?

Ans: _____________________

1. You just graduated from Notre Dame de Namur University (2020) and accepted a job with Facebook in their Finance department. Your salary is $50,000 per year. You are considering investing $500 per month in your company’s 401K and given your risk profile your targeted rate of return is 4.5 percent. What will be the value of your 401K in 35 years (2055)?

Additional 2 bonus points...

Joe, a colleague of yours decided to wait for five years to begin setting aside $500 per month until 2055. His risk profile is like yours, 4.5%. How much will Joe have in 30 years (2055)?

And...”what’s the moral of this story>?

Ans: _______________________

The moral is: _____________________

The Fed offers three types of discount window loans. ______________ credit is offered to small institutions with demonstrable patterns of financing needs, _____________ credit is offered for short-term temporary funds outflows, and _____________ credit may be offered at a higher rate to troubled institutions with more severe liquidity problems.

A saver wants $100,000 after ten years and believes that it is possible to earn an annual rate of 8 percent on invested funds.

a) What amount must be invested each year to accumulate $100,000 if (1) the payments are made at the beginning of each year or (2) they are made at the end of each year?

b) How much must be invested annually if the expected yield is only 5 percent?

Please show step-by-step how to solve within excel

You have applied for a job with a local bank. As part of its evaluation process, you must take an examination of the time value of money analysis covering the following questions. Please show your work. (Identify N, I/Y, PV, PMT, and FV)

1. What is the present value of a 6-year, $100 ordinary annuity if the annual interest rate is 4%?
2. What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly? Compounded daily?

Company A offers you an initial salary of $150,000 with annual raises of 10% for the foreseeable future. Company B offers you $180,000 with annual raises of 8% for the foreseeable future.

A.) How many years will it take for the A salary to equal the B salary?

B.) How many years will it take for the total dollars received from A to equal the total dollars received from B?

Please write (type) about: why is Porter's 5 Forces Model useful for firms? with example

) Assume that you have successfully completed the R&D phase of a new product development project; this phase took several years and cost an estimated $14.75 million but resulted in a successful prototype product. You and your company are now ready to start the market development and research phase of your new product development project.  It is estimated that the market development and research phase of this project will take two years and cost $11.5M per year.  There is an eighty percent probability that the market development and research phase will indicate that a viable market exists for your new product.

Before your company can begin the market development and research phase, however, a long-time rival announced that it plans to market a similar product in one year that will directly compete with your newly developed product. Your company feels that there is a 60 percent probability that your new product will be superior to your competitor’s product.  

If your company’s product is superior to your competitor’s product and the market development phase indicates that a viable market exists, you will earn a net profit of $10 million per year for ten years.  If your product is inferior to your competitor’s product, you will terminate the project.  Assuming a discount rate of 14 percent, calculate the expected NPV of your new product assuming that you proceed immediately with the marketing development and research phase.   

In analyzing this problem, you should make the following assumptions.  First, if you learn that your competitor’s product is better than your product after one year of market development, you will terminate the project and not incur the market development cost ($11.5M) for the second year.  Second, assume that all cash flows occur at the end of the year.

Compare your results to the case when you decide to wait for one year (to learn more about your competitor’s product) before proceeding with the market development and research phase.  If you postpone the market development phase by a year, however, and your product is superior to your competitor’s project (and a viable market exists), it will only have a nine year life span.  What do you think is your best strategy?  Why?

Q1.      What additional concerns might a corporate Chief Financial Officer (CFO) face when a company expands into international markets?

(Ref: BMA, 13/e, Ch 1&12)

Answer:

Q2.      Fajer Inc., a retailer in the home improvement industry, currently operates seven retail outlets in Manama and Dubai. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $100,000 on market research to determine the extent of customer demand for the new store. Now Fajer Inc. must decide whether to build and open the new store.

            Which of the following should be included as part of the incremental earnings for the proposed new retail store?

a.   The cost of the land where the store will be located.

b.   The cost of demolishing the abandoned warehouse and clearing the lot.

c.   The loss of sales in the existing retail outlet, if customers who previously drove across town to shop at the existing outlet become customers of the new store instead.

d.   The $100,000 in market research spent to evaluate customer demand.

e.   Construction costs for the new store.

f.    The value of the land if sold.

g.   Interest expense on the debt borrowed to pay the construction costs.

(Ref: BMA, 13/e, Ch 5&6)

Answer:

Q3. Explain the similarities and differences between Net Present Value (NPV), Profitability Index (PI), and Economic Value Added (EVA).

(Ref: BMA, 13/e, Ch 5, 6, &12)

Answer:

Q4.      Which of the following bonds will have the greatest percentage increase in value if all interest rates decrease by 1 percent?

• 10-year zero coupon bond.
• 20-year zero coupon bond.
• 20-year 10 percent coupon bond.
• 20-year 5 percent coupon bond.
• 1-year 10 percent coupon bond.

(Ref: BMA, 13/e, Ch 2)

Answer:

Q5.      The relationship between a bond’s yield to maturity and coupon interest rate can be used to predict its pricing level. For each of the bonds listed below, state whether the price of the bond will be at a premium to par, at par, or at a discount to par.

(Ref: BMA, 13/e, Ch 3)

Answer: