When organizations decide to finance assets, the key is to match meaning current assets with current financing and long term assets with long term financing.

What would be an example of this occurring in business today and what would be the disadvantage from not matching?

The basic elements of modern portfolio theory were proposed by Dr. Harry M.Markowitz in 1952. He provided the theoretical framework for the systematic composition of optimum portfolio.

Inlight of the above , discuss Markowitzs Model and the Efficient Frontier as a finance theory

4. The following Treasury bond quote appeared in The Wall Street Journal on May 11, 2004:

9.125               May 09            100.09375       100.12500       …         ‐2.15

Why would anyone buy this Treasury bond with a negative yield to maturity? How is this possible?

Walton Electronics is considering investing in manufacturing equipment expected to cost $380,000. The equipment has an estimated useful life of four years and a salvage value of $ 22,000. It is expected to produce incremental cash revenues of $190,000 per year. Walton has an effective income tax rate of 30 percent and a desired rate of return of 14 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Required

Determine the net present value and the present value index of the investment, assuming that Walton uses straight-line depreciation for financial and income tax reporting.

Determine the net present value and the present value index of the investment, assuming that Walton uses double-declining-balance depreciation for financial and income tax reporting.

Determine the payback period and unadjusted rate of return (use average investment), assuming that Walton uses straight-line depreciation.

Determine the payback period and unadjusted rate of return (use average investment), assuming that Walton uses double-declining-balance depreciation. (Note: Use average annual cash flow when computing the payback period and average annual income when determining the unadjusted rate of return.)

Req A and B

Determine the net present value and the present value index of the investment, assuming that Harper uses straight-line depreciation and double-declining-balance for financial and income tax reporting. (Round your answers for "Net present value" to the nearest whole dollar amount and your answers for "Present value index" to 2 decimal places.)

Determine the payback period and unadjusted rate of return (use average investment), assuming that Harper uses straight-line depreciation and double-declining-balance depreciation. (Note: Use average annual cash flow when computing the payback period and average annual income when determining the unadjusted rate of return.) (Round your answers to 2 decimal places.)

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1) Citizens Bank offers 4.8% (APR) monthly compound interest on your deposit. If you deposit $200 today, what is your account balance after 5 years assuming no withdraw?

2)Use the following corporate tax rate table to answer the question:

Honey Donuts reported 2017 taxable income of $250,000.

How much is the firm's tax bill?

What is the average tax rate?

3)Given the following income statement data, calculate net income. sales = $2,500, cost of goods sold = $1,800, expenses, depreciation, and amortization = $200, interest expense = $50, average tax rate = 35%.

4)If current assets = $125, fixed assets = $300, long-term debt = $80, and shareholders' equity = $275, what is the value of current liabilities if it is the only other item on the balance sheet?

5)You are considering Massachusetts State Municipal Bond that is paying a yield of 10.08 %. You are in the 28 percent tax bracket. To match this after-tax yield, you would consider taxable securities (Corporate Bond) that pay at least what level of before-tax yield?

6)If corporate bond yields are at 7.8% and municipal bond yields are at 5.5%, at what federal income tax rate would you be indifferent between owning either of these bonds? (i.e., they will offer the same after tax yield to you) Ignore the impact of state and local taxes.

7)Your uncle has a personal income tax rate 35%. If his after tax return rate from General Electric bonds was 5.6% for year 2017, what must be the before tax return rate on the bond?

PLEASE RESPOND IN 150-200 WORDS THANK YOU!

Why must management distinguish between current assets that can be easily converted to cash and those that are more permanent?

1.Which of the following is not an advantage of MIRR compared to IRR?

A. Assumes reinvestment of cash flows at WACC

B. Assumes reinvestment of cash flows at IRR

C. Avoids multiple IRR issue

D. None of the above

2.What’s the crossover rate of the following two cash flow series? Year 0 1 2 3 Project X -$1,150 $1000 $300 $400 Project Y -$1,150 $500 $300 $1000

A. 12%

B. 11%

C. 10.3%

D. 9.5%

E. None of the above

3. Which of the following is the criterion to evaluate mutually exclusive projects using NPV decision rule?

A. If NPV>0, accept the project

B. If NPV<0, accept the project A. Select the project with the highest positive NPV B. Select the project with the highest negative NPV C. None of the above ><0.Accept the project

A. Select the project with the highest positive NPV

B. Select the project with the highest negative NPV

C. None of the above

4. Which of the following is the criterion to evaluate independent project using IRR decision rule?

A. If IRR>WACC, accept the project

B. If IRR<WACC.

C. Select the project with the highest IRR

D. Select the project with the highest WACC

E. None of the above

5. You are using a net present value profile to compare Projects A and B, which are mutually exclusive. Which one of the following statements correctly applies to the crossover point between these two?

A. The internal rate of return for Project A equals that of Project B, but generally does not equal zero.

B. The internal rate of return of each project is equal to zero.

C. The net present value of each project is equal to zero.

D. The net present value of Project A equals that of Project B, but generally does not equal zero. E. The net present value of each project is equal to the respective project's initial cost.

6. USA Manufacturing issued 30-year, 7.5 percent semiannual bonds 6 years ago. The bonds currently sell at 101 percent of face value. What is the firm's aftertax cost of debt if the tax rate is 35 percent?

A. 4.82 percent

B. 5.62 percent

C. 3.76 percent

D. 3.59 percent

E. 4.40 percent

7. Financing expense is a relevant cash flow

. A. True B. False

A friend has approached you for advice because they know you are in an investments class. The friend’s grandfather has made a gift to the friend of $25,000 with the requirement that the money be used to invest in a minimum of 5 individual stocks. (The grandfather is an old-school stock investor and feels strongly that investing in stocks will help your friend understand the markets and the economy and will improve your friend’s decision-making skills.)

What are the three things you would want your friend to understand before they begin investing? In addition to those three things, how would you advise your friend to go about evaluating what stocks to choose? (You are not recommending a stock, you are advising them how they can choose a stock.) Finally, would you suggest they go about executing their transactions?

3. 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.

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?

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

please explain step by step process.DO NOT COPY AND PASTE PREVIOUS ANSWERS

Explain whether the dividend policy of a company affects its value, by describing the
various theories that have been put forward in the literature. Provide for each theory at
least two references from published papers in scientific journals (approximately 1,000
words).

Suppose your selected company(choose one of the two) just paid a dividend of $ 2.20 per share. The dividend are to calculate the share's expected return. You observe that the risk-free rate of return on us treasuries is 2% p.a, the market risk premium is 7 % and the company's equity has a current beta of 1.285. what is the market value of the company's shares? Compare the actual closing price of your selected company's share on the balance sheet date. Why might the actual share price differ from the calculated price? explain. I choose Woolworth ltd in australia and the other company is Wesfarmers Ltd

Dividend policy                                                                                

a. Define the information content effect of a dividend, and discuss whether or not it conveys information about a firm’s dividend policy.                                                                                

b. Define the clientele effect of dividend policy, and discuss whether or not it conveys information about a firm’s market value.                                                                                          

Russia’s Alternative Currency Bonds.

On March 17, 2018, the Russian Federation issued USD 4bn in eurobonds (what are they?) with an unusual provision. The issuer reserves the right pay bondholders principal and interest in EUR, GBP, or CHF should the Russian Federation be unable to make payment in USD for “for reasons beyond its control..”

Working for the chief investment officer (CInvO) of NoNaCaPa (No-Name Capital Partners), a prominent hedge fund, you are analyzing the bonds to determine what their risk and rewards are.    Your company is USD based but not averse to taking on foreign currency risk to enhance a position’s return potential. Your starting point is the attached Financial Times article which you supplement by your own research. In particular, you wonder about the alternative-currency clause in the indenture (debt contract) and how it might affect the investment performance of the bonds.

(a) Research dual- or multiple-currency debt securities which are typically issued in the eurobond market.

• What do they consist of?   How can you unbundle the bonds into its constituent parts?

• What are eurobonds?

(b) In comparison to multiple curency bonds, what does the alternative currency payment provision effectively amount to?

(c) What motivates the alternative currency payment provision and how does it affect the pricing of the bonds?

(d) What risk factors do investors face?   Present the risks in tabular form distinguishing between financial from nonfinancial risks which obviously translate into financial risks at a later stage. Identify each risk’s origin and nature,who bears it, its impact on bond pricing, and whether and how investors can hedge or not against it.

(e) What investment recommendation would you give to your CInvO? Explain your advice and motivate your investment thesis, i.e., the rationale why or why not you should participate in the transaction.

Cornerstone Exercise 4.5 (Algorithmic)

Activity-Based Product Costing

Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

Required:

1. Calculate the four activity rates.

2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.

Calculate the overhead cost per unit. Round your answers to the nearest cent.

3. What if consumption ratios instead of activity rates were used to assigned costs? Show the cost assignment for the inspection activity.