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NEED ANSWER ASAP / ANSWER NEVER USED BEFORE, COMPLETELY NEW ANSWER PLEASE

Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company’s pension fund management division. An important new client, the North-Western Municipal Alliance, has requested that Mutual of Seattle present an investment seminar to the mayors of the represented cities, and Strother and Tibbs, who will make the actual presentation, have asked you to help them by answering the following questions.

a. What are the key features of a bond?

b. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky?

c. How does one determine the value of any asset whose value is based on expected future cash flows?

d. How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%?

e.

(1) What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?

(2) What would happen to the bond’s value if inflation fell and rd Would we now have a premium or a discount bond?
declined to 7%?

(3) What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial cal-culator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)

Mini Case Sam Strother and Shawna Tibbs. (Chapter 5, p,238). Please respond to the following questions, a, b, c, d, e (1); e(2); e(3).

Textbook

Financial Management: Theory and Practice, 16^th edition

Brigham and Ehrhardt

Cengage

ISBN: 978-1-337-90260-1

ANSWER THROUGHLY 1-2 pages

COPY AND PASTE NOT ATTACHMENT PLEASE

NEEDS TO BE AN ORIGINAL SOURCE ANSWER NEVER USED BEFORE

*****NEEDS TO BE A ORIGINAL SOURCE****

Examine and appraise the differences of robo advisor over traditional wealth managers

A project provides annual cash flows of £800 per year for 8 years and costs £3000 today. Is this a good project if the required return is 8%?

At what discount rate would you be indifferent between accepting the project and rejecting it?

Explain the cash conversion cycle (CCC). Describe the CCC for your employer or company in an industry in which you're interested. What are some specific things that your company could do to decrease your cash conversion cycle? Let's be sure to describe, in pretty specific terms, the CCC for our company and what could be done to shorten it.

Marko inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of 6100, 11100, and 17300 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return 15 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.

Businesses should ensure they price their goods and services reasonably to retain competitive advantage. An accurate method of costing is important as it can assist a business to determine a fair price for their final product.

With the above in mind, the CEO of GoGo Airlines has provided you with the following information:

Total Overheads = £200,000

Total Machine Hours = 100,000

You are required to calculate the unit costs of the vegan and non-vegan meals using:

• Traditional costing using machine hours as the basis of allocation of costs and
• ABC system

In 2009, Roche Holding AG (Roche) made an offer to acquire all remaining outstanding shares of US biotechnology company Genentech. To pay for the deal, Roche planned to sell a record $32 billion in bonds at various maturities from 1 year to 30 years, and in three different currencies (USD, Euro, British pound). For simplicity, let us assume they only issue 10 year dollar-denominated bonds. The 10 year interest rates on corporate bonds, and the median earnings to interest expense ratios (EBITDA/interest expense coverage ratio) for US rated industrial companies at the time were as follows:

With the acquisition of Genentech, suppose we project that Roche will have earnings (EBITDA) of $23 billion, and their interest expense will be $32 billion (the debt) times the interest rate. If we use the coverage ratio to estimate the bond rating, and we use the bond rating to estimate the interest rate, what rating will we assign to Roche's debt?

AAA

AA

A

BBB

Charles (age 38) has just died. He has been credited with the last 30 consecutive credits of Social Security coverage in the last 30 quarters since he left school and began full-time employment. He had never worked before leaving school. Which of the following persons are eligible to receive Social Security survivor benefits as a result of Charles’s death?

1. Charles’s child, Bill, age 16

2. Charles’s child, Dawn, age 19

3. Charles’s widow, Maggie, age 38

4. Charles’s dependent mother, Betty, age 60

Group of answer choices

1 only

1, 2 and 4

1 and 2

2, 3 and 4

Retlaw Corporation (RC) manufactures time-series photographic equipment. It is currently at its target debt–equity ratio of 0.83. It’s considering building a new $46 million manufacturing facility. This new plant is expected to generate after-tax cash flows of $8.5 million in perpetuity. The company raises all equity from outside financing. There are three financing options: A new issue of common stock: The flotation costs of the new common stock would be 8% of the amount raised. The required return on the company’s new equity is 16%. A new issue of 20-year bonds: The flotation costs of the new bonds would be 4% of the proceeds. If the company issues these new bonds at an annual coupon rate of 8.0%, they will sell at par. Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of 0.140. What is the NPV of the new plant? Assume that RC has a 35% tax rate. (Enter the answer in dollars. Do not round intermediate calculations. Round the WACC percentage to 2 decimal places. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $

The Cost of the Cheap Shirt Conduct some research about the working conditions and regulatory environment in clothing factories in Bangladesh. Economists warn about quick fixes for wages and the imposition of U.S. safety standards on foreign factories. They offer the following figures to illustrate that the issue of labor conditions in other countries is complex. In Bangladesh, clothing factories get about $6.75 per shirt. These are the factory costs: $4.75 for the fabric and thread $1.00 for the shirt’s labels $0.38 wage costs for each shirt (workers earn $70 to $80 a month) $0.15 per shirt for laundering That leaves $0.47 per shirt for facilities, shipment, marketing, and perhaps the interest on loans. The cost of living in Bangladesh is $40 per month for rent, and food per adult is $13 per month. Milk for a child is $5 per month. Those who work in the factories are generally the main wage earners in their families because no other jobs pay as well. Given this analysis, where do you see some fixes for the safety and wage issues? What needs to be done besides instituting codes of ethics and factory and labor standards? Assume that you are a manager for a clothing firm in the United States and you are being sent to Bangladesh to select a new manufacturer for your clothing lines. Discuss some of the issues that will affect your decisions about choosing a new facility to work with.

You need a 25-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 7.1 percent APR for this 300-month loan. However, you can afford monthly payments of only $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $850?
A) $687,844.56

B) $737,482.82

C) $101,874.08

D) $709,118.1

E) $120,814.04

RAK, Inc., has no debt outstanding and a total market value of $165,000. Earnings before interest and taxes, EBIT, are projected to be $21,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT wIll be 25 percent higher. If there is a recession, then EBIT will be 35 percent lower. The company is considering a $60,000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock.There are currently 5,500 shares outstanding. Ignore taxes for this problem.

a. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. Also calculate the percentage changes in EPS when the economy expands or enters a recession.

b. Repeat part (a) assuming that the company goes through with recapitalization. What do you observe?

Bill Guerin, an entrepreneur, has a project available for investment with two pro-duction techniques, Safe and Risky, both requiring an initial investment of $100. Next year, the Safe technique provides a payoff of $120 with certainty, and the Risky technique pays $124 if successful, but only $94 if unsuccessful, where the risk-neutral probability of success is ½. The risk-free rate is 5%.

Can Guerin obtain a $100 loan to be repaid next year to finance the project at the risk-free rate?

What is the NPV for the bank if it charges 15% interest on the loan?

What is the NPV for the bank if it charges 17% interest on the loan?

(1 mark) Suppose the bank has a monopoly on providing financing. Discuss how parts b) and c) relate to the bank’s decision about what interest rate to charge.