If the US government wants to increase the money supply:
a. What does it do regarding US Treasury Bonds and explain how it helps
b. What happens to interest rates and why?
In: Finance
A project has annual cash flows of $7,500 for the next 10 years and then $6,500 each year for the following 10 years. The IRR of this 20-year project is 11.48%. If the firm's WACC is 8%, what is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
In: Finance
NPV
A project has annual cash flows of $7,000 for the next 10 years and then $6,000 each year for the following 10 years. The IRR of this 20-year project is 13.84%. If the firm's WACC is 12%, what is the project's NPV? Round your answer to the nearest cent.
$
In: Finance
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McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,010 per set and have a variable cost of $455 per set. The company has spent $160,000 for a marketing study that determined the company will sell 51,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,600 sets of its high-priced clubs. The high-priced clubs sell at $1,510 and have variable costs of $640. The company also will increase sales of its cheap clubs by 12,200 sets. The cheap clubs sell for $455 and have variable costs of $185 per set. The fixed costs each year will be $9,700,000. The company has also spent $1,200,000 on research and development for the new clubs. The plant and equipment required will cost $31,500,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will require an increase in net working capital of $2,560,000 that will be returned at the end of the project. The tax rate is 23 percent and the cost of capital is 12 percent. |
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Suppose you feel that the values are accurate to within only ±10 percent. What are the best-case and worst-case NPVs? (Hint: The price and variable costs for the two existing sets of clubs are known with certainty; only the sales gained or lost are uncertain.) (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
In: Finance
Loan Amortization:
A loan of $14 100.00 is amortized over 11 years by equal monthly payments at
5.4% compounded monthly.
a) Find the outstanding balances after the payment 39 is done.
b) Find the outstanding balances after the payment 129 is done.
c) Find the amount of Final Payment and fill out the last row.
In: Finance
A firm’s product sells for $12 per unit and the unit variable cost is $8. The operating fixed costs total $100,000 per year. The firm pays $20,000 interest and $3,000 preferred dividends each year. The tax rate = 40%.
1. What is the firm’s operating breakeven point (rounded to the whole unit)?
2. What is the DFL at 50,000 units per year (rounded to the first decimal place)?
3. What is the DOL at 50,000 units per year (rounded to the first decimal place)?
4. What is the DTL at 70,000 units per year (rounded to the first decimal place)?
In: Finance
Specify the causes of the Lehman bankruptcy and insolvency as the firm moved through time.
In: Finance
| Consider the following abbreviated financial statements for Cabo Wabo, Inc.: |
| CABO WABO, INC. Partial Balance Sheets as of December 31, 2018 and 2019 |
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| 2018 | 2019 | 2018 | 2019 | ||||||
| Assets | Liabilities and Owners’ Equity | ||||||||
| Current assets | $ | 2,998 | $ | 3,180 | Current liabilities | $ | 1,297 | $ | 1,908 |
| Net fixed assets | 13,873 | 14,494 | Long-term debt | 7,173 | 8,232 | ||||
| CABO WABO, INC. 2019 Income Statement |
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| Sales | $ | 44,745 | |||||||
| Costs | 22,437 | ||||||||
| Depreciation | 3,783 | ||||||||
| Interest paid | 1,029 | ||||||||
| a. |
What is owners’ equity for 2018 and 2019? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) |
| b. | What is the change in net working capital for 2019? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| c-1. | In 2019, the company purchased $7,885 in new fixed assets. The tax rate is 21 percent. How much in fixed assets did the company sell? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| c-2. | What is the cash flow from assets for the year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| d-1. | During 2019, the company raised $2,377 in new long-term debt. What is the cash flow to creditors? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| d-2. | How much long-term debt must the company have paid off during the year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
In: Finance
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Walker, Inc., is an all-equity firm. The cost of the company’s equity is currently 10.9 percent and the risk-free rate is 3.8 percent. The company is currently considering a project that will cost $11.76 million and last six years. The company uses straight-line depreciation. The project will generate revenues minus expenses each year in the amount of $3.43 million. |
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If the company has a tax rate of 22 percent, what is the net present value of the project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) |
In: Finance
|
Rate of Return |
|||||
| Scenario | Probability | Stocks | Bonds | ||
| Recession | .40 | −4 | % | +19 | % |
| Normal economy | .50 | +20 | +9 | ||
| Boom | .10 | +26 | +8 | ||
| Consider a portfolio with weights of .7 in stocks and .3 in bonds. |
| a. |
What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. Round your answers to 1 decimal place.) |
| Scenario | Rate of Return |
| Recession | % |
| Normal economy | % |
| Boom | % |
| b. |
What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Expected rate of return | % |
| Standard deviation | % |
| c. | Which investment would you prefer? |
|
In: Finance
How have automated retirement platforms changed the way people invest for their retirement? Do you think "set and forget" options like Dimensional Managed DC SmartNest will ultimately disintermediate retirement advisors, or will they remain a link in the product distribution chain?
In: Finance
If SmartNest is a game-changing innovation, why not partner with even larger institutions like Vanguard or Fidelity, which already have the infrastructure and inroads into this market?
In: Finance
EVEN-LI Co. and SOONER Inc. each of the companies buys an identical piece of box-manufacturing equipment at a cost of $3,300, and each estimates the equipment's salvage value of $100. However, each company uses a different method of depreciation. EVEN-LI uses the straight -line method and estimates the useful life of the equipment at 4 years. SOONER uses the double-declining balance method for the first year, switching to straight-line for the remaining years and estimates the useful life of the equipment at 4 years. Assume the following for each company: Revenues in each year were $3,000; expenses, other than depreciation were $1,000. Ignore taxes (0% tax rate) 1) calculate each company's net profit for each of the four years. 2) compare the net profit for the two companies across different years. 3) what are the steps and formulas to solve
In: Finance
Planetary Travel Co. has $240,000,000 in stockholders’ equity. Eighty million dollars is listed as common stock and the balance is in retained earnings. The firm has $500,000,000 in total assets and 2 percent of this value is in cash. Earnings for the year are $40,000,000 and are included in retained earnings. a. What is the legal limit on current dividends? b. What is the practical limit based on liquidity? c. If the company pays out the amount in part b, what is the dividend payout ratio? (Compute this based on total dollars rather than on a per share basis because the number of shares is not given.) d. Sometimes the corporation repurchases its own stock? Why? e. What is the characteristic of beta? f. What are the factors that influenced the Global capital markets? g. The investment banker may advise clients on a continuing basic. What are these advises?
In: Finance
Any company in the U.S. that plans to issue stocks or bonds is required by the Securities and Exchange Commission to provide its balance sheet and income statement to the public. Why is this requirement in place? What kind of information that would be useful to potential investors can be found in these financial statements?
2-3 paragraphs minimun
In: Finance