You’ve collected the following information from your favorite financial website.

According to your research, the growth rate in dividends for SIR for the next five years is expected to be 20 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent indefinitely. Assume investors require a return of 14 percent on SIR stock.

According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Current stock price            $

Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?

Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have conflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why? P.S. I saw some answers on Chegg but I didn't like them, please do not use them

A stock has a beta of 0.9 and an expected return of 11 percent. A risk-free asset currently earns 3.5 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.29, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. If a portfolio of the two assets has an expected return of 11.75 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 4 decimal places.) d. If a portfolio of the two assets has a beta of 1.38, what are the portfolio weights?

The expected return and standard deviation of a portfolio that is 40 percent invested in 3 Doors, Inc., and 60 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) 15 % 14 % Standard deviation, σ 58 32 What is the standard deviation if the correlation is +1? 0? −1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. )

what is the IRR for the following project if its initial after tax cost is $5000000 and it is expected to provide after tax operating cash inflows of $1800000 in yr 1, $1750000 in yr 2, $1680000 in yr 3 and $1300000 in yr 4?

What are the preventive steps taken to protect a business from having its cash drained by employees?

Explain the three theories of the term structure of interest rate in investment management

A mutual fund is holding a portfolio consists of four bonds. Duration of Bond A is 1.22-year, of Bond B is 2.75-year, of Bond C is 3.11-year, of Bond D is 5.16. The proportion of Bond A in the portfolio is 30%, Bond B is 25%, Bond C is 15%, and the rest goes to Bond D.

a) Which bond in the portfolio is exposed to the lowest interest rate risk? Briefly explain.

b) What is the duration of the portfolio?

Problem 16-14
Cash Budgeting

Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl frequently run out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high.

Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,700 per month, and the rent is $2,900 per month. In addition, she must make a tax payment of $14,000 in December. The current cash on hand (on December 1) is $550, but Koehl has agreed to maintain an average bank balance of $6,000 - this is her target cash balance. (Disregard the amount in the cash register, which is insignificant because Koehl keeps only a small amount on hand in order to lessen the chances of robbery.)

The estimated sales and purchases for December, January, and February are shown below. Purchases during November amounted to $100,000.

1. Prepare a cash budget for December, January, and February.

   I. Collections and Purchases:
   	December	January	February
   Sales	$	$	$
   Purchases	$	$	$
   Payments for purchases	$	$	$
   Salaries	$	$	$
   Rent	$	$	$
   Taxes	$	---	---
   Total payments	$	$	$
   Cash at start of forecast	$	---	---
   Net cash flow	$	$	$
   Cumulative NCF	$	$	$
   Target cash balance	$	$	$
   Surplus cash or loans needed	$	$	$

   
   
2. Suppose Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. All customers accept these terms, and all other facts in the problem are unchanged. What would the company's loan requirements be at the end of December in this case? (Hint: The calculations required to answer this part are minimal.)
   $

a) In the first trading day of 1998, Hang Seng Index closed at 10680.60, while in the last trading day of 2017, it closed at 29919.15. What is the average annual growth rate of Hang Seng Index in this 20-year?                              

b) The following yield curve is observed of the U.S. Treasury securities on 28th October 2019:

Suppose the pure expectation theory is correct. Forecast the expected one-year yield rate of one year later and of two years later respectively.  

4. Flying High is currently an all-equity firm. It has 1 million shares outstanding and the current share price is $10 per share. The management plans to issue $3 million of perpetual debt and use the proceeds to buy back part of its shares. The debt cost of capital at the new capital structure is 7%. The corporate tax rate is 20%.

Assume the EBIT each year will be high enough so the 30 percent limit on the interest deduction will not be reached. (Therefore the entire interest expense is tax deductible.)

a. Calculate the annual interest tax shield associated with this debt issue.

b. Calculate the present value of the interest tax shields, assuming the interest tax shields have the same risk as the firm's debt.

c. Calculate the value of the firm after the change in capital structure.

d. Calculate the market capitalization after the change in capital structure.

Consider the below alternatives, using a MARR of 10%, and an investment budget of $100,000:

1. Calculate the Internal Rate of Return for each Option

2. Assuming the options A, B, C, and D are mutually exclusive, which option is the best economical choice? You can choose any appropriate method of analysis for comparing alternatives.

3. What is the weighted average Rate of Return for the choice you made assuming that what remains from of the budget is invested at the MARR.

The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S has a maturity of 1 year.

1. What will be the value of each of these bonds when the going rate of interest is 4%? Assume that there is only one more interest payment to be made on Bond S. Round your answers to the nearest cent.

   Bond L	$
   Bond S	$

   
   
2. What will be the value of each of these bonds when the going rate of interest is 9%? Assume that there is only one more interest payment to be made on Bond S. Round your answers to the nearest cent.

   Bond L	$
   Bond S	$