Max Inc. currently has a debt ratio of 50%. The total market value of its equity is $10 million, and the market value of its debt is also $10 million. Max Inc. has decided that lower leverage would be optimal, so it is considering restructuring its capital structure by issuing $3 million in equity and using the proceeds to retire debt (repurchase their outstanding bonds). Max Inc. currently has an equity beta of 1.2 and its cost of debt at 4%. The market risk premium is 10% and the risk free rate is 4%. Max Inc. pays no taxes and has no bankruptcy risk. Max Inc.'s cost of debt will not change as a result of the restructuring (no change in bankruptcy risk, so no change in default premiums)>

a. What is the current WACC for Mac Inc.?

b. Based on M&M theory, what will be the new WACC for Mac Inc. after the financial restructuring?

c. What will the new equity beta of the firm be?

d, What will the new cost of equity for the firm after restructuring?

Show the calculation for price to book ratio, give an example and discuss how to use it as a way to determine valuation for common stock?

Calculate the total return for a stock with a market price on January 1 of $20 and $16 on December 31 that pays quarterly dividend of 50 cents

Case study

Twins Laila aru' Lily are excited to be starting collego next year. Laila is leaving horne
behind and heading to college in Florida while her sigtor Lily in going to live at home and
attend a local university. up until now, they have always use' cash or gift cards received
for holidays or birthdays to pay fcx their expenses. Any savings they had was in their
piggy banks in their rooms. Now that college is almost here. they realize that cash may
be the best option.

1. Why is cash not always a good Option?

2. What should Laila consider when picking a bank? What about Lily? Do they have different needs?

take data from morningstar and solve using Excel

estimate the weighted average cost of capital, listing the necessary inputs at the top of your sheet, calculate Boeing’s cost of equity and beta.

2. use the capital asset pricing model to estimate Boeing’s cost of equity, assuming 3.5% risk-free rate and 5.5% market risk premium. Link to a separate sheet with beta estimation.

3. where you estimated Boeing’s beta, using historical prices with WEEKLY frequency for the most recent 5 YEARS. Use the SLOPE function to estimate beta. Insert a scatter chart that shows the trendline from regressing returns of BA on the VFINX returns, displays the estimated equation, and the R-squared (check the boxes to display the equation and the R-squared).

4. In the context of your regression analysis shown on the chart, using the specific numbers that you estimated. Explain the meaning of the slope coefficient from the estimated equation and discuss what your estimate implies about the risk of holding BA stock. Explain the meaning of the R-squared from the estimated equation.

Finally, Is Boeing’s cost of equity smaller or larger than Boeing’s cost of debt? Is that what we would expect? Explain!

1.) In the U.S. when does a company use the current rate method as opposed to the temporal method?

2.) What is an interest rate swap?

Please help me answer these international financial management questions. Thank you!

Explain how ROA ratio would be affected if a retail company was able to negotiate a better purchase price for a line of clothes for inventory.

Give a BRIEF, general overview of the Annual Budget Cycle, from the president's budget through budget implementation. Brief means to provide only a couple sentences on each major part of the cycle.
What are your top three areas of concern that you think should be addressed in the federal budget and why?

7. A stock will pay a dividend of amount Y at the end of each year for the next 14 years. At the end of the 15-th year the dividend increases by 1:5% and increases by 1:5% each year thereafter. Assuming an annual e?ective interest rate of 5%, the price of this stock is 123. Determine the value ofY.

Why do many companies prefer to use debt to provide capital for their operations?

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $670,000. This cost will be depreciated straight-line to zero over the project’s 5-year life, at the end of which the sausage system can be scrapped for $88,000. The sausage system will save the firm $213,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $41,000. If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

1.) Explain the concept of mismatched maturities? Give an example. What is the purpose of this technique?

2.) What is a Balance Sheet hedge? Why would a firm use one?

Please help me answer these international financial management questions. Thank you!

On January 1st, 2019 the 1-year Hungarian Government Bonds are offered at 1% yield. An investor is interested in investing in the Hungarian capital market. He has the following information about the expected annual returns, variances and correlations for two Hungarian cargo airlines (assuming these are the only stocks traded on this market): ASL Airlines and Fleet Air.

a) i) Do the 1-year Hungarian Government bonds bear any risk? Explain any assumptions you made in arriving at your answer. [2 marks]

ii) Find the annual risk free rate in this economy. [1 mark]

iii) Calculate the annual risk premium of ASL Air. [1 mark]

b) In order to decide his optimum portfolio, the investor needs to know the tangency portfolio in this market. Find the weights of the tangency portfolio. then calculate the expected return and variance of this tangency portfolio [4 marks]

c) Calculate the expected annual return and variance of the tangency portfolio. [3 marks]

1.) Explain how multilateral netting works. Why would a company do this?

2.) What is a functional currency?

3.) Explain the various ways one part of a firm could use to transfer money to another part of the same company?

Please help me answer these international finance questions.

Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production. You will need an initial $5,400,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $850,000 and that variable costs should be $440 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $380,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $560 per ton. The engineering department estimates you will need an initial net working capital investment of $540,000. You require a return of 12 percent and face a marginal tax rate of 23 percent on this project.

a-1

What is the estimated OCF for this project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

a-2

What is the estimated NPV for this 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.)

b.

Suppose you believe that the accounting department’s initial cost and salvage value projections are accurate only to within ±15 percent; the marketing department’s price estimate is accurate only to within ±10 percent; and the engineering department’s net working capital estimate is accurate only to within ±5 percent. What is the worst-case NPV for this project? The best-case NPV?