what are the main question that an analyst should ask in analyzing the sources and uses of cash in a business? 8marks

Why is it important that US financial institutions and financial markets perform efficiently?

Swindler Ltd has completed a feasibility study costing $22,378 to determine if there is any benefit in purchasing a new asset. The machine will cost $331,976 and an additional $11,128 will need to be spent to have the machine in operational state. Before the machine can be used staff must be trained at a further cost of $8,855.

The project is expected to last for 5 years and the Taxation Office has confirmed this. At the end of the project the machine will be fully depreciated.

Initial advertising costs are expected to $22,297 and additional stock of $71,498 will be needed. Wages will change from $85,000 to $53,864 and Fixed Costs will remain at $37,687.

The new machine is expected to produce sales of $1,549,364 in the first year and will grow by 11% each year of the project. Material costs will be 29% of sales in each year.

You are required to calculate the net cash flow (round to the nearest dollar and DO NOT include $ sign) that would appear in Year 1 of a Capital Budget.  

A company is projected to have a free cash flow of $261 million next year, growing at a 7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.0% in perpetuity. The company's cost of capital is 11.7%. The company owes $64 million to lenders and has $33 million in cash. If it has 111 million shares outstanding, what is your estimate for its stock price? Round to one decimal place. (e.g., $4.32 = 4.3)

Consider the following stock information about Tencent and HSBC

a. What’re the expected return on each stock?
b. What’re the standard deviation on each stock?
c. The risk free rate is 1.5%. Based on the CAPM, If Tencent’s market beta is 1.5, what’s the beta of HSBC?
d. If you invested 65 percent in Tencent and 35 percent in HSBC, what is your portfolio expected return? The standard deviation?
e. Given the portfolio information in (d) and beta information in (c), what is the portfolio’s market beta?

Parker & Stone, Inc., is considering a new project that requires an initial fixed asset investment of 1.2 million. The project also requires an initial investment in net working capital of $250,000. The project is expected to generate $950,000 in sales and cost $400,000 every year for three years. The fixed asset follows a straight-line depreciation. After three years, the fixed asset has a zero book value but is estimated to have a market value of $200,000, and the net working capital will fully recovery. The corporate tax rate is 35%.

a. What are the operating cash flows in each year?
b. What are the cash flows from net working capital and the net capital spending in year 3?
c. What are the CFFA in each year?
d. If the required return is 10% for a similar risk level of project, should the company implement this project?

If markets are efficient a random walk explain stock returns. Why?

How does the random walk in stock prices make finance into a science (according to my lecture)?

Explain the disposition effect

Explain the idea of nudging. Then give and explain a few (3 examples) of nudging.

Why did the efficient markets hypothesis collapse ?

What are the consequences of teaching students that markets are efficient when they are likely not? Think hard about this question.

Tabitha saved $5,000 a year for ten years ($50,000) beginning at age 22 Tonya saved $10,000 a year for ten years ($100,000) beginning at age 40 Both made the same investments and realized a compound return of 6% annually Who has more money at age 67?

28) A commercial bank must demonstrate abilities to manage its credit and interest rate risk to its shareholders and regulators. Describe fully two (2) ways banks can use to analyze and minimize each:

•  Credit Risk

•  Interest Rate Risk

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.

What is Project A's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

What is Project B's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

A bond pays annual interest. Its coupon rate is 9%. Its value at maturity is $1,000. It matures in 4 years. Its yield to maturity (YTM) is currently 6%.

a. Calculate the Macaulay's duration.

b. Calculate the modified duration

c. Calculate the percentage change in bond price if YTM increases by 1%