Both Bond Bill and Bond Ted have 5.8 percent coupons, make
semiannual payments, and are priced at par value. Bond Bill has 5
years to maturity, whereas Bond Ted has 25 years to maturity.
a. If interest rates suddenly rise by 2 percent, what is the
percentage change in the price of these bonds? (A negative answer
should be indicated by a minus sign. Do not round intermediate
calculations and enter your answers as a percent rounded to 2
decimal places, e.g., 32.16.)
b. If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of these bonds? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
In: Finance
Which of the following statements regarding the predictive value of historical returns is true?
A. Historical returns can be useful in predicting the general direction of a market over a long period.
B. Macroeconomic forces can be predicted from past market performance.
C. All of these answers.
D. Systemic risk, which diminishes the predictive value of historic returns, is the risk of company failure.
In: Finance
Question 1
(a) How is Inventory Turnover Ratio calculated ? What might a sharp drop in inventory turnover tell us ?
(b) How do we calculate Days Sales Outstanding (DSO) ? What might a sharp increase in DSO tell us ?
(c) How do we calculate Operating Profit Margin? How might it be a better measurement of profitability than Net Profit Margin ?
(d) How do we calculate Current Ratio? What does it tell us?
In: Finance
The Scientific Store received an invoice for $6710.00 dated July
13, terms 5/10, 2/30,
n/90, for a shipment of skis. Calculate the partial payments made
20 July to reduce the
balance to $4000.00 Round to nearest 100th.
Written please.
In: Finance
You are considering two independent projects that have differing requirements. Project A has a required return of 12 percent compared to Project B's required return of 13.5 percent. Project A costs $75,000 and has cash flows of $21,000, $49,000, and $12,000 for Years 1 to 3, respectively. Project B has an initial cost of $70,000 and cash flows of $15,000, $18,000, and $41,000 for Years 1 to 3, respectively. Based on the NPV, you should:
In: Finance
Suzanne opens an account at a local bank on January 1, 2004 with a deposit of 4000 dollars. On October 1, 2004 she withdraws 1430 dollars. On April 1, 2005 she withdraws 850 dollars. And on April 1, 2007 she deposits 2090 dollars. Find the total present value of these transactions on July 1, 2006, if the account earns interest at a nominal rate of 7.6 percent convertible quarterly.
The solutions I've found on the website have not taken into account the future deposit and are incorrect, any suggestions?
In: Finance
You have just purchased a home and taken out a $ 520000 mortgage. The mortgage has a 30-year term with monthly payments and an APR (with semi-annual compounding) of 7.44 %. (Note: Be careful not to round any intermediate steps less than six decimal places.)
a. How much will you pay in interest, and how much will you pay
in principal, during the first year?
b. How much will you pay in interest, and how much will you pay
in principal, during the twentieth year (i.e., between 19 and 20
years from now)?
In: Finance
The Down Towner is considering a project with a life of 4 years that will require $164,800 for fixed assets and $42,400 for net working capital. The fixed assets will be depreciated using the Year 2018 bonus depreciation method. At the end of the project, the fixed assets can be sold for $37,500 cash and the net working capital will return to its original level. The project is expected to generate annual sales of $195,000 and costs of $117,500. The tax rate is 24 percent and the required rate of return is 13 percent. What is the project's net present value?
In: Finance
Question 1
(a) If Company A has a price per share of $40 and an earnings per share of $10, and Company B has a price per share of $30 and earnings per share of $3,what is the P/E
multiple of each.Which Company has a higher expected future earnings growth rate and why?
(b) How do we calculate the Times Interest Earned Ratio ? What does it tell us ?
(c) Why might a lender be more focused on liabilities - to- Assets Ratio rather than Debt- to- Equity Ratio ?
In: Finance
|
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.4%. The probability distributions of the risky funds are: |
| Expected Return | Standard Deviation | |
| Stock fund (S) | 14% | 34% |
| Bond fund (B) | 5% | 28% |
| The correlation between the fund returns is .14. |
|
What is the expected return and standard deviation of the optimal risky portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Expected return | % |
| Standard deviation | % |
rev: 02_05_2014_QC_44397
In: Finance
I and my husband Jose have total amount of $150,000 in our savings account. We have 3 school going kids. We want to buy a new home, a new car and keep funds for children higher education.
We finalized to buy a home for $760,000. We may use $120,000 of our savings as a down payment on it. For balance financing the mortgage specialist/agent gave us the following options:
Ques 1. What will the semi-monthly payment be on the Option 1 mortgage?
Please use (display + name) the excel function/ formula. Also please attach the screenshots/ photos of the excel sheet solution.
Option 2: a monthly payment of $2,900 to be made at the end of each period. The interest rate with this option would be 3.60% APR (annual percentage rate) compounded semi-annually.
Ques 2. How many years will Option 2 mortgage be amortized over?
Please use (display + name) the excel function/ formula. Also please attach the screenshots/ photos of the excel sheet solution.
Ques 3. To buy a new car of $45,000 (including taxes). In exchange of our old car for $10,000 and $10,000 from our savings as a down payment, the car dealer would provide the $25,000 balance as a 5-year loan paid semi-monthly at 4.8% APR compounded semi-monthly. What will the payment be on the loan for the car as per below information?
Please use (display + name) the excel function/ formula. Also please attach the screenshots/ photos of the excel sheet solution.
In: Finance
| Category | Prior Year | Current Year |
| Accounts payable | ??? | ??? |
| Accounts receivable | 320,715 | 397,400 |
| Accruals | 40,500 | 33,750 |
| Additional paid in capital | 500,000 | 541,650 |
| Cash | 17,500 | 47,500 |
| Common Stock | 94,000 | 105,000 |
| COGS | 328,500 | 430,380.00 |
| Current portion long-term debt | 33,750 | 35,000 |
| Depreciation expense | 54,000 | 54,221.00 |
| Interest expense | 40,500 | 42,028.00 |
| Inventories | 279,000 | 288,000 |
| Long-term debt | 335,365.00 | 400,331.00 |
| Net fixed assets | 946,535 | 999,000 |
| Notes payable | 148,500 | 162,000 |
| Operating expenses (excl. depr.) | 126,000 | 161,395.00 |
| Retained earnings | 306,000 | 342,000 |
| Sales | 639,000 | 852,776.00 |
| Taxes | 24,750 | 48,765.00 |
In: Finance
|
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.24 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $252,000. The project requires an initial investment in net working capital of $360,000. The project is estimated to generate $2,880,000 in annual sales, with costs of $1,152,000. The tax rate is 35 percent and the required return on the project is 16 percent. |
| Required: | |
| (a) | What is the project's year 0 net cash flow? |
| (Click to select) -3,960,000 -3,240,000 -3,600,000 -3,420,000 -3,780,000 | |
| (b) | What is the project's year 1 net cash flow? |
| (Click to select) 1,501,200 1,651,320 1,576,260 1,351,080 1,426,140 |
| (c) | What is the project's year 2 net cash flow? |
| (Click to select) 1,651,320 1,501,200 1,426,140 1,351,080 1,576,260 |
| (d) | What is the project's year 3 net cash flow? |
| (Click to select) 2,025,000 1,822,500 2,126,250 2,227,500 1,923,750 |
| (e) | What is the NPV? |
In: Finance
Jack is considering adding work jeans and T-shirts to the items he stocks in his general store provided that his payback period is less than 2.5 years. He estimates that the initial cost of inventory will be $6,750. The remodeling expenses required for this addition are $18,200. Jean and T-shirt sales are expected to produce net cash inflows of $10,200, $14,500, and $16,600 over the next three years, respectively. Jack _____ add the jeans and T-shirts to his offerings as the payback period is _____ years.
Multiple Choice
should; 1.67
should; 3.67
should; 2.02
should not; 3.67
should not; 2.02
In: Finance
You must evaluate a proposal to buy a new milling machine. The base price is $165,000, and shipping and installation costs would add another $12,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $82,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $8,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $31,000 per year. The marginal tax rate is 35%, and the WACC is 13%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.
What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent.
What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent. Do not round your intermediate calculations.
Year 1 $
Year 2 $
Year 3 $
In: Finance