5.20 A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 6%. He has been offered three possible 4-year contracts. Payments are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows:

As his adviser, which contract would you recommend that he accept?

Select the correct answer.

Find the amount to which $700 will grow under each of these conditions:

1. 6% compounded annually for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

2. 6% compounded semiannually for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

3. 6% compounded quarterly for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

4. 6% compounded monthly for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

5. 6% compounded daily for 4 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

6. Why does the observed pattern of FVs occur?

1. Based on the following information, answer the questions.

1. If Profit Margin (PM) is 10 percent, i) what is the net income? If ROEis 5 percent, ii) what is the total equity? Use the net income that you figured out in the previous question. (40points)

PM=Net Income/Sales,  0.1=NI/1,000,000   èNI=100,000

            ROE=Net Income/Total Equity,   0.05=100,000/TE èTE=2,000,000

2. If the firm has a debt-to-equity ratioof 2.5, what is the Total Debt ratio (TD/TA)?(30 points)

Debt-to-equity ratio=TD/TE, 2.5=TD/2,000,000 èTD=5,000,000

TD/TA=5,000,000/7,000,000=5/7

3. The firm plans to reduceits equity multiplier (EM). Other things equal, what will happen to its return on equity (ROE)? Does it increase or decrease?  (30points)

          ROE=NI/TE = (NI/Sales)*(Sales/Total Asset)*(Total Asset/Total Equity)

      = PM*TAT*EM      If EM decreases, then ROE will decrease

Parmorramore corp has 12$ million of sales, 3$ million of inventories, 2$ million of recviables, aand 2.5$ million of payables. Its cost of goods sold is 80% of sales, and it finances working capital with bank loans at 7% rate. Assume 365 days in year fo calculations. 1. What is parramores cash conversion cycle? 2. If parramore could lower its inventoires and reciables by 11% each and increase its payables by 11% all wihtout affecting sales or cogs what would be the new CCC? 3. How much cash would be freed up if parramore could lower its inventories and reciables by 11% and increase paybles by 11%? 4. by how much pretax profits change if parramore could lower its inventories and reciavbles by 11% each and increase its payabes by 11%?   

Ninety days ago, Elena bought in a 180-day bank-accepted bill yielding 9 per cent per annum. Calculate the return that he will earn if the bill is sold today, given that 90-day bills are currently yielding 7 per cent per annum in the market.
A. 10.81%
B. 9%
C. 7%
D. Cannot be determined based on the given information

Answer: A

Q: Can you show t calculation ???

Estes Park Corp. pays a constant $1.43 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 9.59 percent, what is the current share price?

Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.

Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. Round your answers to the nearest whole number, if necessary.

1. What was net operating working capital for 2018 and 2019? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes.

   2018	$    million
   2019	$    million

2. What was Arlington's 2019 free cash flow?

   $    million

3. Construct Arlington's 2019 statement of stockholders' equity.

   Statement of Stockholders' Equity, 2019
   	Common Stock		Retained Earnings	Total Stockholders' Equity
   	Shares	Amount
   Balances, 12/31/18	million	$    million	$    million	$    million
   2019 Net Income			million
   Cash Dividends			million
   Addition to retained earnings				million
   Balances, 12/31/19	million	$    million	$    million	$    million

4. What was Arlington's 2019 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent.

   $    million

5. What was Arlington's MVA at year-end 2019? Assume that its stock price at December 31, 2019 was $25. Round your answer to the nearest cent.

   $    million

Maggie’s Skunk Removal Corp.’s 2018 income statement listed net sales of $14.1 million, gross profit of $9.00 million, EBIT of $7.2 million, net income available to common stockholders of $4.8 million, and common stock dividends of $2.8 million. The 2018 year-end balance sheet listed total assets of $54.1 million and common stockholders' equity of $22.6 million with 2.0 million shares outstanding.

Calculate the gross profit margin. (Round your answer to 2 decimal places.)

Calculate the operating profit margin. (Round your answer to 2 decimal places.)

Calculate the profit margin. (Round your answer to 2 decimal places.)

Calculate the basic earnings power. (Round your answer to 2 decimal places.)

Calculate the return on assets. (Round your answer to 2 decimal places.)

Calculate the return on equity. (Round your answer to 2 decimal places.)

Calculate the dividend payout. (Round your answer to 2 decimal places.)

I always rate! Show Excel work, please

You have been asked to perform scenario analysis, sensitivity analysis, and break even analysis for producing a new golf ball. These new golf balls will sell from $2 a piece. In the best case scenario you think you will sell 750,000 balls, in the most likely case you will sell 500,000 balls and in the worst case you will sell 300,00 balls. Your variable cost is 35% and you have $300,000 in fixed costs. Your depreciation will be $100,000 and you have a 25% tax rate.

1. How sensitive are you to your variable cost? Create a data table ranging from 30% to 45% variable cost rate for the most likely case to show how changes in variable costs effect your net income.

ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $800,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $400,000 and the interest rate on its debt is 5.2 percent. Both firms expect EBIT to be $79,000. Ignore taxes.

a. Rico owns $60,000 worth of XYZ’s stock. What rate of return is he expecting?

b. Suppose Rico invests in ABC Co. and uses homemade leverage. Calculate his total cash flow and rate of return.

c. What is the cost of equity for ABC and XYZ?

d. What is the WACC for ABC and XYZ?

Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $91.89, while a 2-year zero sells at $83.37. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 7% per year.

a. What is the yield to maturity of the 2-year zero?(Do not round intermediate calculations. Round your answers to 3 decimal places.)

b. What is the yield to maturity of the 2-year coupon bond? (Do not round intermediate calculations. Round your answers to 3 decimal places.)

c. What is the forward rate for the second year? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

d. If the expectations hypothesis is accepted, what are (1) the expected price of the coupon bond at the end of the first year and (2) the expected holding-period return on the coupon bond over the first year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

e. Will the expected rate of return be higher or lower if you accept the liquidity preference hypothesis?

• Higher

• Lower

Richter Manufacturing has a 10% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 3% rate after Year 3. Year 1 Year 2 Year 3 FCF $715 $750 $805

a. What is the horizon value of the unlevered operations?

b. What is the total value of unlevered operations at Year 0?

Billy Bob Corp has a profit margin (income to sales) of 3.1%. Sales-to-assets measures a ratio of 1.2x. The capital structure of BBC is 40% debt & 60% equity. What is BBC's return on equity?  (Answer in % format with no % sign needed, xx.x, to the level of 10 basis points.)

Florida Company (FC) and Minnesota Company (MC) are both service companies. Their historical return for the past three years are: FC: -10%,15%, 25%; MC: -19%,36%,-47%. Calculate the sample standard deviation of return for MC. (For these problems don't enter the % into your formula, e.g. treat "10%" as "10", not as "0.10". You can use the =STDEV function in Excel.)

Florida Company (FC) and Minnesota Company (MC) are both service companies. Their historical return for the past three years are: FC: -34%,13%,21%; MC: 10%, 6%, 32%. Calculate the sample variance of return for FC. (For these problems don't enter the % into your formula, e.g. treat "10%" as "10", not as "0.10". You can use the =VAR function in Excel.)

Florida Company (FC) and Minnesota Company (MC) are both service companies. Their historical return for the past three years are: FC: -38%,39%, -22%; MC: 10%, 6%, 32%. Calculate the sample standard deviation of return for FC. (For these problems don't enter the % into your formula, e.g. treat "10%" as "10", not as "0.10". You can use the =STDEV function in Excel.)

Discuss intrinsic value of stock and market value of stock. Discuss when they in and out of equilibrium