The risk-free rate is 2.30% and the market risk premium is 6.49%. A stock with a β of 1.36 just paid a dividend of $2.92. The dividend is expected to grow at 23.49% for three years and then grow at 4.92% forever. What is the value of the stock?

Donna’s Fashions Corporation has the following sales forecast in units:

January 1,000; February 800; March 900; April 1,400; May 1,550; June 1,800; July 1,400

Donna always keeps ending inventory equal to 120 percent of the next month’s expected sales. The ending inventory for December (January’s beginning inventory) is 1,200 units, consistent with company policy.

Materials cost $14 per unit and are paid for in the month after production. Labour cost is $7 per unit and is paid in same month the cost is incurred. Overhead costs are $8,000 per month. Interest of $10,000 will be paid in March, and employee bonuses of $15,500 paid in June. Enter all values as positive value.

a. Prepare a monthly production schedule for January through June.

b. Prepare a monthly summary of cash payments for January through June. Donna produced 800 units in December.

Give an example of how you could use break-even analysis in a personal finance situation.

Capital Market Efficiency

-Implications for Corporate Finance?

how is legality different from ethics? what are the three questions to answer when faced with a potentially unethical action such as deciding to download or upload a video that is copyrighted protected? how can we tell if business decisions are ethical? who should be held accountable for the copyright violation the people who uphold material or the web sites that carry it? if the web aren't held legally responsible, do they still have an ethical responsibility to find and remove the protected material?

Jill Meier is the sole owner of Meier Corp., which provides her only source of income. Jill has always paid herself entirely by drawing dividends from her corporation. A friend suggested that as long as she is earning about what she would have to pay someone else to run the business, she might be better off paying herself a salary instead of dividends because she would avoid the problem of double taxation. If Jill's company earns $220,000, all of which she will pay to herself, how much will she take home under each method? Assume a corporate tax rate of 33% and a personal tax rate of 22% on both salary and dividend income. Under dividends: $ ? Under salary: $ ?

Ellis Electronics Company’s actual sales and purchases for April and May are shown here, along with forecasted sales and purchases for June through September.

The company makes 10 percent of its sales for cash and 90 percent on credit. Of the credit sales, 20 percent are collected in the month after the sale and 80 percent are collected two months after. Ellis pays for 40 percent of its purchases in the month after purchase and 60 percent two months after.

Labour expense equals 10 percent of the current month’s sales. Overhead expense equals $12,000 per month. Interest payments of $30,000 are due in June and September. A cash dividend of $50,000 is scheduled to be paid in June. Tax payments of $25,000 are due in June and September. There is a scheduled capital outlay of $300,000 in September.

Ellis Electronics’ ending cash balance in May is $20,000. The minimum desired cash balance is $15,000.

a. Prepare a schedule of monthly cash receipts for June through September.

b. Prepare the monthly cash payments for June through September.

c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,000. Excess cash (above $50,000) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $15,000). (Omit $ sign in your response. Do not leave any empty spaces; input a 0 wherever it is required. Negative answers and amounts to be deducted should be indicated by a minus sign.)

XYZ corp. is considering investing in a new machine. The new machine cost will $10,000 installed. Depreciation expense will be $1000 per year for the next five years. At the end of the fifth year XYZ expects to sell the machine for $6000. XYZ will also sell its old equipment today that has a book value of $3000 for $3000. In five years, the old machine will be fully depreciated and have a salvage value of zero. Additionally, XYZ Corp expects that the new machine will increase its EBIT by $2000 in each of the next five years. Assuming that XYZ’s tax rate is 21% and the new machines WACC is 15%, what is the projects NPV. Round your final answer to two decimals.

Name and describe ten critical strategies for personal finance success.

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.20. The company has a target debt-equity ratio of .75. The expected return on the market portfolio is 10 percent and Treasury bills currently yield 3.8 percent. The company has one bond issue outstanding that matures in 19 years, a par value of $2,000, and a coupon rate of 6.5 percent. The bond currently sells for $2,080. The corporate tax rate is 24 percent.

a. What is the company’s cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

c. What is the company’s weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Use MACRS to compute the depreciation schedule for office furniture purchased for $80,000 (use the 7 yr depreciation schedule). Assume salvage value is $10,000

1. What is the difference between hedging and speculation?

2. List one reason why risk management might increase the value of a firm.

3. List one difference between a futures contract and a forward contract.

4. What are you protecting against if you sell Treasury futures short?

5. Why would a company enter into a swap?

Sunburn Sunscreen has a zero coupon bond issue outstanding with a $12,000 face value that matures in one year. The current market value of the firm’s assets is $13,800. The standard deviation of the return on the firm’s assets is 34 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously. The firm is considering two mutually exclusive investments. Project A has an NPV of $1,500, and Project B has an NPV of $2,300. As the result of taking Project A, the standard deviation of the return on the firm’s assets will increase to 49 percent per year. If Project B is taken, the standard deviation will fall to 21 percent per year.

2) Analyze the project’s return in the initial business plan. Discuss the effect of possible legal constraints.