The Sheridan Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 10.325 percent. The current market rate for similar securities is 11.8 percent. Assume that the face value of the bond is $1,000.

Suppose the bond were to mature in 12 years. What will be the bond’s price if rates in the market

(i) decrease to 9.80 percent or

(ii) increase to 12.8 percent?

Why is it important that, in countries with high inflation, financial statements be adjusted for inflation? Consider understated asset values, understated expenses, overstated income, and overstated equity and how these may affect a company’s overall strategy when responding.

I need some guidance on question 1c.

(1) (A) Between 2001 and 2011, the real (2018 US $) price of a barrel of oil rose at a rate of about 13% per year in real terms to around $124 per barrel in 2011, but the real price fell to $46 per barrel in 2016, before rebounding in 2018 to $71 per barrel. If prices continue increasing from their 2018 price of $71 per barrel through 2028 at a more modest rate of 7% year in real terms, what will be the price of oil in 2028? Assume these prices are for December 31 of each year.

(B) Suppose the price of gasoline in 2018 was $2.75 per gallon, and every $1 per barrel increase in the price of oil causes the price of gasoline to increase by $0.025 per gallon. If SouthWestern Ohio gasoline distribution company bought a forward contract for delivery of gasoline from Exxon in 2019 for $2.80 per gallon and in 2020 for $2.80 per gallon, based on your oil price projection in (A), will these contracts save them money? Be sure to show how you arrived at your answer.

(C) Suppose you are the operator of the East Lima International Refinery LLC, and you buy a call option for crude oil to refine in 2020. Your call option has a strike price of $59, with no option premium, and it expires on December 31, 2019. If prices rise as predicted above, will you make money on the call option? If so, how much? If not, what do you do on December 31, 2019 when the option expires?

Oriole Information Systems management is planning to issue 10-year bonds. The going market yield for such bonds is 9.300 percent. Assume that coupon payments will be made semiannually. Management is trying to decide between issuing an 9 percent coupon bond or a zero coupon bond. Oriole needs to raise $1 million.

What will be the price of an 9 percent coupon bond?

How many 9 percent coupon bonds would have to be issued?

What will be the price of a zero coupon bond?

How many zero coupon bonds will have to be issued?

Delta Partners is an investment firm specialising in corporate advice, particularly in regard to raising
finance and company valuation. One of its clients, Pagoda Industries Ltd, recently approached Delta
Partners seeking advice and assistance in regard to raising additional finance. Pagoda has now asked
Delta Partners for advice on whether to introduce a new product in its manufacturing division.
Pagoda Industries Ltd is a large company listed on the Australian Stock Exchange. It is a diversified
company with manufacturing and trading divisions operating in a number of industries. Pagoda’s
research department has developed a new information technology product which is expected to
appeal to the corporate market. Because of the rapid advances in information technology, the
product is expected to have a life of five years before it becomes obsolete. Consequently, the project
would be terminated after five years.
Pagoda has put together the following information about the product:
Cost of new plant and equipment $7,900,000
Transport and installation costs $100,000
Unit Sales:
Year Units Sold
1 70,000
2 120,000
3 140,000
4 80,000
5 60,000
Sales Price per Unit:
Years 1-4 $300
Year 5 $260
Variable Cost per Unit $180
Annual Fixed Costs $200,000
Net Working Capital:
An initial investment of $100,000 in net working capital is required to get the project started.
Additionally, net working capital equal to 10 per cent of the value of sales will be required each year
(including year one).
The plant and equipment are expected to have a salvage value of $500,000 at the end of the
project’s life. The company tax rate is 30 per cent. Pagoda’s required return for this project is 15 per
cent.
Required: As a financial analyst for Delta Partners you have been asked to:
a) Calculate the yearly cash flows and the yearly net after-tax cash flow associated with the
project
b) Calculate the Net Present Value (

The verbrugge publishing company's 2019 balance sheet and income statement are as follows

Balance Sheet

Current assets $300

Net Fixed Assets 200

Total assets 500

Current Liabilities $40

Advance Payments by customers $80

Noncallable preferred stock $6 coupon

$110 par value (1,000,000 shares) $110

Callable preferred stock, $10 coupon

no par, $100 call price (200,00) shares $200

Common stock, $2 par value

(5,000,000 shares) $10

Retained Earnings $60

Total liabilities and equity $500

Income Statement

Net Sales $540

Operating Expense $516

Net Operating income $24

Other income $4

EBT $28

Taxes(25%) $7

Net Income $21

Dividends on $6 preferred $6

Dividends on $10 preferred $2

Income available to common stockholders $13

Verbrugge and its creditors have agreed upon a voluntary reorganization plan. In this plan, each share of the noncallable preferred will be exchanged for 1 share or $2.40 preferred with a par value of $35 plus on 8% subordinated income debenture with a par value of $75. The callable preferred issue with be retired with cash generated by reducing current assets.

a) Assume that the reorganization takes place and construct the projected balance. Show the new preferred stock at is par value. What is the total assets? For debt? For preferred stock?

b) Construct the projected income statement. What is the income available to common shareholders in the proposed recapitalization.

c) What were the total cash flows received by the noncallable preferred stockholders prior to the reorganization? What were the total cash flows to the original noncallable preferred stockholders after the reorganization? What was the new income to common stockholders before and after reorganization

d)Required pre-tax earnings are defined as the amount that is just large enough to meet fixed charges. What are the required pre-tax earnings before and after recapitalization?

e) How is the debt ration affected by reorganization? Suppose you treated preferred stock as debt and calculated the resulting debt ratios, How are these ratios affected? If you were a holder of Verbrugge's common stock, would you vote in favor or the reorganization? Why or Why not?

Your client is 37 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $7,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 6% in the future.

1. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

2. How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent.

3. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent.

   Annual withdrawals if she retires at 65:

   Annual withdrawals if she retires at 70:

Suppose that you invest $100 in an account for 20n years. This account will credit you 5% annual effective rate of interest for the first 5 years, 5% annual effective rate of discount for the send 5 years, 5% simple interest for the third 5 years, and 5% simple rate of discount for the last 5 years. How much will you have at the end of the 20 years?

*hint use equations for from these chapters*

Jan sold her house on December 31 and took a $30,000 mortgage as part of the payment. The 10-year mortgage has an 11% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year.

a. What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent.

b. How much interest was included in the first payment? Round your answer to the nearest cent.
How much repayment of principal was included? Do not round intermediate calculations. Round your answer to the nearest cent.

c. How much interest must Jan report on Schedule B for the first year? Do not round intermediate calculations. Round your answer to the nearest cent.
Will her interest income be the same next year?

d. If the payments are constant, why does the amount of interest income change over time?

What does working capital management encompass? What functional decisions are involved, and what underlying principle or trade-off influences the decision process?

1. 4. (Annuity payments) The Knutson Corporation needs to save $15 million to retire a $15 million mortgage that matures in 10years. To retire this mortgage, the company plans to put a fixed amount into an account at the end of each year for 10years. The Knutson Corporation expects to earn 5.7 percent annually on the money in this account.
   1. What equal annual contribution must the firm make to this account to accumulate the $15 million by the end of 10years?
   2. Prepare, on a spreadsheet, how the deposits will accumulate to $15 Million

You are to start a new job earning $10 000 / month, plus allowances to the sum of $2300.00/month.

You are on contract for 3 years after which a review will be done to determine your progress.

You are confronted with an offer to invest in real estate which would entail utilising some of your allowances to pay for it. The investment will require you to spend over a 5 year period to complete payment. How would you go about making a decision about what to do or not to do?

Based on the projections, Decker will have

3. (Annuity payments) Mr. Bills Preston, Esq., purchased a new house for $280,000. He paid $80,000 up front on the down payment and agreed to pay the rest over the next 25 years in 25 equal annual payments that include principal payments plus 6.2 percent compound interest on the unpaid balance.

1. What will these equal payments be?
2. Show on a spreadsheet how the loan will be paid off