1. Given the data below, explain the distribution of weights for every portfolio? For example, the Eq-Wtd portfolio allocates 20% weights to all five asset classes because it is an equally-weighted portfolio.

The Rustic Welt Company is considering launching a new product. The new equipment costs $9 million and falls under straight line depreciation. The depreciation rate will be 10% each year for the next 10 years. The sale price is $8 per welt. The variable costs is a welt to $4 per welt. However, as the following table shows, there is some uncertainty about both the future number of unit sold:

a. calculate the NPV for the expected case

b. Conduct a sensitivity analysis assuming a discount rate of 12%. Rustic does not pay taxes and there is no change in NWC.

Give a brief explanation of the secondary mortgage markets.

Avicorp has a $ 11.8 million debt issue​ outstanding, with a 5.9 %

coupon rate. The debt has​ semi-annual coupons, the next coupon is due in six​ months, and the debt matures in five years. It is currently priced at 93 % of par value.

a. What is​ Avicorp's pre-tax cost of​ debt? Note: Compute the effective annual return. (Round to 4 decimal places)

b. If Avicorp faces a 40 % tax​ rate, what is its​ after-tax cost of​ debt? (Round to 4 decimal places)

​Note: Assume that the firm will always be able to utilize its full interest tax shield.

RETURN ON EQUITY

Pacific Packaging's ROE last year was only 4%; but its management has developed a new operating plan that calls for a debt-to-capital ratio of 55%, which will result in annual interest charges of $128,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $332,000 on sales of $4,000,000, and it expects to have a total assets turnover ratio of 4.0. Under these conditions, the tax rate will be 30%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.

%

Marvin, age 32, withdrew $10,000 from his traditional IRA to purchase his first home. Assuming Marvin is in the 20% tax bracket, how much does he owe in taxes and penalty?

Question 1

Suppose you purchased a 76.000 April lean hog put for 6.850. You expect basis will 2.50 over when you sell your hogs.

Calculate your minimum net selling price (Price floor).

For each of the April lean hog futures price determine your net selling price. The net/gain loss on the long put is intrinsic value – premium paid.

Question 2

Suppose you sold an April lean hog futures at 79.400 to hedge the sale of your hogs. You expect basis will 2.50 under when you sell your hogs. For each of the April lean hog futures prices determine your net selling price.

The market portfolio has an expected return of 11 percent and a standard deviation of 19 percent. The risk-free rate is 3.2 percent.

a. What is the expected return on a well-diversified portfolio with a standard deviation of 27 percent

b. What is the standard deviation of a well-diversified portfolio with an expected return of 15 percent?

A company releases outstanding earnings numbers and raises guidance for the next fiscal year, and the stock price as a result jumps up 20%, then it is optimal to convert a convertible bond on this company into stocks right away. Assume that the stock pays no dividend.

This problem is a complex financial problem that requires several skills, perhaps some from previous sections. Clark and Lana take a 30-year home mortgage of $124,000 at 7.2%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1000 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.)

(b) Find the unpaid balance when they begin paying the $1000. (Round your answer to the nearest cent.)

(c) How many payments of $1000 will it take to pay off the loan? Give the answer correct to two decimal places.
monthly payments

(d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)

This problem is a complex financial problem that requires several skills, perhaps some from previous sections. During four years of college, Nolan MacGregor's student loans are $4,000, $3,500, $4,400, and $5,000 for freshman year through senior year, respectively. Each loan amount gathers interest of 2%, compounded quarterly, while Nolan is in school and 3%, compounded quarterly, during a 6-month grace period after graduation. (a) What is the loan balance (in dollars) after the grace period? Assume the freshman year loan earns 2% interest for 3/4 year during the first year, then for 3 full years until graduation. Make similar assumptions for the loans for the other years. (Round your answer to the nearest cent.)

(b) After the grace period, the loan is amortized over the next 10 years at 3%, compounded quarterly. Find the quarterly payment (in dollars). (Round your answer to the nearest cent.)

(c) If Nolan decides to pay an additional $90 per payment, how many payments will amortize the debt? (Round your answer to two decimal places.)
payments

What amount (in dollars) should be added to the last payment to pay the loan in full? (Round your answer to the nearest cent.)
$  

(d) How much will Nolan save (in dollars) by paying the extra $90 with each payment? (Round your answer to the nearest cent.)
$

A uniform gradient cash flow contains a first payment of $500 at the end of the first year, $600 payment at the end of the second year, $700 payment at the end of the third year, $800 payment at the end of the fourth year, and so on. There are a total of 15 payments. The annual interest rate is 8%. Determine: (a) the present, (b) the future, and (c) the uniform annual amounts that are equivalent to the cash flow.

1) You estimate Bayleaf Inc. has free cash flows of $70 million arriving in 1 year, $74 million in 2 years, and $80 million in 3 years. After year 3, the long term growth rate of FCF will be 3% (thus year 4 FCF is $82.4 million). Bayleaf has $241 million in net debt and a weighted average cost of capital of 14%. What is your estimate of the Enterprise Value of Bayleaf (in millions)?

2)You believe Orange Inc. has an enterprise value of $833 million. Orange's balance sheet shows $77 million in cash and $165 million in debt. What is your estimate for the stock price if Orange has 5 million shares outstanding?

A construction crane collapsed while working on a new building for Metro City. A pedestrian was killed. The husband of the victim is suing Metro City and the construction company. The city attorney, in consultation the city’s liability insurer and the construction company, has offered two out-of-court settlements to the husband of the victim. Here are the settlement options

Option 1: Four annual payments of $225,000 with the first payment one year from today.

Option 2: Five Payments of $200,000 with the payments one year, three years, five years, seven years, and nine years from today.

Assuming a 6% discount rate, which settlement option is the best from the perspective of Metro City?