Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 7.5%, a YTM of 6%, and 13 years to maturity. Bond Y is a discounted bond making semiannual payments. This bond has a coupon rate of 6%, a YTM of 7.5%, and also 13 years to maturity. What are the prices of these bonds today assuming both bonds have a $1,000 par value? If interest rates remain unchanged, what do you expect the prices of these bonds to be in 1 year? In 3 years? In 8 years? In 12 years? In 13 years? What's going on here? Illustrate your answers by graphing bond prices versus time to maturity.

You consider a new piece of equipment that will cost $400,000, and will require $20,000 for shipping and installation. NWC will increase immediately by $25,000. The project will last 3 years and the equipment has a 5 year class life. Revenues will increase by $220,000/year, and defect costs will decrease by $220,000/year. Operating costs will increase by $30,000/year. The market value of the equipment after year 3 is $200,000. The cost of capital is 12%; marginal tax rate is 30%. What is the NPV?

You are the CFO of a small technology firm. It is difficult for you to raise money from a bank or from other investors, and you only have a limited amount of cash. As long as you apply the NPV rule, you will maximize the returns to your investors.

All calculations are Semi Annual!! ABC Inc. has three different types of bonds outstanding. Bond X carries a 6.25% coupon and has 8 years to maturity, Bond Y is a zero coupon bond also with 8 years to maturity, and Bond Z is a 6.25% coupon bond with 15 years to maturity. All three bonds currently have a YTM =10%. 1.What is today’s market price for Bond X? Bond Y? Bond Z? 2.What is the true annualized yield of Bond X? Of Bond Y? Of Bond Z? (i.e., find their EARs) 3.Suppose interest rates suddenly drop, such that the yield on all three bonds declines by 200 basis points. What is the new price for each of these bonds? What is the percentage change in price of the three bonds? Explain why the percentage change in the price of Bond X is different than that of the other two bonds. 4.Suppose in the previous problem that yields increase by 200 basis points instead. Without performing any calculations, do you expect the percentage price change in the bonds to be of greater or lesser magnitude than what you calculated in problem #3? Why? What principle lies behind your answer? 5. Suppose you decide to sell Bond X 4 years from now for $880.00. What is your HPY? When you first bought the bond 4 years ago, what did you expect would to be its year 4 price?

You are the CFO and are considering introducing a new product that will require an initial investment in equipment of $6 million. The equipment will be depreciated straight line over 3 years to a value of zero, and can be sold after 3 years for $500,000. Working capital at each date must be maintained at a level of 10% of the following year’s forecast sales. You estimate production costs at $1.50 /unit and the sales price at $4/unit. Sales forecasts are given in the following table. The tax rate is 35%, and the discount rate is 12%. What is the project NPV?

An amount of $2400 was borrowed at 12% on March 1, 2016. Payments of $800 were made on May 1st, August 1st, and October 1st. Determine the amount needed to repay the loan on December 1st using:

1) the Merchant's Rule AND 2) the U.S. Rule.

Really looking for help on how to compute them and the formulas required. Thanks!

6. How, are the four functions of management, related to the five skills of management? Use examples to clarify your answer.

Medical Research Corporation is expanding its research and production capacity to introduce a new line of products. Current plans call for the expenditure of $100 million on four projects of equal size ($25 million each), but different returns. Project A is in blood clotting proteins and has an expected return of 18 percent. Project B relates to a hepatitis vaccine and carries a potential return of 14 percent. Project C, dealing with a cardiovascular compound, is expected to earn 11.8 percent, and Project D, an investment in orthopedic implants, is expected to show a 10.9 percent return. The firm has $15 million in retained earnings. After a capital structure with $15 million in retained earnings is reached (in which retained earnings represent 60 percent of the financing), all additional equity financing must come in the form of new common stock. Common stock is selling for $25 per share and underwriting costs are estimated at $3 if new shares are issued. Dividends for the next year will be $.90 per share (D1), and earnings and dividends have grown consistently at 11 percent per year. The yield on comparative bonds has been hovering at 11 percent. The investment banker feels that the first $20 million of bonds could be sold to yield 11 percent while additional debt might require a 2 percent premium and be sold to yield 13 percent. The corporate tax rate is 25 percent. Debt represents 40 percent of the capital structure.

a.) Based on the two sources of financing, what is the initial weighted average cost of capital (Use Kd and Ke.)?

b.) At what size capital structure will the firm run out of retained earnings?

c.) What will the marginal cost of capital be immediately after that point?

d.) At what size capital structure will there be a change in the cost of debt?

e.) What will the marginal cost of capital be immediately after that point?

f.) Based on the information about potential returns on investments in the first paragraph and information on marginal cost of capital (in parts a, c, and e), how large a capital investment budget should the firm use?

A stock has had the following year-end prices and dividends:

What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

You are given the returns for the following three stocks:

Calculate the arithmetic return, geometric return, and standard deviation for each stock.

A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 6 workers, who together produced an average of 90 carts per hour. Workers receive $18 per hour, and machine cost was $40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $11 per hour while output increased by 4 carts per hour.

a. Compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity. (Round your answers to 3 decimal places.)

b. Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure. (Round your answers to 3 decimal places.)

c. Comment on the changes in productivity according to the two measures. Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places.

Answer the following questions based . Write your response in a separate Microsoft Word document: o Importance of Cost of Capital:

THE ANSWER SHOULD BE BASED ON AMAZON

Why is cost of capital important to an organization, and what does it measure?

o Meaning of Calculations: How do organizations calculate various costs, and what do these calculations mean to business?

Please explain why bond prices are subject to changes in interest rates.

Describe the characteristics of a bond and provide an example of a firm or government entity that has recently issued (sold) these securities.

Need 300 words discussions

Bongo Company's board of trustees knows the company needs to raise some serious cash to finance expansion. They are considering three options to raise the needed cash. They can issue bonds, issue common sock or issue preferred stock. Compare and contrast the advantages and disadvantages of each of these approaches to financing. Which one would you suggest Bongo use to raise the funds and why?

1.You are considering an investment that will pay you $1,200 in one year, $1,400 in two years, and $1,600 in three years, $1,800 in four years, and $11,000 in five years. All payments will be received at the end of the year. • Your opportunity cost of capital (r ) is 10.5%

• Using the present value formula calculate the present value of each of the cash flows by

1. Discounting cash flows using annual compounding

2. Discounting cash flows using monthly compounding

3. Discounting cash flows using continuous compounding • How much would you be willing to pay for the investment using each of the three different compounding scenarios? That is, what is the present value of the cash flows from the investment using each of the three different compounding scenarios? • Which of the three present values is the largest (annual, monthly or continuously compounded returns)? Please explain why this is the case.

2. Tiny’s Quick Loans offers customers a “four for five or I knock on your door” loan. That is, Tiny will lend you $4 today and you repay Tiny $5 in one week when you get paid. What is the effective annual return Tiny is earning in this lending business? What is the APR that you are paying Tiny? (Assume that there are 52 weeks in the year.)