If I deposit $5,000 a year for 10 years, age 25 to 35, at 10% interest, and then let the sum/accumulation sit for 30 years, also earning 10% per year that might be an astute investment. But my older brother who graduated from the “school down south,” says that I should wait until I am 35 and making a ton of money and then I can deposit $7,500 a year for 30 years at 10% and I will be much better off…….since you are a University of Utah grad, and unlike some other universities (Tempe Normal) you can walk and chew gum at the same time, which of the following is correct? Group of answer choices

Both would yield virtually the same sum, within $1,000 of each other without rounding off.

The $5,000 a year would give about $979,258 more because of the power of compound interest.

The $7,500 scenario would provide me with at least $156,786 more.

The $7,500 scenario would provide me with about $156,786 less.

1. Draw a curve showing the balance of carrying costs and ordering costs. Specifically show the EOQ point and explain it.
2. What are the assumptions for EOQ to hold true?
3. AMS Ltd is engaged in sale of footballs. Its cost per order is Tsh 400 and its carrying cost per unit is Tshs 10 per unit per annum. The company has a demand for 20,000 units per year. Find EOQ, No. of order per year, Ordering Cost and Carrying Cost and Total Cost of Inventory

Montgomery Corp is currently worth $30 million as a company, but has $50 million of debt. There is a potential project that costs $60 million that would require shareholders to provide an additional $30 million to invest in. In one year, the project will yield $99 million or $55 million with 50% probability each. If the investment is not made, the firm will file for bankruptcy today. Suppose a 10% discount rate.

The shareholders will _____ the investment because they stand to _____. The investment is _____ for the firm and _____ for the debtholders.

(Ignore taxes and bankruptcy costs)

Group of answer choices

approve; gain $10 million; bad; bad

approve; gain $5.45 million; good; bad

disapprove; lose $10 million; bad; good

disapprove; lose $5.45 million; good; good

Think of an organization of your choice, which involves in trading mobile phones. Explain the various approaches used in segmenting markets and also describe how the marketing mix is used to position your products in a market

You are a senior manager at Nittany Aircraft and have been authorized to spend up to $550,000 for projects. The three projects you are considering have the following characteristics:

Project A: Initial investment of $420,000. Cash flow of $195,000 at year 1 and $235,000 at year 2. This is a plant expansion project, where the required rate of return is 13 %.

Project B: Initial investment of $210,000. Cash flow of $180,000 at year 1 and $140,000 at year 2. This is a new product development project, where the required rate of return is 16 %.

Project C: Initial investment of $165,000. Cash flow of $145,000 at year 1 and $90,000 at year 2. This is a market expansion project, where the required rate of return is 16 %.     

Assume the corporate discount rate is 17 %.

What is the IRR of project A? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

What is the NPV of project A? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the PI of project A? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the IRR of project B? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

What is the NPV of project B? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the PI of project B? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the IRR of project C? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

What is the NPV of project C? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the PI of project C? (Round answer to 2 decimal places. Do not round intermediate calculations)

What is the incremental IRR (aka, crossover point) between Project B & Project C? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

A 25-year maturity bond has a 8% coupon rate, paid annually. It sells today for $887.42. A 15-year maturity bond has a 7.5% coupon rate, also paid annually. It sells today for $899.5. A bond market analyst forecasts that in five years, 20-year maturity bonds will sell at yields to maturity of 9% and that 10-year maturity bonds will sell at yields of 8.5%. Because the yield curve is upward-sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 7%.

a. Calculate the expected rate of return of the 25-year bond over the five-year period. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Expected rate of return% ?

b. What is the expected return of the 15-year bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Expected rate of return% ?

Chuck Brown will receive from his investment cash flows of $3,155, $3,500, and $3,820 at the end of years 1, 2 and 3 respectively. If he can earn 7.5 percent on any investment that he makes, what is the future value of his investment cash flows at the end of three years? (Round to the nearest dollar.)

What is the purpose of calculating WACC, meaning how can it be used to calculate the current value of the firm and to assess if the firm creating value?

​Knott's Industries manufactures standard and super premium backyard swing sets. Currently it has four identical​ swing-set-making machines, which are operated 250250 days per year and 8 hours each day. A capacity cushion of 1515 percent is desired. The following information is also​ known:

Standard Model Super Premium Model

Annual Demand: 20,000 10,000

Standard Processing Time: 5 min 17 min

Average Lot Size: 60 25

Standard Setup Time per Lot: 30 min 45 min

a. Does​ Knott's have sufficient capacity to meet annual​ demand?

b. How many machines are needed?

Bond has following charaateristics: par value €1000, 5,5%coupon rate, paid annually and 15 years to maturity. YTM is 6.5%

A) Find Macaulay duration of that bond (Dmac)

B) Find modified duration of that bond (Dmod)

A new father plans on saving for his daughter’s college education. He will donate $775.00 on her first birthday. After that, he will increase his donation by 3.00% each year and will make his last contribution on her 18th birthday. If he can earn 9.00% each year in his investment account, how much will his daughter’s college fund be worth on her 18th birthday?

Suppose you need $1 million dollars to start your Dream Business. Describe two (2) ways you would generate the funds needed to start such a business. Next, discuss any risks or benefits you should be aware of when gathering these funds. Provide examples to support your response.

Adamson Corporation is considering four average-risk projects with the following costs and rates of return:

The company estimates that it can issue debt at a rate of r_d= 10%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $6 per year at $58 per share. Also, its common stock currently sells for $32 per share; the next expected dividend, D₁, is $3.25; and the dividend is expected to grow at a constant rate of 6% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

1. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations.

   Cost of debt %

   Cost of preferred stock %

   Cost of retained earnings %

2. What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations.

   %

3. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept?

   Project 1

Assume a mutual fund owns 2,500 shares of Goldman Sachs, trading at $66.25, 1,500 shares of Amazon, currently trading at $61.75, and 2,000 shares of Apple, trading at $18.50 on day 1. The mutual fund has no liabilities and 15,000 shares outstanding held by investors.

a. What is the NAV of the fund?

b. Calculate the change in the NAV of the fund if the next day Goldman Sachs’ shares increase to $69, Amazon’s shares increase to $65, and Pfizer’s shares decrease to $15.50.

c. Assume that on Day 1, 750 additional investors buy one share each of the mutual fund at the NAV obtained in part a) equal to $Y. This means that the fund manager has 750 * Y additional funds to invest. The fund manager decides to use these additional funds to buy additional shares in Amazon. Calculate next day’s NAV given the same rise in share values as calculated in part b.

SHOW WORK FOR CALCULATIONS

1. Complete questions: Define each of the following terms:

a. Operating plan; financial plan

b. Spontaneous liabilities; profit margin; payout ratio

c. Additional funds needed (AFN); AFN equation; capital intensity ratio; self-supporting growth rate

d. Forecasted financial statement approach using percentage of sales e. Excess capacity; lumpy assets; economies of scale

f. Full capacity sales; target fixed assets to sales ratio; required level of fixed assets

2. Complete problem: Premium for Financial Risk XYZ, Inc. has an unlevered beta of 1.0. They are financed with 50% debt and has a levered beta of 1.6. If the risk-free rate is 5.5% and the market risk premium is 6%, how much is the additional premium that XYZ, Inc. shareholders require to be compensated for financial risk? Show your work.