How to arrive at the solution below for this pratice problem? Solution: -22,037,756.82

Assuming the firm is operating at only 50% capacity and using the data in the table below, forecast Orwell's AFN for the coming year? Last year's sales = S0 $136,000 Last year's accounts payable $40,000 Sales growth (ΔS) $9,000 Last year's notes payable $10,000 Last year's total assets = A0* $248,000 Last year's accruals $10,000 Last year's profit margin = PM 0.03 Target payout ratio 0

Discuss a management strategy used to retain or increase cash. Share an example of a time when you’ve used a similar strategy in your personal finances. How are the applications of these strategies similar or different for businesses and individuals?

Give 5 benefits of supply chain management with an example of how a NYS (New York State) Corporation is employing this type of management to run its operations. For full credits, give the profile of each NYS corporation that you name.

You and your lovely and/or handsome spouse have decided the purchase a new home with a loan for $260,000. The mortgage you chose offers a contract rate of 4.5%, a maturity of 30 years, and requires the payment of 3 points. What is the annual effective cost of borrowing for this loan if you make your scheduled payments for the full 30 years?

Greta, an elderly investor, has a degree of risk aversion of A = 4 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of 1-year strategies. (All rates are annual and continuously compounded.) The S&P 500 risk premium is estimated at 9% per year, with a SD of 18%. The hedge fund risk premium is estimated at 5% with a SD of 25%. The returns on both of these portfolios in any particular year are uncorrelated with its own returns in other years. They are also uncorrelated with the returns of the other portfolio in other years. The hedge fund claims the correlation coefficient between the annual returns on the S&P 500 and the hedge fund in the same year is zero, but Greta is not fully convinced by this claim.

a-1. Assuming the correlation between the annual returns on the two portfolios is indeed zero, what would be the optimal asset allocation? (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

s&p =

Hedge =

a-2. What is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

Suppose that Home Depot decides to add a coffee shop in the middle of the store to encourage more browsing by customers. This business will hire some additional employees, but analysts believe the coffee shop will require the store general manager to work 15 more hours per week. This will increase the general manager’s salary by $15,862.00 per year. Home Depot has a 40.00% tax rate, a 12.00% cost of capital, and is evaluating this project over a 6.00-year period. What is the net opportunity cost to adding the coffee shop? (HINT: Value the extra gain in the manager’s salary. EXPRESS as a positive number)

Justin Owens is an analyst for an equity mutual fund that invests in British stocks. At the beginning of 2008, Owens is examining domestic stocks for possible inclusion in the fund. One of the stocks that he is analyzing is British Sky Broadcasting Group (London Stock Exchange: BSY). The stock has paid dividends per share of £9, £12.20, and £15.50 at the end of 2005, 2006, and 2007, respectively. The consensus forecast by analysts is that the stock will pay a dividend per share of £18.66 at the end of 2008 (based on 19 analysts) and £20.20 at the end of 2009 (based on 17 analysts). Owens has estimated that the required rate of return on the stock is 11 percent.

A. Compare the compound annual growth rate in dividends from 2005 to 2007 inclusive (i.e., from a beginning level of £9 to an ending level of £15.50) with the consensus predicted compound annual growth rate in dividends from 2007 to 2009, inclusive.

B. Owens believes that BSY has matured such that the dividend growth rate will be constant going forward at half the consensus compound annual growth rate from 2007 to 2009, inclusive, computed in Part A. Using the growth rate forecast of Owens as the constant growth rate from 2007 onwards, estimate the value of the stock as of the end of 2007 given an 11 percent required rate of return on equity.

C. State the relationship between estimated value and r and estimated value and g

refer to the table of data below and answer the questions that follow

economic state probability of economic state return on stock J return on stock K

bear 0.25 -0.02 0.034

normal 0.60 0.138 0.062

bull 0.15 0.218 0.092

calculate the expected return of each stock

if a portfolio was created with from 30% of stock j and 70% of stock k what is the expected return of the portfolio?

calculate the standard deviation of each stock?

calculate the covariance between the two stocks

calculate the correlation coefficient between the two stocks

what is the portfolio standard deviation?

Davis is setting an investment plan with $10000 in 445 years until his retirement. His plan has two phases. In the first 20 years the rate of return is 8% per year, compounding semi-annually. In the last 25 years, the rate of return is 10% per year compounding annually.   

Required :- A) Calculate the effective ANNUAL interest rate (EAR) Davis receives during the first 20 years of his investment. B) Assume that at the end of the first 20 years. Davis decides to withdraw $5000 from his investment. How much money Davis will have in 45 years? C) If DAvis wishes to have exactly $600,000 in his account when he is retired, which is the rate of return should he has in the first 20 years? D) Assuming that at the end of the first 20, Davis changes his investment strategy and puts exactly $700 into a superannuation account at beginning of each month for the interest rates of 9% for the left 25 years. How much would be accumulates when he retires by this cash flow only? E) How much money Davis could accumulates for this cash flow alone if he puts that $700 at the end of each month rather than at the beginning of each month for 25 years. F) If at the first day of Davis retirement the superannuation fund starts to pay him $80,000 per year forever, what is the implied rate of return if the present value of this cash flow is $800,000?

jk stock currently sells for $50 a share. the stock has just paid a dividend of $2 a share. the dividend is expected to grow at a constant rate of 6% per year. what is the stock price that would be expected in one year from now? what is the required rate of return on jks stock?.

Suneview Ltd., a listed public company with actively traded securities, issued debentures with a total term of fifteen years and a face value of $1,000 to the public exactly five years ago for $1,000 each. The debentures were issued at an annual coupon interest rate of 12% p.a. with payments annually in arrears. Interest rates for debentures of a similar risk to those of Suneview Ltd. are currently (five years after originally being issued) being traded at a premium of 3% above the government bond rate. A new series of government bonds (Series XXIV) were issued today for a ten-year term at an annual coupon interest rate of 5% p.a. (with payments annually in arrears), a face value of $1,000 and a yield to bondholders of 7% p.a. Required:

1. Assume that a further three years has elapsed since the calculations undertaken in part a) of this question (a total of eight years after the original debenture issue) and the premium on Suneview Ltd. debentures has increased to 5% above the government bond rate. No further government bonds have been issued since Series XXIV bonds which closed trading today at a yield of 9% p.a.

1. How much would you now (a total of eight years after the original debenture issue) pay for Suneview Ltd. debentures?
2. Briefly discuss the possible ‘real-world’ factors that may have caused the differences in the premium on Suneview Ltd. debentures as compared to the government bond rate (from 3% to 5%).

JB Hi-Fi management is considering the two following options of buying a new equipment for a new investment project with the same initial cost. Year:- 0 , 1, 2, 3, 4 Project A :-, -$78500, $43000, $29000, $23000, $21000, Project B:-, -$78500, $21000, $28000 , $34000, $41000 A) which project the company should choose based on NPV Criterion if the required rate of return is 11%. B) Which project the company should choose based on P1 criterion if the required rate of return is 11%. C) Which project the company should choose if the payback criterion of minimum 3 years applies. D) After selecting the optimum project the company is thinking of financing the project which costs totally 1 million dollars by a capital structure of 40% of debt and 60% of equity . The dividend paid out to shareholders at the end of financial year is $1800000. Define the net profit of the company in the current year by applying the residual theory. E) compute the dividend payout ratio.

-Do you think it is better to buy and hold or to time the markets?
-What type of stock are you interested in? Any specific sectors or companies interest you?
-What would be your portfolio allocation percentages? (Now you can use bonds, stock, currency, precious metals, commodities, real estate, etc)
-Why do you choose this as your allocation?

Mr Chan’s son is three years old now and will be going to college in 15 years. Mr Chan would like to have $625,000 in a savings account to fund his education at that time. If the account promises to pay a fixed interest rate of 3% per year, how much money does Mr Chan need to put in the account today to ensure that he will have $625,000 in 15 years?

Professor Wendy Smith has been offered the following​ opportunity: A law firm would like to retain her for an upfront payment of $48,000. In​ return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment​ arrangement, the firm would pay Professor​ Smith's hourly rate for the eight hours each month. ​ Smith's rate is $535 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding the payment​ arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of 15%​. What about the NPV​ rule?