A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 4.0%. The probability distribution of the risky funds is as follows:

The correlation between the fund returns is 0.13.

Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the "%" sign in your response.)

Refer to the following information:

a. The ATAM bond was issued on June 1, 2011, at 101.00%. How much would you have to pay to buy one bond delivered on June 15? Don’t forget to include accrued interest. Assume a 365-day year. (Do not round intermediate calculations. Enter your answer as a percent of par rounded to 3 decimal places.)

b-1. When is the first interest payment on the bond?

b-2. What is the total dollar amount of the payment? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

c-1. On what date do the bonds finally mature?

c-2. What is the amount to be paid on each bond at maturity? (Do not round intermediate calculations. Enter your answer to 2 decimal places.)

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.6%. The probability distributions of the risky funds are:

The correlation between the fund returns is 0.0800.

What is the expected return and standard deviation for the minimum-variance portfolio of the two risky funds? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

  Using a cost of capital of 10​%, calculate the net present value for the project shown in the following table and indicate whether it is​ acceptable

Initial investment   $-1,147
Year   Cash inflows
1   $84
2   $138
3   $187
4   $257
5   $311
6   $375
7   $274
8   $98
9   $49
10   $24

The net present value​ (NPV) of the project is ____

You are considering a new product launch. The project will cost $810,000, have a 4-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 200 units per year; price per unit will be $16,375, variable cost per unit will be $11,250, and fixed costs will be $550,000 per year. The required return on the project is 11 percent and the relevant tax rate is 23 percent. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within ±10 percent. a. What are the best-case and worst-case NPVs with these projections? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What is the base-case NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the sensitivity of your base-case NPV to changes in fixed costs? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

opinion, which is more critical to a healthcare facility’s financial success, proper analysis of the balance sheet, or proper analysis of the income statement? Explain your answer in detail.

Hi, I have a question for this problem

You have been offered four different financing schemes for a $30,000 car. Which one should you choose?

The answer choices are, can you please let me know what the right answer is and how to do it. Thank you.

Hankins Corporation has 7.8 million shares of common stock outstanding, 290,000 shares of 4.3 percent preferred stock outstanding, par value of $100; and 175,000 bonds with a semiannual coupon rate of 5.9 percent outstanding, par value $2,000 each. The common stock currently sells for $59 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $97 per share, and the bonds have 16 years to maturity and sell for 103 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 3.5 percent, and the company’s tax rate is 22 percent. a. What is the firm’s market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows? (Do not round intermediate calculations enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What are two assumptions when one applies the constant growth model to analyze stock price?

Obs: Please be detailed.

Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following​ table:

Initial investment   $84,600   $59,700   $129,900
Year          
1   $17,900   $12,500   $50,000
2   $17,900   $14,500   $30,100
3   $17,900   $15,500   $20,500
4   $17,900   $18,200   $20,500
5   $17,900   $19,800   $19,900
6   $17,900   $24,800   $29,600
7   $17,900   $0   $39,500
8   $17,900   $0   $49,900

a.  Calculate the net present value ​(NPV​) of EACH press.

b.  Using​ NPV, evaluate the acceptability of EACH press.

c.  Rank the presses from best to worst using NPV.

d.  Calculate the profitability index​ (PI) for EACH press.

e.  Rank the presses from best to worst using PI.

The​ firm's cost of capital is 12​%.

6. Solving for the WACC

The WACC is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an appropriate discount rate only for a project of average risk.

Analyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address.

Consider the case of Turnbull Co.

Turnbull Co. has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%.

If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be 14.7%. However, if it is necessary to raise new common equity, it will carry a cost of 16.8%.

If its current tax rate is 25%, how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.)

1.07%

1.28%

1.39%

0.91%

Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will raise the $570,000 in capital by issuing $230,000 of debt at a before-tax cost of 9.6%, $20,000 of preferred stock at a cost of 10.7%, and $320,000 of equity at a cost of 13.5%. The firm faces a tax rate of 25%. What will be the WACC for this project? _______ (Note: Round your intermediate calculations to three decimal places.)

Consider the case of Kuhn Co.

Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1555.38. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $9 at a price of $92.25 per share.

Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Flotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 25%. What will be the WACC for this project? ________(Note: Round your intermediate calculations to two decimal places.)

Suppose you observe a European call option that is priced at less than the value Max[0, S0 - K(1+r)-T].

What type of transaction should I execute to achieve the maximum benefit? How would I create a payoff table showing the outcomes of expiration?