QUESTION 10 Car payments are determined using simple interest. If you don’t remember this formula, go back and look it up! To finance your vehicle purchase you have two choices. Write two equations, one for each bank, that models the banks' loan options using x for the price of the vehicle and y to represent the total cost (price, interest and origination fees) paid on each loan. Be sure to label which equation goes with which bank. Bank A: Finance the full price of the vehicle at 5% with an origination fee of $300 paid over 5 years. Bank B: Finance the full price of the vehicle at 3.5% paid over 6 years (no additional fees). car costs:$31,690.
QUESTION 12 Use the equations you came up with for bank financing options to calculate the following: Total cost of your vehicle using bank A Monthly payment of your vehicle using bank A Total cost of your vehicle using bank B Monthly payment of your vehicle using bank B Show all of your work using the equation editor and label each solution.
QUESTION 13 Taking into account your allowed car payment range and the payments you determined for Bank A and Bank B, can you afford to purchase your vehicle? Express your answer in paragraph form. If you cannot afford the vehicle, explain why based on your budget values you determined. If you will purchase the vehicle, which bank will you finance your vehicle through and why?
In: Finance
capital budgeting criteria:
You are given the following cash flow of a project with a discount rate of 7%. Calculate the Net Present Value, Internal Rate of Return, Profitability Index, and Payback Period.
| Year | Cash.Flow |
| 0 | -17000 |
| 1 | 4500 |
| 2 | 8700 |
| 3 | 11900 |
Net present value = ??
Internal Rate of Return = ??
Profitability Index = ??
Payback period = ??
In: Finance
Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $800 and has an existing customer base of 660. Paul plans to raise the annual fee by 6 percent every year and expects the club membership to grow at a constant rate of 4 percent for the next five years. The overall expenses of running the health club are $131,000 a year and are expected to grow at the inflation rate of 2 percent annually. After five years, Paul plans to buy a luxury boat for $560,000, close the health club, and travel the world in his boat for the rest of his life. Assume Paul has a remaining life of 25 years and earns 9 percent on his savings.
How much will Paul have in his savings on the day he starts his world tour assuming he has already paid for his boat? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Account value at retirement $
What is the annual amount that Paul can spend while on his world tour if he will have no money left in the bank when he dies? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Annual withdrawal
In: Finance
Your firm recorded sales for the most recent year of $10 million generated from an asset base of $7 million, producing a $500,000 net income. Sales are projected to grow at 20%, causing spontaneous liabilities to increase by $200,000. In the most recent year, $200,000 was paid out as dividends, and the current payout ratio will continue in the upcoming years. What is your firm’s AFN?
Hint:
g = growth rate of sales = ??
S0 = current sales = ??
S1 = new sales = S0 * (1+g) = ??
A0 = current asset = ??
NI0 = current profit = ??
NI0 / S0 = current profit margin = ??
RR0 = Retention ratio = 1 - Dividend / Net profit = ??
Change of Assets = A0 * g= ??
Change of Liability = ??
Addition to Retained Earnings = S1 * (NI0 / S0) * RR0 = ??
AFN = Change of Assets - Change of Liabilities - Addition to Retained Earnings = ??
In: Finance
explain the importance of distinguishing between variable and fixed costs?
In: Finance
A stock had the following trades during a particular period. What was the money flow for the stock? (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Do not round intermediate calculations. Round your answers to the nearest whole dollar.)
| Week | Day | Price | Volume | |||||
| 1 | Monday | $ | 91.42 | |||||
| Tuesday | 91.38 | 2,700 | ||||||
| Wednesday | 91.39 | 3,100 | ||||||
| Thursday | 91.42 | 3,000 | ||||||
| Friday | 91.41 | 3,150 | ||||||
| 2 | Monday | 91.44 | 1,100 | |||||
| Tuesday | 91.45 | 1,600 | ||||||
| Wednesday | 91.49 | 600 | ||||||
| Thursday | 91.48 | 1,500 | ||||||
| Friday | 91.50 | 3,300 | ||||||
| Price | Up/Down | Price Times Volume | Positive Money Flow | Negative Money Flow | Net Money Flow |
| $91.42 | |||||
| 91.38 | –selected answer correct | $246,726selected answer correct | $0selected answer correct | $(108)selected answer incorrect | |
| 91.39 | +selected answer correct | 283,309selected answer correct | 31selected answer incorrect | 0selected answer correct | |
| 91.42 | +selected answer correct | 274,260selected answer correct | 90selected answer incorrect | 0selected answer correct | |
| 91.41 | –selected answer correct | 287,942selected answer correct | 0selected answer correct | (32)selected answer incorrect | |
| 91.44 | +selected answer correct | 100,584selected answer correct | 33selected answer incorrect | 0selected answer correct | |
| 91.45 | +selected answer correct | 146,320selected answer correct | 16selected answer incorrect | 0selected answer correct | |
| 91.49 | +selected answer correct | 54,894selected answer correct | 24selected answer incorrect | 0selected answer correct | |
| 91.48 | –selected answer correct | 137,220selected answer correct | 0selected answer correct | (15)selected answer incorrect | |
| 91.50 | +selected answer correct | 301,950selected answer correct | 66selected answer incorrect | 0selected answer correct |
v
In: Finance
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $890 per set and have a variable cost of $427 per set. The company has spent $190,000 for a marketing study that determined the company will sell 79,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,550 sets per year of its high-priced clubs. The high-priced clubs sell at $1,320 and have variable costs of $640. The company will also increase sales of its cheap clubs by 10,700 sets per year. The cheap clubs sell for $336 and have variable costs of $138 per set. The fixed costs each year will be $14,250,000. The company has also spent $1,400,000 on research and development for the new clubs. The plant and equipment required will cost $42,600,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,575,000 that will be returned at the end of the project. The tax rate is 24 percent, and the cost of capital is 14 percent.
Calculate the payback period, the NPV, and the IRR.
In: Finance
I need new and unique answers, please. (Use your own words, don't copy and paste), Please Use your keyboard (Don't use handwriting) Thank you..
***Just choose the correct answer without explain
25- The measure of net income returned from every dollar invested in total assets is the:(…………..).
A. profit margin.
B. return on assets.
C. return on equity.
D. asset turnover.
E. earnings before interest and taxes.
26- The financial ratio that measures the accounting profit per dollar of book equity is referred to as the:(…………..).
A. profit margin.
B. return on assets.
C. return on equity.
D. asset turnover.
E. earnings before interest and taxes.
27- The amount that investors are willing to pay for each dollar of annual earnings is reflected in the:(…………..).
A. profit margin.
B. return on assets.
C. return on equity.
D. asset turnover.
E. earnings before interest and taxes.
28- The market-to-book ratio is measured as the:(…………..).
A. market price per share divided by the par value per share.
B. net income per share divided by the market price per share.
C. market price per share divided by the net income per share.
D. market price per share divided by the dividends per share.
E. market value per share divided by the book value per share.
29- Which one of the following statements is correct concerning ratio analysis?
A. A single ratio is often computed differently by different individuals.
B. Ratios do not address the problem of size differences among firms.
C. Only a very limited number of ratios can be used for analytical purposes.
D. Each ratio has a specific formula that is used consistently by all analysts.
E. Ratios cannot be used for comparison purposes over periods of time.
30- Which one of the following is a liquidity ratio?
A. quick ratio
B. cash coverage ratio
C. total debt ratio
D. EV multiple
E. times interest earned ratio.
31- An increase in which one of the following accounts increases a firm's current ratio without affecting its quick ratio?
A. accounts payable
B. cash
C. inventory
D. accounts receivable
E. fixed assets
32- A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?
A. current
B. cash
C. debt-equity
D. quick
E. total debt
33- A firm has a total debt ratio of .47. This means the firm has 47 cents in debt for every:(................).
A. $1 in total equity.
B. $.53 in total assets.
C. $1 in current assets.
D. $.53 in total equity.
E. $1 in fixed assets.
34- The long-term debt ratio is probably of most interest to a firm's:(................).
A. credit customers.
B. employees.
C. suppliers.
D. mortgage holder.
E. stockholders.
35- From a cash flow position, which one of the following ratios best measures a firm's ability to pay the interest on its debts?.
A. times interest earned ratio
B. cash coverage ratio
C. cash ratio
D. quick ratio
E. interval measure.
36- The higher the inventory turnover, the:(................).
A. less time inventory items remain on the shelf.
B. higher the inventory as a percentage of total assets.
C. longer it takes a firm to sell its inventory.
D. greater the amount of inventory held by a firm.
E. lesser the amount of inventory held by a firm.
37- If a firm produces a return on assets of 15 percent and also a return on equity of 15 percent, then the firm:(................).
A. has no debt of any kind.
B. is using its assets as efficiently as possible.
C. has no net working capital.
D. also has a current ratio of 15.
E. has an equity multiplier of 2.
38- If stockholders want to know how much profit the firm is making on their entire investment in that firm, the stockholders should refer to the:(................).
A. Profit margin.
B. Return on assets.
C. Return on equity.
D. Equity multiplier.
E. Earnings per share.
39- Assume BGL Enterprises increases its operating efficiency by lowering its costs while holding its sales constant. As a result, given all else constant, the:(................).
A. return on equity will increase.
B. return on assets will decrease.
C. profit margin will decline.
D. equity multiplier will decrease.
E. price-earnings ratio will increase.
40- Which one of the following sets of ratios would generally be of the most interest to stockholders?
A. return on assets and profit margin
B. quick ratio and times interest earned
C. price-earnings ratio and debt-equity ratio
D. return on equity and price-earnings ratio
E. cash coverage ratio and equity multiplier
41- ROE is: (…………..).
A) Return on Equity.
B) Return on investment.
C) All the above.
42-The return on equity can be calculated as: (…………..).
A. ROA × Equity multiplier.
B. Profit margin × ROA.
C. Profit margin × ROA × Total asset turnover.
D. ROA ×(Net income / Total assets).
E. ROA × Debt-equity ratio.
43-Which one of the following depicts a correct relationship?
A. Dividend payout ratio = 1 – Retention ratio
B. Total asset turnover = 1 + Capital intensity ratio
C.ROA = ROE × (1 + Debt-equity ratio)
D. ROE = 1 – ROA
E. Equity multiplier = 1 – Debt-equity ratio
44- DuPont known as: (…………..).
A) Du Pont Equation.
B) Du Pont Model.
C) All of the above.
45- The DuPont identity can be computed as: (…………..).
A. Net income × Profit margin × (1 + Debt-equity ratio).
B. Profit margin × (1 / Capital intensity) × (1 + Debt-equity ratio).
C. Net income × Total asset turnover × Equity multiplier.
D. Profit margin × Total asset turnover × Debt-equity ratio.
E. Return on equity × Profit margin × Total asset turnover.
46- If a firm decreases its operating costs, all else constant, then the: (…………..).
A. profit margin will decrease.
B. return on assets will decrease.
C. total asset turnover rate will increase.
D. cash coverage ratio will decrease.
E. price-earnings ratio will decrease.
47- It is easier to evaluate a firm using its financial statements when the firm: (…………..).
A. is a conglomerate.
B. is global in nature.
C. uses the same accounting procedures as other firms in its industry.
D. has a different fiscal year than other firms in its industry.
E. tends to have one-time events such as asset sales and property acquisitions.
48- The most effective method of directly evaluating the financial performance of a firm is to compare the financial ratios of the firm to: (…………..).
A. the firm’s ratios from prior time periods and to the ratios of firms with similar operations.
B. the average ratios of all firms within the same country over a period of time.
C. those of other firms located in the same geographic area that are similarly sized.
D. the average ratios of the firm’s international peer group.
E. those of the largest conglomerate that has operations in the same industry as the firm.
49- The equity multiplier measures: (…………..).
A. financial leverage.
B. returns to stockholders.
C. operating efficiency.
D. management efficiency.
E. asset use efficiency.
50- The Expressions to breaks Return on Equity are : (…………..).
A) Profitability.
B) Financial Leverage.
C) All of the above.
In: Finance
a) What are the key differences between equity and debt financing? Discus the merits and demerits of each type of procuring finance at the firm level.
b) What are Hedge Funds? What investment strategies do the hedge fund managers use?
In: Finance
Tim Smith is shopping for a used car. He has found one priced at $4500. The salesman has told Tim that if he can come up with a down payment of $500 the dealer will finance the balance of the price at an annual rate of 14% over 2 years (24 months).
a. Assuming that Tim accepts the dealer's offer, what will his
monthly (end-of-month) payment amount be?
b. Use a financial calculator or spreadsheet to help you figure
out what Tim's monthly payment would be if the dealer were willing
to finance the balance of the car price at an annual rate of
9%?
In: Finance
b) Write brief notes about the key features, relevance and there role in the capital markets for the following: I. Private Equity Funds II. Venture Capital Funds III. Exchange Traded Funds
In: Finance
General Electric got a SR 100, 000, 000 loan repaid
over a 5-year period at 0.5% per month interest.
What is the difference in the amount of interest in the second
month’s payment if interest is charged on the principle of the loan
rather on the unrecovered balance?
In: Finance
a) Discuss the role of the financial markets in providing the platform for investors to interact
and help in providing the financing and investment requirements of market participants.
In: Finance
a) Discuss the process of going public through an IPO. Your answer should also include the Part played by the underwriter in the issuance of the IPO.
b) With respect to fixed income securities, discuss the concept of:
I. Treasury Bills
II. Municipal Bonds
In: Finance
Cash Conversion Cycle & Ratios
Target
Sales = 74,433,000,000
Cost of goods sold = 53,299,000,000
Inventory = 9,497,000,000
Accounts receivable = 468,000,000
Accounts payable = 1,127,000,000
Inventory conversion period = 65.04
Average collection period = 2.29
Payables deferral period = 7.72
CCC = 59.61
Nike
Sales = 36,397,000,000
Cost of goods sold = 20,441,000,000
Inventory = 5,261,000,000
Accounts receivable = 3,498,000,000
Accounts payable = 2,279,000,000
Inventory conversion period = 93.94
Average collection period = 35.08
Payables deferral period = 40.69
CCC = 88.33
McDonalds
Sales = 21,025,000,000
Cost of goods sold = 2,200,000,000
Inventory = 51,100,000
Accounts receivable = 2,441,500,000
Accounts payable = 1,207,900,000
Inventory conversion period = 8.48
Average collection period = 42.39
Payables deferral period = 2.00
CCC = 48.87
Best Buy
Sales = 42,151,000,000
Cost of goods sold = 32,275,000,000
Inventory = 5,209,000,000
Accounts receivable = 1,049,000,000
Accounts payable = 4,873,000,000
Inventory conversion period = 58.91
Average collection period = 9.08
Payables deferral period = 55.11
CCC = 12.88
Amazon
Sales = 232,887,000,000
Cost of goods sold = 139,156,000,000
Inventory = 17,174,000,000
Accounts receivable = 16,677,000,000
Accounts payable = 38,192,000,000
Inventory conversion period = 45.05
Average collection period = 26.14
Payables deferral period = 100.18
CCC = -28.99
*Compare and analyze thoroughly the CCC for the five companies
1. Analyze the CCC for the five companies. How does the CCC compare across the different companies?
2. Analyze the relationship between CCC and the company’s profitability for all five companies
3. Analyze the relationship between CCC and the size of the company (measured by total assets) for all five companies
In: Finance