explain why maximizing profits falls short of maximizing shareholders wealth

A bond has a 10% coupon rate, payable quarterly. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 14%. What is the price of the bonds?

In no more than 300 words, explain why the quality of corporate governance is relevant to the effective management of educational institutions.

Financial intermediaries play a major role in the financial markets . without financial intermediaries being in place, some financial market transactions may not occur smoothly. Required:

a) Explain and discuss the functions of financial intermediaries in the economy

b) Identify and discuss the relative advantage and disadvantages of financial intermediations and disintermediation

Comment on the major challenges to Basel II implementation in the Caribbean in relation to credit risk management.

MM with Corporate Taxes

Companies U and L are identical in every respect except that U is unlevered while L has $16 million of 6% bonds outstanding. Assume: (1) All of the MM assumptions are met. (2) Both firms are subject to a 25% federal-plus-state corporate tax rate. (3) EBIT is $4 million. (4) The unlevered cost of equity is 10%.

1. What value would MM now estimate for each firm? (Hint: Use Proposition I.) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places.

   Company U: $   million
   Company L: $   million

2. What is r_s for Firm U? Round your answer to one decimal place.

   %

   What is r_s for Firm L? Do not round intermediate calculations. Round your answer to one decimal place.

   %

3. Find S_L, and then show that S_L + D = V_L results in the same value as obtained in Part a. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.

   S_L = $   million

   S_L + D = $   million

4. What is the WACC for Firm U? Do not round intermediate calculations. Round your answer to two decimal places.

   %

   What is the WACC for Firm L? Do not round intermediate calculations. Round your answer to two decimal places.

   %

Q4) Why is it important to establish a time limit for a new business to generate a profit?

Virtual bank is defined as a bank which primarily delivers retail banking services

through the internet or other forms of electronic channels instead of physical branches.

(300 word)

You are valuing Soda City Inc. It has $104 million of debt, $89 million of cash, and 154 million shares outstanding. You estimate its cost of capital is 12.6%. You forecast that it will generate revenues of $703 million and $797 million over the next two years. Projected operating profit margin is 21%, tax rate is 29%, reinvestment rate is 23%, and terminal exit value multiple at the end of year 2 is 15. What is your estimate of its share price? Round to one decimal place. ​[Hint: Compute projected FCFF for years 1 and 2 based on info provided, compute terminal value using the exit multiple method, discount it all to find EV, walk the bridge to Equity, divide by number of shares outstanding.]

Lisa just won $2.5 million in the state lottery. She is given the option of receiving a lump sum $1.3 million now, or she can elect to recieve $100,000 at the end of each of the next 25 years. If Gabrielle can earn 5% annually on her investments, which option should she take? Please provide formula used to solve answer.

The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $650 for 5 years and $325 for the sixth year. Its current book value is $3,575, and it can be sold on an Internet auction site for $4,150 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life.

Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $12,000 and has an estimated useful life of 6 years with an estimated salvage value of $1,500. This steamer falls into the MACRS 5-year class, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine’s much greater efficiency would reduce operating expenses by $1,900 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert’s marginal federal-plus-state tax rate is 25%, and the project cost of capital is 15%. Should it replace the old steamer?

Edna Recording​ Studios, Inc., reported earnings available to common stock of $4,000,000 last year. From those​ earnings, the company paid a dividend of $1.34 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 30% debt, 15% preferred stock, and 55% common stock. it is taxed at a rate of 26%.

a.  If the market price of the common stock is ​$46 and dividends are expected to grow at a rate of 9​% per year for the foreseeable​ future, what is the​ company's cost of retained earnings financing​?

b.  If under pricing and flotation costs on new shares of common stock amount to ​$9 per​ share, what is the​ company's cost of new common stock financing​?

c.  The company can issue ​$1.99 dividend preferred stock for a market price of ​$30 per share. Flotation costs would amount to ​$2 per share. What is the cost of preferred stock financing​?

d. The company can issue ​$1,000​-par-value, 11​% coupon, 12​-year bonds that can be sold for ​$1290 each. Flotation costs would amount to ​$20 per bond. Use the estimation formula to figure the approximate​after-tax cost of debt​ financing?

e. What is the WACC​?

4) Nandana invests $500 at the start of each year for 20 years in a bank account paying interest at the effective annual rate i. She takes the interest paid at the end of each year and invests it in a different account paying an effective annual rate i/2. The effective annual rate she earns on her combined investments is 6%.

a) How much money does she have at the end of 20 years? (Total of both accounts.)

b) What is i?