What are the 2 components of the periodic return?
In: Finance
1) A slowdown in the U.S economic growth will
A) boost $ value because inflation fears will be calmed. B) boost $ value because the federal reserve will expand money supply. C) lower $ value because the U.S will be a less attractive place to invest in. D) lower $ value because intrest rate will rise
2) In 1995 ¥ went from $0.0125 to $0.0095238. By how much did $ appreciate against ¥?
3) Suppose that the Brazilian real devalues by 40% against the dollar. By how much will the dollar appreciate against the real?
4) Suppose the spot direct quotes for the pound sterling in New York is $1.3981. What is the direct quote for the dollar in London?
5) If the Euro devalued by 17% against the U.S dollar, this is equivalent to revaluation of the dollar against Euro by?
In: Finance
Stock-Trak Exercises
2. Explore some of the Internet links to stock market research tools provided by Stock-Trak.
3. Look up stock ticker symbols for these companies: American Express, ExxonMobil, Liz Claiborne, McDonald’s, Procter & Gamble, Southwest Airlines, and Xerox.
4. Some companies have ticker symbols with only a single letter, for example, the letters A, B, C, D, E, F, G, K, N, O, Q, R, S, T, X, and Y are one-letter tickers. What are these companies’ names?
5. Can you guess what the company names are for the ticker symbols AAPL, BUD, DIS, FDX, HOG, LZB, PEP, PILL, PZZA, REV, SBUX, and YUM?
In: Finance
|
Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $235,000; Costs = $141,000; Other expenses = $7,900; Depreciation expense = $14,600; Interest expense = $14,900; Taxes = $19,810; Dividends = $12,000. In addition, you’re told that the firm issued $6,400 in new equity during 2018 and redeemed $4,900 in outstanding long-term debt. |
| a. |
What is the 2018 operating cash flow? (Do not round intermediate calculations.) |
| b. | What is the 2018 cash flow to creditors? (Do not round intermediate calculations.) |
| c. | What is the 2018 cash flow to stockholders? (Do not round intermediate calculations.) |
| d. | If net fixed assets increased by $25,000 during the year, what was the addition to NWC? (Do not round intermediate calculations.) |
In: Finance
What are the political and financial consequences of the Census undercounting the population in Texas?
In: Finance
Dave’s pizza is considering a merger with Fulton Pizza. The offer under discussion is a cash offer of $352 million for Fulton Pizza. Both companies have niche markets in the pizza industry, and the companies believe a merger will result in significant synergies due to economies of scale in manufacturing and marketing, as well as significant savings in general and administrative expenses.
Matt Robinson, the financial officer for Dave’s, has been instrumental in the merger negotiations. Matt has prepared the following pro forma financial statements for Fulton assuming the merger takes place. The financial statements include all synergistic benefits from the merger:
|
2015 |
2016 |
2017 |
2018 |
2019 |
|
|
Sales |
$512,000,000 |
$576,000,000 |
$640,000,000 |
$720,000,000 |
$800,000,000 |
|
Production costs |
359,200,000 |
403,200,000 |
448,000,000 |
505,600,000 |
564,000,000 |
|
Depreciation |
48,000,000 |
51,200,000 |
52,800,000 |
53,120,000 |
53,600,000 |
|
Other expenses |
51,200,000 |
57,600,000 |
64,000,000 |
72,320,000 |
77,600,000 |
|
EBIT |
$ 53,600,000 |
$ 64,000,000 |
$ 75,200,000 |
$ 88,960,000 |
$104,800,000 |
|
Interest |
12,160,000 |
14,080,000 |
15,360,000 |
16,000,000 |
17,280,000 |
|
Taxable Income |
$ 41,440,000 |
$ 49,920,000 |
$ 59,840,000 |
$ 72,960,000 |
$ 87,520,000 |
|
Taxes @40% |
16,576,000 |
19,968,000 |
23,936,000 |
29,184,000 |
35,008,000 |
|
Net Income |
$ 24,864,000 |
$ 29,952,000 |
$ 35,904,000 |
$ 43,776,000 |
$ 52,512,000 |
Matt knows that Fulton will require investments each year for maintenance of plant. The table below has required investments and sources of financing:
|
2015 |
2016 |
2017 |
2018 |
2019 |
|
|
Investments |
|||||
|
Net working capital |
$ 12,800,000 |
$ 16,000,000 |
$16,000,000 |
$19,200,000 |
$19,200,000 |
|
Fixed assets |
9,600,000 |
16,000,000 |
11,520,000 |
76,800,000 |
4,480,000 |
|
Total |
22,400,000 |
$ 32,000,000 |
$ 27,520,000 |
$ 96,000,000 |
$ 23,680,000 |
|
Sources of financing |
|||||
|
New debt |
$ 22,400,000 |
$ 10,240,000 |
$ 10,240,000 |
$ 9,600,000 |
$ 7,680,000 |
|
Profit retention |
0 |
21,760,000 |
17,280,000 |
17,280,000 |
16,000,000 |
|
Total |
22,400,000 |
32,000,000 |
27,520,000 |
26,880,000 |
23,680,000 |
The management of Dave’s feels that that capital structure at Fulton is not optimal. If the merger takes place, Fulton will immediately increase its leverage with a $71 million debt issue, which would be followed by a $96 million dividend payment to Dave’s. This will increase Fulton’s debt-to-equity ratio from 0.50 to 1.00. Dave’s will also be able to use a $16 million tax loss carryforward in 2016 and 2017 from Fulton’s previous operations. The total value of Fulton is expected to be $576 million in five years, and the company will have $192 million in debt at that time.
Stock in Dave’s currently sells for $94 per share, and the company has 11.6 million shares of stock outstanding. Fulton has 5.2 million shares of stock outstanding. Both companies can borrow at 8%. The risk-free rate is 6%, and the expected return on the market is 13%. Matt believes the current cost of capital for Dave’s is 11%. The beta for Fulton at its current capital structure is 1.30.
Matt has asked you to analyze the financial aspects of the potential merger. Specifically, he has asked you to answer the following questions:
In: Finance
Find the price of a bond with face value of $100 and $10 annual coupons that matures in 5 years, given that the continous compounding rate is 6%.
In: Finance
Torque Manufacturing forecasts that its production will require 600,000 tons of bauxite over its planning period. Demand for Torque's products is stable over time. Ordering costs amount to an average of $15.00 per order. Holding costs are estimated at $1.25 per ton of bauxite. If Torque uses an inventory quantity of 3,000 tons, what will be the total annual cost of inventory?
The answer is $4,875 but I don't know how they got it. Can anyone help?
In: Finance
In: Finance
|
Your client is 40 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $12,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 7% in the future.
|
In: Finance
Suppose that you purchase a $1,000 zero-coupon bond that matures 3 years from now and is priced to yield 4.5%., Assume interest is compounded semi-annually.
a. How much will you pay for the bond with exactly 3 years to maturity?
b. One year later, if interest rates remain the same, what will be the price of the bond?
c. If you paid $850 for the bond with 3 years to maturity, and held it until maturity, what will be your expected return (i.e. yield-to-maturity)?
In: Finance
A loan of $100,000 is made today. The borrower will make equal repayments of $3070.83 per month with the first payment being exactly one month from today. The interest being charged on this loan is constant (but unknown). For the following two scenarios, calculate the interest rate being charged on this loan, expressed as a nominal annual rate in percentage:
(b) The term of the loan is unknown but it is known that the loan outstanding 2 years later equals to $46729.02.
In: Finance
home / study / business / finance / finance questions and answers / a) assuming triangular arbitrage is not possible and exchange rates are priced efficiently, ...
Question: A) Assuming triangular arbitrage is not possible and exchange rates...
a) Assuming triangular arbitrage is not possible and exchange rates are priced efficiently, use the following quotes to determine the percentage change in the NZD against the JPY.
|
Today |
1 year ago |
|
|
AUD NZD |
1.0362 |
1.0965 |
|
AUD JPY |
71.85 |
74.65 |
b) You have the following quotes from three different banks:
|
Big Time Bank |
71.85 JPY AUD |
|
Fack Bank |
0.9601 AUD NZD |
|
Trusty Bank |
69.99 JPY NZD |
If you can buy or sell at the given quotes, how much profit can you make using AUD $1 000 000. Clearly show each of your trades and give your profit in AUD.
In: Finance
1) Wick Inc., has sales of $889,095.00, operating costs (not including depreciation) of $320,074.20, depreciation expense of $124,473.30, interest expense of $62,236.65, and a tax rate of 38.00%. What is the net income for this firm?
a. $237,032.73
b. $237,032.73
c. $145,278.12
d. $168,928.05
2)Given the following Financial Information Answer the following question:
| 2017 | 2018 | |
|---|---|---|
| Cash | 3,000 | 461,305 |
| Accounts Receivable | 9,000 | 9,900 |
| Inventory | 5,000 | 5,500 |
| Prepaid Assets | 3,000 | 3,300 |
| Other Assets | 5,000 | 5,500 |
| Total Current Assets | 25,000 | 485,505 |
| Net PPE | 80,000 | 67,000 |
| Intangibles | 1,000 | 1,000 |
| Total Assets | 106,000 | 553,505 |
| Accounts Payable | 3,000 | 3,300 |
| Salary Payable | 1,000 | 1,100 |
| Notes Payable | 1,000 | 1,000 |
| Total Current Liabilities | 5,000 | 5,400 |
| Long-Term Debt | 70,000 | 70,000 |
| Total Liabilities | 75,000 | 75,400 |
| Common Stock | 40,000 | 40,000 |
| Retained Earnings | -9,000 | 438,105 |
| total equity | 31,000 | 478,105 |
| 2018 | |
|---|---|
| Sales | 2,965,000 |
| COGS | 2,223,750 |
| Gross Profit | 741,250 |
| SG&A | 12,000 |
| Other Operating Expenses | 13,000 |
| Depreciation | 8,000 |
| Interest | 6,785 |
| Taxes | 223,481 |
| Net Income | 485,984 |
| dividends | 38,879 |
Calculate the Change in Net Operating Working Capital (NOWC)
a. $ -460,504.82
b. $ 460,504.82
c. $ 460,104.82
d. $ -460,104.82
3)
Reihing Inc., 's current balance sheet shows total common equity of $1,667,544.00. The company has 340,000.00 shares of stock outstanding, and they sell at a price of $5.49 per share. By how much do the firm's book value and market value per share differ?
a. $-0.59
b. $4.90
c. $5.49
d. $0.59
In: Finance
Decision #2: Planning for Retirement
Erich and Mallory are 22, newly married, and ready to embark on the journey of life. They both plan to retire 45 years from today. Because their budget seems tight right now, they had been thinking that they would wait at least 10 years and then start investing $3000 per year to prepare for retirement. Mallory just told Erich, though, that she had heard that they would actually have more money the day they retire if they put $3000 per year away for the next 10 years - and then simply let that money sit for the next 35 years without any additional payments – then they would have MORE when they retired than if they waited 10 years to start investing for retirement and then made yearly payments for 35 years (as they originally planned to do). Please help Erich and Mallory make an informed decision:
Assume that all payments are made at the END a year (or month), and that the rate of return on all yearly investments will be 7.2% annually.
(Please do NOT ROUND when entering “Rates” for any of the questions below)
b2) How much will the amount you just computed grow to if it remains invested for the remaining 35 years, but without any additional yearly deposits being made?
In: Finance