You are considering how to invest part of your retirement savings.You have decided to put $ 500,000 into three​ stocks: 66 % of the money in GoldFinger​ (currently $ 27​/share), 14 % of the money in Moosehead​ (currently $ 80​/share), and the remainder in Venture Associates​ (currently $ 4​/share). Suppose GoldFinger stock goes up to $ 36​/share, Moosehead stock drops to $ 69​/share, and Venture Associates stock rises to $ 9 per share.

a. What is the new value of the​ portfolio?

b. What return did the portfolio​ earn?

c. If you​ don't buy or sell any shares after the price​ change, what are your new portfolio​ weights?

On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $25 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt.

New bonds will have an 7% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so $1.20/$30 = 4%.) The marginal corporate tax rate is 40%.

1. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Enter your answer in dollars. For example, $1.2 million should be entered as $1200000. Round your answer to the nearest dollar. Do not round intermediate calculations.

   $  

2. Assuming there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity, what is its WACC? Round your answer to two decimal places. Do not round intermediate calculations.

   %

3. Suppose now that there is not enough internal cash flow and the firm must issue new shares of stock. Qualitatively speaking, what will happen to the WACC?

   _____IIIIIIIVV

   I. r_s and the WACC will decrease due to the flotation costs of new equity.
   II. r_s will increase and the WACC will decrease due to the flotation costs of new equity.
   III. r_s will decrease and the WACC will increase due to the flotation costs of new equity.
   IV. r_s and the WACC will not be affected by flotation costs of new equity.
   V. r_s and the WACC will increase due to the flotation costs of new equity.

Jefferson qualifies for an income-adjusted monthly payment of $485. If Jefferson has a subsidized student loan of $46,000 at an annual interest rate of 4% (compounded monthly), how many months are required to repay the loan? (Round your answer up to the nearest month.) You must use technology to solve this problem.

Renegade Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2.89 million and will last for six years. Variable costs are 33% of sales, and fixed costs are $1,981,139 per year. Machine B costs $5.1 million and will last for nine years. Variable costs for this machine are 22% of sales and fixed costs are $1,427,870 per year. The sales for each machine will be $10.9 million per year. The required return is 10 %, and the tax rate is 38%. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis.

Calculate the NPV for machine A. (Round answer to 2 decimal places. Do not round intermediate calculations)

parts a-c

Coupon Bond

Note: You need to use a financial calculator or Excel to solve c. and g. in this problem. Provide the direct answer

to the question

and be sure to list all of the inputs to the calculator or Excel that were necessary to arrive at

your answer.

Consider a $6,000 8-yr coupon bond with a 3.5% coupon rate.

a.

What price can this bond be purchased for if the market interest rate is 5%? (answer in long form)

b.

If this bond is purchased for $5,000, what is the current yield?

c.

If this bond is purchased for $5,000, what is its yield to maturity (YTM)?

d.

Explain why the Current Yield is either greater than or less than the coupon rate.

e.

Explain why the YTM is either greater than or less than the current yield.

f.

After five years, the market interest rate has fallen to 2%. How much can this bond be sold for? (Answer in

long form.)

g.

Compute the original owner’s holding period return if the bond is originally purchased for $4,700.

4. Calculating taxable income

For 2016, the personal exemption amount is $4,050. The 2016 standard deduction is $6,300 for unmarried taxpayers or married taxpayers filing separately, $12,600 for married taxpayers filing jointly, and $9,300 for taxpayers filing as head of household.

Calculating Heidi’s Taxable Income

Heidi is an unmarried person filing single. Calculate Heidi’s 2016 taxable income by filling in the worksheet. Enter adjustments, deductions, and exemptions as negative numbers. If your answer is zero, enter "0".

• Heidi will earn $90,965 in wages this year.

• She contributed $4,000 to an IRA.

• She received a gift from her parents to put a down payment on a new car totaling $5,000.

• She uses the standard deduction.

• She donated $1,000 to charity.

• She is entitled to one exemption.

Synovec Corp. is experiencing rapid growth. Dividends are expected to grow at 28 percent per year during the next three years, 18 percent over the following year, and then 5 percent per year, indefinitely. The required return on this stock is 11 percent and the stock currently sells for $82 per share. What is the projected dividend for the coming year?

Paymaster Enterprises has arranged to finance its seasonal​ working-capital needs with a​ short-term bank loan. The loan will carry a rate of 14 percent per annum with interest paid in advance​ (discounted). In​ addition, Paymaster must maintain a minimum demand deposit with the bank of 11 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow ​$100 comma 000 for a period of 6 ​months, what is the annualized cost of the bank​ loan?

6. In order to plan for their child’s college education two parents are trying to decide on a savings goal. The parents would like to be able to provide $10,000 each year for four years to assist in paying for college expenses. If the parents are confident that their investments will grow at an effective annual interest rate of 5%:

(a) How much should the parents try to save before their child goes to college to completely cover these payments?

(b) If the parents have 10 years to accumulate these savings, design a savings plan(with level payments) which will allow them to meet this goal.

Bond Bill

a) percentage change in price:

b) percentage change in price:

Bond Ted

a) percentage change in price:

b) percentage change in price:

1) Which one of the following statements is correct?

A) The standard deviation of the returns on Treasury bills is zero.

B) Large-company stocks are historically riskier than small-company stocks.

C) The standard deviation is a means of measuring the volatility of returns on an investment.

D) A risky asset will always have a higher annual rate of return than a riskless asset.

E) There is an indirect relationship between risk and return.

2) Christine owns a stock that dropped in price from $43.80 to 39.49 over the past year. The dividend yield on that stock is 1.8 percent. What is her total return on this investment for the year?

A) -11.31 percent

B) -10.49 percent

C) -9.91 percent

D) -9.59 percent

E) -8.04 percent

3) Jack owned a stock for five months and earned an annualized rate of return of 6 percent. What was the holding period return?

A) 2.37 percent

B) 2.42 percent

C) 2.46 percent

D) 2.64 percent

E) 2.72 percent

4) An asset has an average annual historical return of 11.6 percent and a standard deviation of 17.8 percent. What range of returns would you expect to see 95 percent of the time?

A) -41.8 to + 65.0 percent

B) -34.4 to + 53.6 percent

C) -24.0 to + 47.2 percent

D) -6.2 to + 29.4 percent

E) -5.4 to + 41.0 percent

What is bankruptcy? What is the difference between liquidation and
reorganization? What is the main benefit of reorganization?

The Sheridan Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 10.325 percent. The current market rate for similar securities is 11.8 percent. Assume that the face value of the bond is $1,000.

Suppose the bond were to mature in 12 years. What will be the bond’s price if rates in the market

(i) decrease to 9.80 percent or

(ii) increase to 12.8 percent?

Why is it important that, in countries with high inflation, financial statements be adjusted for inflation? Consider understated asset values, understated expenses, overstated income, and overstated equity and how these may affect a company’s overall strategy when responding.

I need some guidance on question 1c.

(1) (A) Between 2001 and 2011, the real (2018 US $) price of a barrel of oil rose at a rate of about 13% per year in real terms to around $124 per barrel in 2011, but the real price fell to $46 per barrel in 2016, before rebounding in 2018 to $71 per barrel. If prices continue increasing from their 2018 price of $71 per barrel through 2028 at a more modest rate of 7% year in real terms, what will be the price of oil in 2028? Assume these prices are for December 31 of each year.

(B) Suppose the price of gasoline in 2018 was $2.75 per gallon, and every $1 per barrel increase in the price of oil causes the price of gasoline to increase by $0.025 per gallon. If SouthWestern Ohio gasoline distribution company bought a forward contract for delivery of gasoline from Exxon in 2019 for $2.80 per gallon and in 2020 for $2.80 per gallon, based on your oil price projection in (A), will these contracts save them money? Be sure to show how you arrived at your answer.

(C) Suppose you are the operator of the East Lima International Refinery LLC, and you buy a call option for crude oil to refine in 2020. Your call option has a strike price of $59, with no option premium, and it expires on December 31, 2019. If prices rise as predicted above, will you make money on the call option? If so, how much? If not, what do you do on December 31, 2019 when the option expires?