Professor Wendy Smith has been offered the following​ opportunity: A law firm would like to retain her for an upfront payment of

$ 49 comma 000$49,000.

In​ return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment​ arrangement, the firm would pay Professor​ Smith's hourly rate for the eight hours each month. ​ Smith's rate is

$ 540$540

per hour and her opportunity cost of capital is

15 %15%

per year. What does the IRR rule advise regarding the payment​ arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of

15 %15%​.)

What about the NPV​ rule?

You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million):

a. What are the IRRs of the two​ projects?

b. If your discount rate is

5.2 %5.2%​,

what are the

NPVs

of the two​ projects?

c. Why do IRR and NPV rank the two projects​ differently?

a.  A bond that has a ​$1 comma 000 par value​ (face value) and a contract or coupon interest rate of 10.5 percent. Interest payments are ​$52.50 and are paid semiannually. The bonds have a current market value of ​$1 comma 122 and will mature in 10 years. The​ firm's marginal tax rate is 34 percet.

b.  A new common stock issue that paid a ​$1.83 dividend last year. The​ firm's dividends are expected to continue to grow at 7.4 percent per​ year, forever. The price of the​ firm's common stock is now ​$27.35.

c.  A preferred stock that sells for ​$122​, pays a dividend of 8.1 ​percent, and has a​ $100 par value.  

d.  A bond selling to yield 11.7 percent where the​ firm's tax rate is 34 percent.

Your factory has been offered a contract to produce a part for a new printer. The contract would last for

33

years and your cash flows from the contract would be

$ 5.24$5.24

million per year. Your upfront setup costs to be ready to produce the part would be

$ 7.82$7.82

million. Your discount rate for this contract is

7.6 %7.6%.

a. What does the NPV rule say you should​ do?

b. If you take the​ contract, what will be the change in the value of your​ firm?

Rate the three most important concepts of Working Capital, Financial budgeting, and The Cash Budget in order of importance (one being the most important; three, the least). Provide a rationale for your ratings.

Hi, can you answer this question in more detail?

Subject: Insurance Practices

Q4：

There are two major types of risk management tools, namely, risk control and risk financing. Discuss the details of these tools with examples.

Compare a value firm with a growth firm? What are some metrics that one can normally use to characterize firms in the value or growth category? How does valuation of a growth company compare to that of a value company? Can a growth company become a value company? How? Provide the name of a company that you think used to be a growth company that is now a value firm. Compare how your valuation of a growing company would differ from that of a declining company. How does the macro economy affect your valuation of each (inflation, economic growth, value of the dollar)?

A $16,000 bond redeemable at par on July 27, 2012 is purchased on October 19, 2002. Interest is 6.9% payable semi-annually and the yield is 7.3% compounded semi-annually.

a. What is the cash price?

b. What is the accrued interest?

c. What is the quoted price?

What is EBITDA? How does it compare to operating income? Which is likely to be the largest? Identify and discuss several liquidity ratios? Current ratio, quick ratio? Can the quick ratio ever be greater than the current ratio? Profitability ratios? Gross margin?

Compare and contrast the valuation of a business using discounted cash flow (DCF) and relative valuation (multiples). What elements do you need to know in order to proceed with each methodology? In what cases would you advise against using DCF? Relative valuation? How would a Federal Reserve interest rate increase affect your valuation? Suppose you decided to use DCB. Discuss how you would estimate the risk premium for the company.

Anderson Corp just issued a stock dividend of$2.00 yesterday. The company plans on increasing the dividend by 6% per year for the next 5 years. After which, the dividend will grow at 3% forever. The required rate of return is 10%.

A) Calculate the current price of the stock

B)Calculate what the price of the stock should be in 1 year

C) Calculate the Dividend yield and capital gains yield during the first year.

True or False:

This question has 5 parts:

a) the slope coefficient computed by regressing a particular stock's historical returns on the s&p 500 returns is called beta,the stock's beta with respect to the s&p 500 index; beta is important in finding variance-minimizing hedged portfolis.

b)a swap provides a means for replacing a stream of uncertain and variable payments with a fixed, non-variable payment stream that is certain.

c)the zero-cost collar options trading strategy involves buying a call option and selling a put option on the same stock with the same expiration date, same premium, and a higher strike price than the call option.

d)suppose you go long 10 Eurodollar futures contracts at price of 97. when the futures contracts settle at expiration, 3-month LIBOR is 1%.j ignoring commissions and margin interest, your position results in a $50,000 loss.

e)the current u.s. dollar/Chinese yuan currency spot rate is $0.13 per yuan. the fair value price for the U.S. dollar /Chinese yuan exchange rete for a 2-year forward contract is $0.1408. If the U.S. dollar denominated annual interest rate is 6%, the Chinese yuan-denominated annual interest rate must be 3%.

u can just answer true or false, but if u can simply explain why, It will be better. thank you

HappyPups makes pet cameras and will be introducing their newest product, the Furbo. The Furbo is a camera that allows dog owners to check in on their pup, give their pup a treat, and talk to them while they are away. HappyPups spent $375,000 on consumer demand studies and an additional $40,000 on research and development to get the perfect product for all pet lovers. Each Furbo will sell for $195. It is expected that Furbo product will generate additional revenue from the sale of treats that are compatible with device. It is expected that 50% of Furbo purchases will result in an additional $15 net profit from treat sales at time of purchase. The Furbo has a variable cost of $125.00, and the project will incur an annual fixed cost of $1,400,000 each year. HappyPups will need to purchase a new machine to manufacture the Furbo for $2,000,000, and will be depreciated using the 3-yr MACRS schedule. HappyPups anticipates it will be able to sell the machine for $750,000 at the end of the project in three years. In order to promote the product, HappyPups will initially set aside $1,000,000 worth of inventory at the beginning of the project and will readjust NWC levels to reflect 10% of Furbo Sales (not including the treats). All inventory will be liquidated at the end of project. However, by introducing the Furbo, HappyPups anticipate that will take away roughly $1,000,000 in revenue each year from its existing pet camera line. The required return for the project is 20%, and the tax rate is 21%

• Spent $375,000 and $40,000 on consumer demand studies and R&D
• Sales: 80,000 units, 70,000 units, 60,000 units.
• Retail price: $195, Variable Costs $125, and $1,400,000 in fixed costs
• 50% of Furbo purchases will result an additional $15 in revenue from Treat sales
• Machine to manufacture the product: $2,000,000, depreciated using 3yr MACRS schedule. Will be able to sell for $750,000 at the end of the 3^rd year.
• $1,000,000 will be set aside in inventory, and then adjust to 10% of Furbo sales (just the camera), and will be liquidated and recouped at the end of the project
• $1,000,000 in revenue will be lost each year from HappyPup’s existing pet camera line.

1. Calculate the Operating Cash flows for the project.
2. Calculate the Cash Flow From Assets for this Project.
3. What is the net present value of this project? Should the project be accepted or rejected?
4. What is the IRR of this project (round to nearest number)?
5. HappyPups does not have enough cash for the machine. HappyPups current has a debt-to-equity ratio of .7, and does not want to alter its capital structure. If HappyPups will be charged 8% to raise debt and 10% to raise equity, how much will the machine effectively cost HappyPups?
6. Using the information in number 5, what is the new net present value of the project?

As a member of the Finance Department of Ranch​ Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the​ firm's present capital structure reflects the appropriate mix of capital sources for the​ firm, you have determined the market value of the​ firm's capital structure as​ follows: To finance the​ purchase, Ranch Manufacturing will sell 10​-year bonds paying interest at a rate of 7.2 percent per year​ (with semiannual​ payment) at the market price of ​$1 comma 044. Preferred stock paying a ​$2.02 dividend can be sold for ​$24.97. Common stock for Ranch Manufacturing is currently selling for ​$54.31 per share and the firm paid a ​$3.09 dividend last year. Dividends are expected to continue growing at a rate of 5.3 percent per year into the indefinite future. If the​ firm's tax rate is 30 ​percent, what discount rate should you use to evaluate the equipment​ purchase?

Source of Capital   Market Values
Bonds $3,500,000
Preferred stock   $2,300,000
Common stock   $6,000,000

a.  Calculate component weights of capital.

The weight of debt in the​ firm's capital structure is ?

An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond L matures in 13 years, while Bond S matures in 1 year. What will the value of the Bond L be if the going interest rate is 7%, 9%, and 12%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 13 more payments are to be made on Bond L. Round your answers to the nearest cent. 7% 9% 12% Bond L $ $ $ Bond S $ $ $ Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change? Long-term bonds have lower reinvestment rate risk than do short-term bonds. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. Long-term bonds have greater interest rate risk than do short-term bonds. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. Long-term bonds have lower interest rate risk than do short-term bonds.