You are eyeing an investment in a corporate bond which has a YTM of 5.00%, and a stated rate of interest of 13.00% with a maturity of 1 years. What is the price of this bond?
a. $1,014.29
b. $1,202.38
c. $1,076.19
d. $1,077.10
In: Finance
Step 1: Pick stock you would like to invest in for the long-term (10 or more years)
Step 2: What is the CAGR (compound annual growth rate) for this stock over the past 10 years
Step 3: Does this stock pay dividends? If so, what is the dividend history over the past 10 years
Step 4: Write a paragraph about what this company does, how it makes money, including main products/services/users/etc, and why this is a good investment. Defend your "long" position, both quantitatively and qualitatively.
Please show your work.
In: Finance
Constant Growth Valuation
Woidtke Manufacturing's stock currently sells for $18 a share.
The stock just paid a dividend of $1.00 a share (i.e.,
D0 = $1.00), and the dividend is expected to grow
forever at a constant rate of 5% a year. What stock price is
expected 1 year from now? Round your answer to the nearest
cent.
$
What is the estimated required rate of return on Woidtke's stock? Do not round intermediate calculations. Round the answer to three decimal places. (Assume the market is in equilibrium with the required return equal to the expected return.)
In: Finance
A T-bond with semi-annual coupons has a coupon rate of 3%, face value of $1,000, and 2 years to maturity. If its yield to maturity is 4%, what is its Macaulay Duration? Answer in years, rounded to three decimal places
In: Finance
|
We are evaluating a project that costs $660,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 69,000 units per year. Price per unit is $58, variable cost per unit is $38, and fixed costs are $660,000 per year. The tax rate is 35 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. |
|
Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| NPV | ||
| Best-case | $ | |
| Worst-case | $ | |
In: Finance
In: Finance
1. Consider the following Balance Sheet for Total Caribbean Bank(TCB) (in millions)
|
ASSETS |
LIABILITIES |
|||
|
Floating rate mortgages |
120 |
Demand deposits |
110 |
|
|
(currently 12% annually) |
(currently 3% annually) |
|||
|
30 years fixed rate loans |
1 year CD |
50 |
||
|
(currently 7% annually) |
80 |
(currently 6% annually) |
||
|
Equity |
40 |
|||
|
200 |
200 |
a. What is TCB expected net interest income (NII) at year end? (1mark)
b. What is TCB expected net interest income at year end if interest rates grew by 500 basis points. (1 mark)
c. What is TCB expected net interest income at year end if interest rates fell by 200 basis points on assets and decline by 2% on liabilities.
In: Finance
|
Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $316,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,690,000. The cost of the machine will decline by $106,000 per year until it reaches $1,160,000, where it will remain. |
|
If your required return is 13 percent, calculate the NPV today. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|
NPV |
$ |
|
If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
|
NPV |
|
|
Year 1 |
$ |
|
Year 2 |
$ |
|
Year 3 |
$ |
|
Year 4 |
$ |
|
Year 5 |
$ |
|
Year 6 |
$ |
|
Should you purchase the machine? |
|
If so, when should you purchase it? |
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|
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In: Finance
In: Finance
You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $110,000, and it would cost another $22,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $44,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require a $14,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $51,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%.
What are the project's annual cash flows in Years 1, 2, and 3? Round your answers to the nearest cent.
In Year 1 $
In Year 2 $
In Year 3 $
In: Finance
In: Finance
19. What is the NPV of the project? Which you accept the project?
In: Finance
In: Finance
Stocks A and B have the following returns in each of the states given below.
| boom | Nornmal Economy | Recession | |
| Stock A return | 12% | 10% | -5% |
| Stock B return | 1% | -5% | 15% |
The probability of the boom is 0.5, the probability of the
normal economy is 0.3 and the probability of the recession is
0.2.
(a) Calculate the variance of the returns of A and the variance of
the returns of B
(b) What is the covariance between the returns of A and B?
(c) What is the standard deviation of a portfolio of A and B with equal amounts invested in both?
In: Finance
Consider that you are 35 years old and have just changed to a new job. You have $155,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $7,700 each year into your new employer’s plan.
If the rolled-over money and the new contributions both earn a return of 6 percent, how much should you expect to have when you retire in 30 years?
In: Finance