1.     Consider the following Balance Sheet for Total Caribbean Bank(TCB) (in millions)

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.

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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%.

1. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus sign.
   $

2. 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 $

3. If the WACC is 10%, should the spectrometer be purchased?
   -Select-YesNo

Stocks A and B have the following returns in each of the states given below.

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?

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?

Quantitative Problem: Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2015 sales (all on credit) were $150,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.29 times during the year. Its receivables balance at the end of the year was $13,117.75 and its payables balance at the end of the year was $7,399.8. Using this information calculate the firm's cash conversion cycle. Do not intermediate calculations. Round your answer to the nearest whole number.

1)

The current stock price for Ford is $31 and for Coca-cola is $66. The consensus predictions by Wall Street economists for the state of the economy next year and the associated stock prices are the following:

The stock prices above are given ex-dividend. Next year, Ford is expected to pay a dividend of $1.24 per share and coca-cola is expected to pay a dividend of $0.88 per share.

a) What is the expected return on Ford stock? What is the standard deviation of the rate of return on Ford stock?

b) What is the expected return on Coca-cola stock? What is the standard deviation of the rate of return on Coca-Cola stock?

c) What is the covariance between the rate of return on Ford and Coca-cola? What is the correlation coefficient between their rates of return?

Based on the following information: State of Economy Probability of State of Economy Return on Stock J Return on Stock K Bear .24 −.026 .028 Normal .59 .132 .056 Bull .17 .212 .086 a. Calculate the expected return for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) d. What is the correlation between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.)

The answer to the following questions may be found in either the Annual Report to Stockholders or on the SEC Form 10-K. It may also be necessary for you to use other sources. To fully answer the questions, you must identify the source for your information and also include the answer. If the question is not applicable to your company, place “NA” as the answer. To identify the source use “AR” for Annual Report to Stockholders and “10K” for the SEC Form 10-K. If something else, use “Other” and include the identification at the end of your answer.

FORD MOTOR COMPANY

1. Tell me the best scenario when an investor should consider the purchase of a corporate bond in a portfolio. Also, talk to me about how spread tightening and widening can be trading opportunities.