You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016. The bonds have a par value of $2,000. Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Xenon, Inc. (XIC) 5.600 Jan 15, 2022 94.203 ?? 57,364 Kenny Corp. (KCC) 7.140 Jan 15, 2021 ?? 5.18 48,943 Williams Co. (WICO) ?? Jan 15, 2028 94.755 6.88 43,804

New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $980,000, and it would cost another $23,500 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $531,000. The machine would require an increase in net working capital (inventory) of $9,000. The sprayer would not change revenues, but it is expected to save the firm $461,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%.

1. What is the Year 0 net cash flow?
   $ ???
2. 
   
3. 
   
4. 
   
5. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

   Year 1	$
   Year 2	$
   Year 3	$

6. 
   
7. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.
   $ ???
8. 
   
9. 
   
10. If the project's cost of capital is 14 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
    $ ???
    
    Should the machine be purchased?
    -Select-YesNo

What is the firm's total change in cash from the prior year to the current year?

Cash disbursements schedule   Maris​ Brothers, Inc., needs a cash disbursement schedule for the months of​ April, May, and June. Use the format given here

and the following information in its preparation.

​Sales:

February $505,000​;

March $518,000​;

April $572,000​;

May $617,000​;

June $670,000​;

July $665,000

​Purchases: Purchases are calculated as

55%

of the next​ month's sales,

9%

of purchases are made in​ cash, 52% of purchases are paid for 1 month after​ purchase, and the remaining 39% of purchases are paid for 2 months after purchase.

​Rent: The firm pays rent of $8,030 per month.

Wages and​ salaries: Base wage and salary costs are fixed at

$6,200 per month plus a variable cost of

6.9%of the current​ month's sales.

​Taxes: A tax payment of $54,300 is due in June.

Fixed asset​ outlays: New equipment costing $74,800 will be bought and paid for in April.

Interest​ payments: An interest payment of $30,100is due in June.

Cash​ dividends: Dividends of $12,000 will be paid in April.

Principal repayments and​ retirements: No principal repayments or retirements are due during these months.

Feb    Mar Apr May Jun Jul

Sales Disbursements

Purchases

Cash

1 month delay

2 month delay

Rent

Wages and salary

Fixed

Variable

Taxes

Fixed assets

Interest

Cash dividends

Total
Disbursements

( Please explain how you got the answer )

Assume that you manage a risky portfolio with an expected rate of return of 20% and a standard deviation of 46%. The T-bill rate is 5%. Your risky portfolio includes the following investments in the given proportions: Stock A 30 % Stock B 30 Stock C 40 Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill money market fund so that his overall portfolio will have an expected rate of return of 14%. a. What is the proportion y? (Round your answer to 1 decimal places.) b. What are your client's investment proportions in your three stocks and in T-bills? (Round your intermediate calculations and final answers to 1 decimal places.) c. What is the standard deviation of the rate of return on your client's portfolio? (Round your intermediate calculations and final answer to 2 decimal places.)

1. Over the past three decades about half of the public firms were regular dividend payers, while the other half were not paying dividends at all. Assuming wealth maximization of shareholders is a primary objective of the management, explain: a) why some firms choose to pay dividends consistently (give at least three possible reasons); b) why other firms choose not to pay any dividends at all (at least three reasons); c) why some other firms choose to combine stock repurchases and cash dividends (at least three reasons).

Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 34%. The T-bill rate is 4%. Your client chooses to invest 85% of a portfolio in your fund and 15% in a T-bill money market fund. a. What is the expected return and standard deviation of your client's portfolio? (Round your answers to 2 decimal places.) b. Suppose your risky portfolio includes the following investments in the given proportions: Stock A 32 % Stock B 36 Stock C 32 What are the investment proportions of your client’s overall portfolio, including the position in T-bills? (Round your answers to 1 decimal places.) c. What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? (Round your answers to 4 decimal places.)

BOND RETURNS Last year Janet purchased a $1,000 face value corporate bond with an 11% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 10.17%. If Janet sold the bond today for $1,125.36, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.

Create a page length written analysis based on the numbers in the spreadsheet. What do the numbers mean? What should be done with the information?

69. Machine costs $150,000, and lasts 10 years with salvage value of $15,000. Annual operating costs are $50,000. If you want to make a 20% return on investment, what is the minimum annual revenue required from this machine? Show all work for full credit.

the price of a one-year pure discount bond is 96.15 and the price of a two-year pure discount bond is 92.63. what rate on a one year bond, one year from today, could you lick in today?

An FI has purchased a $207 million cap of 9 percent at a premium of 0.60 percent of face value. A $207 million floor of 4.7 percent is also available at a premium of .65 percent of face value.

a. If interest rates rise to 10 percent, what is the amount received by the FI? What are the net savings after deducting the premium?
b. If the FI also purchases a floor, what are the net savings if interest rates rise to 11 percent? What are the net savings if interest rates fall to 3.7 percent? (Negative amounts should be indicated by a minus sign.)
c. If, instead, the FI sells (writes) the floor, what are the net savings if interest rates rise to 11 percent? What if they fall to 3.7 percent? (Negative amounts should be indicated by a minus sign.)

a.Amount received

Net savings

b.Net savings if interest rates rise to 11 percent

Net savings if interest rates fall to 3.7 percent

c.Net savings if interest rates rise to 11 percent

Net savings if they fall to 3.7 percent

A $1,000 face value has a 5% annual coupon rate. The next coupon is due in one year and the bond matures in 26 years. The current YTM on the bond is 4.2%. What is the dollar value of the price change if the bond's YTM increases to 6.3%? Round to the nearest cent. ​[Hint: 1) If the price drops, the change is a negative number. 2) Do not compute duration. You can calculate the precise impact of a yield change on the bond's price by comparing the prices under the two scenarios.]

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,180,000 in annual sales, with costs of $1,170,000. The project requires an initial investment in net working capital of $153,000, and the fixed asset will have a market value of $178,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 12 percent.

What is the net cash flow of the project each year? (A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What is the NPV of the project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV            $

What is liquidity premium theory about interest rate? Can it be used to explain the downward-sloping yield curve?