What is the expected return for the following stock? (State your answer in percent with one decimal place.)
Outcomes Possible returns Probability
better 36% 13%
same 25% 39%
worse 18% 48%

You are holding a stock that has a beta of 2.12 and is currently in equilibrium. The required return on the stock is 12.49%, and the return on the market portfolio is 10.00%. What would be the new required return on the stock if the return on the market increased to 13.00% while the risk-free rate and beta remained unchanged?

You are holding a stock that has a beta of 1.67 and is currently in equilibrium. The required return on the stock is 15.38% and the return on a risk-free asset is 7.0%. What would be the return on the stock if the stock's beta increased to 2.12 while the risk-free rate and market return remained unchanged?

You are offered an investment with a quoted annual interest rate of 11% with weekly compounding of interest. What is your effective annual interest rate?

You are valuing an investment that will pay you nothing the first two years, $21,000 the third year, $23,000 the fourth year, $27,000 the fifth year, and $33,000 the sixth year (all payments are at the end of each year). What is the value of the investment to you now if the appropriate annual discount rate is 15.00%?

2. Balance sheet

The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company’s financial condition and performance.

Cute Camel Woodcraft Company is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheets for Cute Camel Woodcraft Company for the years ending December 31, Year 2 and 1, respectively.

Given the information in the preceding balance sheet—and assuming that Cute Camel Woodcraft Company has 50 million shares of common stock outstanding—read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.

Statement #1: Cute Camel’s pool of relatively liquid assets, which are available to support the company’s current and future sales, decreased from Year 1 to Year 2.

This statement is   , because:

Cute Camel’s total current liabilities balance increased from $33,750 to $42,188 between Year 1 and Year 2.

Cute Camel’s total current asset balance decreased from $281,250 to $225,000 between Year 1 and Year 2.

Cute Camel’s total current asset balance actually increased from $225,000 to $281,250 between Year 1 and Year 2.

Cute Camel’s total current liabilities balance decreased by $56,250 between Year 1 and Year 2.

Statement #2: On December 31 of Year 2, Cute Camel Woodcraft Company had $115,312 of actual money that it could have spent immediately.

This statement is   , because:

The funds recorded in Cute Camel’s accounts receivable account represents funds that are either cash or can be converted into cash almost immediately.

Cute Camel’s Year 2 cash and equivalents balance is $290,250.

The funds recorded in Cute Camel’s cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately.

Statement #3: One way to interpret the change in Cute Camel’s accounts receivable balance from Year 1 to Year 2 is that more customers purchased new items on credit rather than paying off existing credit accounts.

This statement is   , because:

The decrease from $42,188 to $33,750 implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit.

The $8,438 increase in accounts receivable means either that Year 1’s existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year 1’s credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1’s credit sales.

The change from $99,000 to $123,750 reflects a net accumulation of new credit sales.

Based on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to   if the firm buys a new plant and equipment at a cost of $1 million with liquid capital.

Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Cute Camel Woodcraft Company’s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)?

The company’s debts should be listed from those carrying the largest balance to those with the smallest balance.

The company’s debts are listed in the order in which they are to be repaid.

The company’s debts should be listed in order of their liquidity.

Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $3 million, $6 million, $9 million, and $13 million. After the fourth year, free cash flow is projected to grow at a constant 5%. Brandtly's WACC is 10%, the market value of its debt and preferred stock totals $72 million; the firm has $13 million in non-operating assets; and it has 18 million shares of common stock outstanding.

1. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
2. 
   
3. What is the firm's horizon, or continuing, value? Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
4. What is the market value of the company's operations? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
5. 
   
6. What is the firm's total market value today? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000.
7. What is an estimate of Brandtly's price per share? Do not round intermediate calculations. Round your answer to the nearest cent.

Please show me how to do it and not just the answer please and thank you!

A project has an annual cash flow of $8000 for first 10 years and $11000 for the next 10 years, the cost of total investment was $90,000. The company’s WACC is 10% and IRR is 14%. What is the project’s payback and NPV?

Bigg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($) (including depreciation) are following:

Project A                              Project B

Year 0    -7500 -17500

Year 1    2000                                       5600

Year 2    2000                                       5600

Year 3    2000                                       5600

Year 4    2000                                       5600

Year 5    2000                                       5600

Year 6    4000                                       9000

If company’s WACC is 13%, find NPV, IRR, Payback and discount payback for each project. If the projects are mutually exclusive what is your recommendation to the company.(show working please)

You buy a 12-year 5 percent annual coupon bond at par value, $1,000. You sell the bond three years later for $1,200. What is your rate of return over this three-year period?

1. You are considering the bonds of Epsilon, Inc., a printer manufacturer. The bonds make semiannual payments and have five years to maturity, a coupon rate of 7%, and a redemption value of $1,000.

A. Determine the intrinsic value of these bonds assuming that your required rate of return is 10% (use the PV function.) B. Also determine the current yield and the yield to call (use the RATE function) if the bonds can be called in four years with a call premium of 2%.

(This needs to be done in Excel)

You invest $2,000 in a certificate of deposit that matures after eight years and pays 5 percent interest, which is compounded annually until the certificate matures. Round your answers to the nearest dollar. a.How much interest will you earn if the interest is left to accumulate? b. How much interest will you earn if the interest is withdrawn each year?

35) The margin requirement on a stock purchase is 25%. You fully use the margin allowed to purchase 100 shares of MSFT at $25. If the price drops to $22, what is your percentage loss?

A) 9%

B) 15%

C) 48%

D) 57%

E) 60%

36) You short-sell 200 shares of Rock Creek Fly Fishing Co., now selling for $50 per share. If you want to limit your loss to $2,500, you should place a stop-buy order at ____.

A) $37

B) $62.50

C) $56.25

D) $59.75

E) $65.25

37) An investor buys $8,000 worth of a stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. In 1 year the investor has interest payable and gets a margin call. At the time of the margin call the stock's price must have been ____.

A) $20

B) $29.77

C) $30.29

D) $32.45

E) $35.50

38) Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year and with $250 million in assets and 11 million shares at the end of the year. During the year investors have received income distributions of $2 per share and capital gain distributions of $.25 per share. Assuming that the fund carries no debt, and that the total expense ratio is 1%, what is the rate of return on the fund?

A) 11.19%

B) 23.75%

C) 24.64%

D) 25.20%

E) The answer cannot be determined from the information given.

39) Suppose you pay $9,700 for a $10,000 par Treasury bill maturing in 3 months. What is the holding-period return for this investment?

A) 3.01%

B) 3.09%

C) 12.42%

D) 16.71%

E) 17.50%

1(a). Company ABC has the following audited balance sheet amounts (under appropriate accounting rules):

Bank Loan (Floating rate = prime rate) = $100,000,000

Bonds (7% coupon, 10 years to maturity) = $2,000,000,000

Class A Common Stock (100,000,000 shares outstanding) = $1,000,000,000

Class B Common Stock (200,000,000 shares outstanding) = $2,000,000,000

If the YTM (yield to maturity) on the bonds is 6%, the stock price for Class A=$50 per share and for Class B = $50 per share, the beta of the company is 1.3, the risk-free rate is 2% and E(Rm) =9%, calculate the WACC.

(b) Using the numbers in (a), if the company issues $2,000,000,000 (market value) in 6% 20 year bonds to fund a new project, what is the new WACC?

(c) After issuing the debt in part (b), if the company’s new project is a failure and the company is now close to bankruptcy, what is the WACC if the stock price falls to $10 and the YTM is 10%? (Note: you have to calculate the new equity beta with the revised capital structure)

Post your thoughts and personal experience with Time Value of Money. expand with further examples of Time Value of Money in a real life. Indicate how this can apply to corporate finance. 

How will understanding finance and making correct financial decisions contribute to your general quality of life? What are parallels between how a successful business manages its money and how you manage yours?