Bill Clinton reportedly was paid $ 15.0 million to write his book My Life. The book took three years to write. In the time he spent​ writing, Clinton could have been paid to make speeches. Given his​ popularity, assume that he could earn $ 8.5 million per year​ (paid at the end of the​ year) speaking instead of writing. Assume his cost of capital is 9.3 % per year. a. What is the NPV of agreeing to write the book​ (ignoring any royalty​ payments)? b. Assume​ that, once the book is​ finished, it is expected to generate royalties of $ 4.8 million in the first year​ (paid at the end of the​ year) and these royalties are expected to decrease at rate of 30 % per year in perpetuity. What is the NPV of the book with the royalty​ payments?

Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $775,000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life (ignore the half-year convention for the straight-line method). The applicable MACRS depreciation rates are 33%, 45%, 15%, and 7%. The company's WACC is 12%, and its tax rate is 30%.

1. What would the depreciation expense be each year under each method? Round your answers to the nearest cent.
   

   Year	Scenario 1 (Straight-Line)	Scenario 2 (MACRS)
   1	$	$
   2
   3
   4

2. Which depreciation method would produce the higher NPV?
   -Select-Straight-LineMACRSItem 9
   
   How much higher would the NPV be under the preferred method? Round your answer to two decimal places. Do not round your intermediate calculations.

Describe why would some companies consider global branding while other companies prefer to have local brands

Grupo​ Bimbo, headquartered in Mexico​ City, is one of the largest bakery companies in the world. On January​ 1st, when the spot exchange rate is Ps 10.83 divided by $​, the company borrows $25.1 million from a New York bank for one year at 6.77 % interest​ (Mexican banks had quoted 9.62 % for an equivalent loan in​ pesos). During that​ year, U.S. inflation is 2.2 % and Mexican inflation is 4.7 %. At the end of the year the firm repays the dollar loan.

a. If Bimbo expected the spot rate at the end of one year to be equal to purchasing power​ parity, what would be the cost to Bimbo of its dollar loan in​ peso-denominated interest?

b. What is the real interest cost​ (adjusted for​ inflation) to​ Bimbo, in​ peso-denominated terms, of borrowing the dollars for one​ year, again assuming purchasing power​ parity?

c. If the actual spot rate at the end of the year turned out to be Ps 9.66 divided by $​, what was the actual​ peso-denominated interest cost of the​ loan?

Stock A: E (R) = 9%, STD DEVIATION =36%

Stock B : E (R) = 15%, STD DEVIATION =62%

1. Calculate the expected return of a portfolio that is composed of 35% of a stock A and 65% of stock B

2. calculate the std deviation of this portfolio when the correlation coefficient between the returns is 0.5

3. calculate the std deviation of this portfolio same weights in each stock when the correlation coefficient is now -0.5

4. how did the changes in the correlation between the returns on A and B affect the std deviation of the portfolio?

A 5-year Treasury bond has a 4.75% yield. A 10-year Treasury bond yields 6.05%, and a 10-year corporate bond yields 9.45%. The market expects that inflation will average 2.25% over the next 10 years (IP₁₀ = 2.25%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Open spreadsheet

What is the yield on this 5-year corporate bond? Round your answer to two decimal places.

_____%

  Calculate the value of each of the bonds shown in the following​ table, all of which pay interest semiannually.

Bond   Par Value   Coupon interest rate   Year to maturity   Required stated annual return
A   500   7%   8   9%
B   1,000   12   20   14
C   500   16   5   13

The value of bond A is

The value of bond B is

The value of bond C is

how do i figure yield on the following 3-year bond 2 years, 2 yr bond 3 years, 4 yr bond 3yrs and 5-year bond 2 years forward using this information? Please, may I have the answers and how to input them into excel to achieve the correct answer? I have tried a few ways that I thought the professor said to do and they are not yielding any results. Thank You

Maturity Yield

1 yr 2.0 %

2 Yr 2.20 %

3yr 3.40 %

4 yr 4.50%

5yr 5.00 %

6yr 5.0%

7 yr 5.20 %

8 yr 5.40

9 yr 5.50 %

10 5.50%

REPLACEMENT ANALYSIS

The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $550,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to another firm in the industry for $265,000. The old machine is being depreciated by $110,000 per year, using the straight-line method.

The new machine has a purchase price of $1,100,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $120,000. The applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. It is expected to economize on electric power usage, labor, and repair costs, as well as to reduce the number of defective bottles. In total, an annual savings of $250,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 12% WACC.

1. What initial cash outlay is required for the new machine? Round your answer to the nearest dollar. Negative amount should be indicated by a minus sign.
   $
   
2. Calculate the annual depreciation allowances for both machines and compute the change in the annual depreciation expense if the replacement is made. Round your answers to the nearest dollar.

   Year	Depreciation Allowance, New	Depreciation Allowance, Old	Change in Depreciation
   1	$	$	$
   2
   3
   4
   5

3. What are the incremental net cash flows in Years 1 through 5? Round your answers to the nearest dollar.

   Year 1	Year 2	Year 3	Year 4	Year 5
   $	$	$	$	$

4. Should the firm purchase the new machine?
   -Select-YesNoItem 22
   
   Support your answer. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   
5. In general, how would each of the following factors affect the investment decision, and how should each be treated?
   1. The expected life of the existing machine decreases.

   The input in the box below will not be graded, but may be reviewed and considered by your instructor.

   2. The WACC is not constant, but is increasing as Bigbee adds more projects into its capital budget for the year.

   The input in the box below will not be graded, but may be reviewed and considered by your instructor.

A) Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 40%, and a 9% cost of capital is appropriate for the project.

Calculate the project's NPV. Round your answer to the nearest dollar. $ 25890

Calculate the project's IRR. Round your answer to two decimal places. 11.64 %

Calculate the project's MIRR. Round your answer to two decimal places. 10.43 %

Calculate the project's payback. Round your answer to two decimal places.

B) Assume management is unsure about the $110,000 cost savings - this figure could deviate by as much as plus or minus 20%. Calculate the NPV if cost savings value deviate by plus 20%. Round your answer to the nearest dollar. $

Calculate the NPV if cost savings value deviate by minus 20%. Round your answer to the nearest dollar. $

C) Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the working capital (WC) requirement. She asks you to use the following probabilities and values in the scenario analysis: Scenario Probability Cost Savings Salvage Value WC Worst case 0.30 $ 88,000 $28,000 $40,000 Base case 0.40 110,000 33,000 35,000 Best case 0.30 132,000 38,000 30,000

Calculate the project's expected NPV. Round your answer to the nearest dollar. $

Calculate the project's standard deviation. Round your answer to the nearest dollar. $

Calculate the project's coefficient of variation. Round your answer to two decimal places.

Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 8.5%; and the yield to maturity is 7%. What is the bond's current market price? Round your answer to the nearest cent.

Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12–11 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $275,000, and it will produce earnings before depreciation and taxes of $90,000 per year for three years, and then $44,000 a year for seven more years. The firm has a tax rate of 35 percent. Assume the cost of capital is 13 percent. In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for depreciation. Use Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Calculate the net present value. (Do not round intermediate calculations and round your answer to 2 decimal places.)

b. Based on the net present value, should Universal Electronics purchase the asset? Yes No

4. Now with $150,000 bonus that will be saved today, Michelle will then make 4 additional equal payments each year from 2019 to 2022 to end up with $150,000 at the end of 2022. If Citi Bank still pays 3.5% interest annual, how large must each payment be?

5. Assume after 5 years, Michelle will be 40 years old and will have $200,000 in her saving account, and she is planning to retire at 65 years old and she will need $1,200,000 at retirement. What annual interest rate must she earn to reach her goal, assuming each year she will only save $20,000.