Masterson, INC., has 7 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value os $140 million, has a coupon rate of 6 percent, and sells for 94 percent of par. The second issue has a face value of $125 million, has a coupon rate of 5 percent, and sells for 105 percent of par. The first issue matures in 25 years, the second in 8 years. Both bonds make semiannual coupon payments.

a. What are the company's capital structure weights on a book value basis?

b.What are the company's capital structure weights on a market value basis?

c.Which are more relevant, the book or market value weights?

Kingston Corp. is considering a new machine that requires an initial investment of $550,000 installed, and has a useful life of 8 years. The expected annual after-tax cash flows for the machine are $89,000 during the first three years, $95,000 during years 4 through 6 and $105,000 during the last two years.

(1) Develop the timeline.

(2) Calculate the internal rate of return (IRR).

(3) Calculate the net present value (NPV) at the following required rates of return: a. 3%, b. 4%, c. 8%, d. 9%.

(4) Using IRR and NPV criterion, comment if the project should be accepted or rejected at each of the required rates of return in question (3).

(5) Plot the net present value (NPV) profile with NPV on the Y-axis, and rates of return on the X-axis.

Guardian Inc. is trying to develop an asset-financing plan. The firm has $490,000 in temporary current assets and $390,000 in permanent current assets. Guardian also has $590,000 in fixed assets. Assume a tax rate of 30 percent.

a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 70 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest rate is 12 percent on long-term funds and 8 percent on short-term financing. Compute the annual interest payments under each plan.
  

b. Given that Guardian’s earnings before interest and taxes are $370,000, calculate earnings after taxes for each of your alternatives.
  

c. What would the annual interest and earnings after taxes for the conservative and aggressive strategies be if the short-term and long-term interest rates were reversed?
  

discuss the concepts of liquidity, solvency and DSO's as they pertain to cash-flows and the overall health of a business.

PLEASE SOLVE ONLY USING EXCEL

Samuel agreed to pay $550,000 for a house. He made a $125,000 down payment and financed the balance using a 30-year, 6 % per annum compounded monthly conventional loan.

a) How much were his monthly payments? b) If he sold the house for $750,000 after 5 years, how much equity did he have in the house? c) How much is his contribution to his loan (Principal and Interest)?

Suppose that the daily simple returns of a stock in one week were -0.4%, 0.8%, 1.3%, -1.5%, and 0.9%. What are the corresponding daily log returns? What is the weekly simple return of the stock?

Please refer to the information for Celebrity Auto Parts above. What was Celebrity’s EVA in 2017?

Multiple Choice

• −$30 million

• −$360 million

• $765 million

• −$135 million

• None of the options are correct.

Elliot Karlin is a​ 35-year-old bank executive who has just inherited a large sum of money. Having spent several years in the​ bank's investments​ department, he's well aware of the concept of duration and decides to apply it to his bond portfolio. In​ particular, Elliot intends to use $ 1 million of his inheritance to purchase 4 U.S. Treasury​ bonds:

1. An 8.59 %​, ​13-year bond​ that's priced at $ 1,092.14 to yield 7.47 %.

2. A 7.784 %​, ​15-year bond​ that's priced at $ 1023.51 to yield 7.52 %.

3. A​ 20-year stripped Treasury​ (zero coupon)​ that's priced at $ 197.76 to yield 8.27 %.

4. A​ 24-year, 7.49 % bond​ that's priced at $ 965.54 to yield 7.81 %. Note that these bonds are semiannual compounding bonds.

a. Find the duration and the modified duration of each bond.

b. Find the duration of the whole bond portfolio if Elliot puts $ 250,000 into each of the 4 U.S. Treasury bonds.

c. Find the duration of the portfolio if Elliot puts $ 380,000 each into bonds 1 and 3 and $ 120,000 each into bonds 2 and 4.

d. Which portfolio - b or c - should Elliot select if he thinks rates are about to head up and he wants to avoid as much price volatility as​ possible? Explain. From which portfolio does he stand to make more in annual interest​ income? Which portfolio would you​ recommend, and​ why? The duration and modified duration can be calculated using a​ spreadsheet, such as Excel. It gives the precise duration measure because it avoids the​ rounding-off errors, which are inevitable with manual calculations.

Bond​ 1: 13​ years, 8.59 %​, priced to yield 7.47 %.

The duration of this bond is ____ years.  ​

The modified duration of this bond is ____ years.  

Bond​ 2: 15​ years, 7.784 % priced to yield 7.52 %.

The duration of this bond is ____ years. 

The modified duration of this bond is ____ years.  

Bond​ 3: 20​ years, zero​ coupon, priced to yield 8.27 %.

The duration of this bond is ____ years.  

The modified duration of this bond is ____ years.  

Bond​ 4: 24​ years, 7.49 %​, priced to yield 7.81 %.

The duration of this bond is ____ years.  ​

The modified duration of this bond is _____ years.  ​

b. Find the duration of the whole bond portfolio if Elliot puts $ 250,000 into each of the 4 U.S. Treasury bonds.

The duration of this portfolio is ____ years.  

c. Find the duration of the portfolio if Elliot puts $ 380,000 each into bonds 1 and 3 and $ 120,000 each into bonds 2 and 4.

The duration of this portfolio is ____ years.  ​

d. Which portfolio - the portfolio in part b or the portfolio in part c - should Elliot select if he thinks rates are about to head up and he wants to avoid as much price volatility as​ possible?  ​(Choose the best answer​ below.)

A. He should invest in the portfolio in part b. The portfolio in part c has a higher duration than the portfolio in part b. If rates are about to​ rise, then it is safer to invest in the portfolio in part b​, because it would be less price volatile than the other portfolio.

B. He should invest in either portfolio. The portfolio in part c has a higher duration than the portfolio part b. If rates are about to​ rise, then it is equally safe to invest in either​ portfolio, because both portfolios would be equally price volatile.

C. He should invest in the portfolio in part c. The portfolio in part b has a higher duration than the portfolio in part c. If rates are about to​ rise, then it is safer to invest in the portfolio in part c​, because it would be less price volatile than the other portfolio.

D. He should invest in the portfolio in part c. The portfolio in part c has a higher duration than the portfolio in part b. If rates are about to​ rise, then it is riskier to invest in the portfolio in part b​, because it would be more price volatile than the other portfolio.

Please explain how to calculate in excel....

A = Annual

1. Compute the continuously compounded yields of these five bonds.
2. Compute the continuously compounded zero rates for maturities of 1,2,3,4, and 5 years.

1) Explain what debt investments are investment grade. What rate of return would you expect on investment grade debt versus other non-investment grade debt (and why)?

2) Explain the difference between constant dividend growth and supernatural dividend growth.

1. Why do you think investors want to own stocks instead of bonds, besides the opportunities to earn superior returns? Write 100 words.

2. What preference do you have regarding owning stocks vs. bonds? Why do you have that preference? Write 100 words.

3. How many different stocks and or bonds do you own? Do you have a diversified portfolio? Write 100 words.

Please write in your own words. Please write appropriate answers and don't copy them from anywhere. Thank you!

You have estimated that the annual expected return on Apple stock is 15% and that Apple’s standard deviation is 20%. The Treasury bill rate is 1%. You are considering an asset allocation between T-bills and Apple stock and given your risk preferences and investment objectives, you seek to establish a portfolio with an expected return of 8%.

27. In relation to the problem above, what proportion of your portfolio should you allocate to Apple stock (rounding to the nearest whole percent)?

a. 20%

b. 40%

c. 50%

d. none of the above.

28. In relation to the problem above, what will be the variance on your portfolio?

(a) 0.01

(b) 0.04

(c) 0.08

(d) 0.1

(e) 0.15

Complete b-e and show explanations

You are looking to purchase a $10,000 bond issued by Mexico in USD. It pays $500 annually and matures exactly 10 years from now.

A) What is Mexico’s current long term foreign currency credit rating by S&P? AA-

B) How much would you pay for this bond?

C) What rate did you use to make the calculation?

D) Why did you choose the rate?

bond valuation assume the following information for an existing bong that provides annual coupon payments: par value= $1,000 coupon rate= 11% maturity= 4 years required rate of return by investors= 11% a). what is the present value of the bond? b). if the required rate of return by investors were 14 percent instead of 11 percent, what would be the present value of the bond? c). if the required rate of return by investors were 9 percent, what would be the present value of the bond?