A 30-year loan of 1100 is repaid with payments at the end of each year.

Each of the first fifteen payments equals 155% of the amount of interest due. Each of the last fifteen payments is X.

The lender charges interest at an annual effective rate of 8%. Calculate X

a. 57

b. 65

c. 77

d. 82

e. 46

. Define each of the following types of credit market instruments and identify one common example of each type: (a) simple loan; (b) fixed payment loan; (c) coupon bond; (d) discount bond. (e) Are loans and bonds credit and/or debt instruments? Briefly explain.

Examine the stock market changes in the recent years, especially after the credit crisis in 2007-08. What has happened to the stock market? Do you find the market volatile?

Excel Business & Finance

You are going to contribute some money to your retirement fund at the beginning of this year and each of the next 39 years. You have the following assumptions:
I. Initial balance for year 1 is assumed to be 0. II. Suppose during Year 1, your salary is $40,000 and your salary increases by 5 percent each year until your retirement. III. You want to contribute the same percentage of your salary each year while you are working for your retirement.
IV. When you retire in 40 years, you plan to withdraw $100,000 per year for 20 years (starting year 41) and will not make any contribution to your retirement during the 20 years.
You also Assume the following retirement investment portfolio:
I. First 20 years of your investing, the investments will earn 10 percent per year V. During all other years, your investments will earn 5 percent per year
Part I: Assume all contributions and withdrawals occur at the beginning of the year before investment returns are received, please set up the retirement problem to find out the minimum percentage of your salary you should save for your retirement in order for you to make the withdrawals.
Part II: Assume that withdrawals occur at the end of each year after the investment returns are received and contributions occur at the beginning of each year before the investment returns are received, please set up the retirement problem to find out the minimum percentage of your salary you should save for your retirement in order for you to make the withdrawals.

A project will produce an operating cash flow of $7,300 a year for three years. The initial investment for fixed assets will be $11,600, which will be depreciated straight-line to zero over the asset's 4-year life. Ignore bonus depreciation. The project will require an initial $500 in net working capital plus an additional $500 every year with all net working capital levels restored to their original levels when the project ends. The fixed assets can be sold for an estimated $2,500 at the end of the project, the combined tax rate is 23 percent, and the required rate of return is 12 percent. What is the net present value of the project?

You have just deposited $13,000 into an account that promises to pay you an annual interest rate of 6.9 percent each year for the next 5 years. You will leave the money invested in the account and 15 years from today, you need to have $43,590 in the account. What annual interest rate must you earn over the last 10 years to accomplish this goal?

XYZ used an investment bank to do IPO. In IPO, XYZ sold 1 million shares at $68 each. The investment bank charged 7% spread. At the end of the 1st day of trading, XYZ stock price closed at $80. Calculate the total cost of IPO. That is, what is the sum of direct and indirect cost?

Describe the components of working capital and how firms manage them in at least 200 words

You are considering a stock A that pays a dividend of $1. The beta coefficient of A is 1.3. The risk free return is 6%, while the market average return is 13%.

a.What is the required return for Stock A?

b. If A is selling for $10 a share, is it a good buy if you expect earnings and dividends to grow at 6%?

NEW PROJECT ANALYSIS

You must evaluate a proposal to buy a new milling machine. The base price is $104,000, and shipping and installation costs would add another $20,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $57,200. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $4,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $54,000 per year. The marginal tax rate is 35%, and the WACC is 13%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.

1. How should the $5,000 spent last year be handled?
   1. Only the tax effect of the research expenses should be included in the analysis.
   2. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.
   3. Last year's expenditure is considered as an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
   4. Last year's expenditure is considered as a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
   5. The cost of research is an incremental cash flow and should be included in the analysis.
   
   =______?

2. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent.
   $_____?

3. What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent. Do not round your intermediate calculations.

   Year 1 $____?

   Year 2 $____?

   Year 3 $____?

4. Should the machine be purchased?
   =YES/NO?

NEW PROJECT ANALYSIS

You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $210,000, and it would cost another $31,500 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 $94,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require a $13,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $57,000 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?
   =YES/NO?

Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production. You will need an initial $5,600,000 investment in threading equipment to get the project started; the project will last for 6 years. The accounting department estimates that annual fixed costs will be $600,000 and that variable costs should be $250 per ton. Further, the accounting department will depreciate the initial fixed asset investment straight-line to zero over the 6-year project life and estimate a salvage value of $450,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $340 per ton. The engineering department estimates you will need an initial net working capital investment of $560,000. You require a return of 13 percent and face a marginal tax rate of 24 percent on this project. Suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw requirements. a. What is the sensitivity of the project OCF to changes in the quantity supplied? What about the sensitivity of NPV to changes in quantity supplied? c. Given the sensitivity number you calculated, is there some minimum level of output below which you wouldn’t want to operate? Show step by step

The dividend for Should I, Inc., is currently $1.70 per share. It is expected to grow at 12 percent next year and then decline linearly to a perpetual rate of 3 percent beginning in four years. If you required a return of 16 percent on the stock, what is the most you would pay per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Kevin Hall just received a cash gift from his grandfather. He plans to invest in a five-year bond issued by Wildhorse Corp. that pays an annual coupon rate of 4.5 percent. If the current market rate is 8.50 percent, what is the maximum amount Kevin should be willing to pay for this bond?