assume the Canadian dollar spot rate is 1.18c$/us$, the swiss spot rate is 1.29CHF/us$ and the market cross rate is 1.11 chf/c$ a. calculate the implied cross-rate of CHF/c$ b calculate the triangular arbitrage profit, assume you have us$1000 to work with

Junk bonds: JC Penney has a CCC- rated corporate bond outstanding. There are 4 years remaining to maturity. The bond has a 5.75% coupon and closed at 85.372. Find the bond’s yield to maturity.

PRESENT VALUE OF AN ANNUITY

Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.

1. $600 per year for 16 years at 12%.

   $  

2. $300 per year for 8 years at 6%.

   $  

3. $900 per year for 16 years at 0%.

   $  

   Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.

4. $600 per year for 16 years at 12%.

   $  

5. $300 per year for 8 years at 6%.

   $  

6. $900 per year for 16 years at 0%.

   $  

The most recently issued 4-week T-Bill is quoted at a discount of 1.91.

a. What is the price of this T-Bill?

b. What is the bond-equivalent yield? Assume 4 weeks is 30 days, and the par value is $10,000. Express your answers rounded to two decimal places.

Thurston Petroleum is considering a new project that complements its existing business. The machine required for the project costs $4.8 million. The marketing department predicts that sales related to the project will be $2.83 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated to zero over its 4-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 30 percent of sales. The company also needs to add net working capital of $220,000 immediately. The additional net working capital will be recovered in full at the end of the project’s life. The tax rate is 24 percent and the required return for the project is 11 percent.

Exhibit 10.1

Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below.

Assets

Current assets $38,000,000 Net plant, property, and equipment $101,000,000 Total assets $139,000,000 Liabilities and Equity Accounts payable $10,000,000 Accruals $9,000,000 Current liabilities $19,000,000 Long-term debt (40,000 bonds, $1,000 par value) $40,000,000 Total liabilities $59,000,000 Common stock (10,000,000 shares) $30,000,000 Retained earnings $50,000,000 Total shareholders' equity $80,000,000 Total liabilities and shareholders' equity $139,000,000

The stock is currently selling for $15.25 per share, and its noncallable $1,000.00 par value, 20-year, 9.00% bonds with semiannual payments are selling for $930.41. The beta is 1.22, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 25%. Refer to Exhibit 10.1. What is the best estimate of the after-tax cost of debt?

a. 5.59% b. 7.35% c. 6.17% d. 5.23% e. 6.48%

Below are the closing values and daily return on the S&P 500 for the last ten days. What are the daily and annualized standard deviations? You may use excel for this problem. Enter your answers as percent rounded to two decimal places.

What is the duration of an 8% annual coupon bond with a par value of $1000 that matures in 3 years? YTM on alternative investments is 10 %

You bought a TV for $900 and charged it to your credit card with 22% APR. You will be diligent in spending monthly payments in an amount that would retire the card balance in exactly 5 years. After 3 years of payments you refinance the remaining balance to a new card with 12% APR. After 3 years you can afford a high monthly payment of $40.

A) what is the balance that will get transferred to the new card after 3 years?

B) How many months will it take to puff of credit card balance with the new $40 payment assuming no other purchases?

Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid shaped. They sell 8,750 cupid shaped boxes for $18.75 and 10,000 heart shaped boxes for $15.00 each. Cupid Company has $18,000 of fixed costs (non-plant). Both boxes currently have an extremely manual manufacturing process. The cupid shaped box costs $7.50 each to make, comprised of $1.50 in variable overhead, $2.10 in direct materials, direct labor cost $8.15 per hour and it takes employees 28.72 minutes per box. The heart shaped box costs $6.00 each to make, comprised of $1.50 in variable overhead, $1.58 in direct materials, $8.15 per hour for direct labor; it takes employees 21.5 minutes per box.

One of the employees, Venus, proposed a cost savings plan. Her plan was to purchase a new chocolate picking machine, which would cut direct labor by 40%. The machine costs $785,000 and would last the company 6 years with a $20,000 salvage value. They would be able to sell the machine at the end of six years for $35,000.

Venus was discussing her plan with a co-worker, Aphrodite. Aphrodite believed that sales were currently constrained by available space and labor. She believed that in addition to reducing labor costs, Cupid Company would also be able to increase sales of each style by 5%. Additionally, she proposed a new product be offered; chocolate flower bouquets. The company would be able to see 3,200 units at $30 each. The cost would be $10.50 per bouquet, comprised of $1.50 in variable overhead, $7.00 in direct materials, $8.15 per hour for direct labor and it takes employees 14.73 minutes per bouquet. Additionally, fixed costs would increase by $5,000.

Cupid Company's desired rate of return is 15%, has a 30% tax rate and they use straight-line depreciation for all plant assets. All numbers provided are pre-tax.

For Venus' proposal show the annual cash flows and the NPV of the project. (On Excel Sheeet please)

1. ) Suppose a stock had an initial price of $37 per share, paid a dividend of $0.3 per share during the year, and had an ending share price of $50. Compute the percentage total return. Enter the answer in 4 decimals.

2. ) Calculate the arithmetic average of the following returns.

Year Return

1 0.18

2 0.08

3   0.11

4   -0.05

5 0.3

Enter the answer with 4 decimals.

3.) Calculate the standard deviation of the following returns.

Year Return

1 -0.18

2 -0.06

3   -0.09

4   0.21

5 0.08

Enter the answer with 4 decimals.

4. ) Calculate the variance of the following returns.

Year Return

1 -0.16

2 0.08

3   -0.08

4   0.14

5 -0.02

Enter the answer with 4 decimals.

One of the more difficult issues in the discussion between the entrepreneur and Venture Capital firm is the topic of Control. How are you going to advise your friend on a potential demand coming from the Venture Capital Fund on investing in the firm only upon gaining control in the company?