Suppose that you work for a U.S. senator who is contemplating writing a bill that would put a national sales tax in place. Because the tax would be levied on the sales revenue of retail stores, the senator has asked you to prepare a forecast of retail store sales for year 8, based on data from year 1 through year 7. The data are:

1. Use the naive forecasting model presented in this chapter to prepare a forecast of retail store sales for each year from 2 through 8.

2. Prepare a time-series graph of the actual and forecast values of retail store sales for the entire period. (You will not have a forecast for year 1 or an actual value for year 8.)

3. Calculate the MAPE for your forecast series using the values for year 2 through year 7. (please show how to plug in Excel)

Find and describe five (5) stocks or bonds from Caribbean based companies. For example you may pick 2 stocks and 3 bonds, you decide. Be sure to quote the latest stated price.

The adjacent table contains the details of four bonds currently traded in the market. Using this information calculate the no arbitrage price of a 3 year 8% annual coupon bond.

Lourdes Corporation's 15% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years, are callable 4 years from today at $1,075. They sell at a price of $1,359.25, and the yield curve is flat. Assume that interest rates are expected to remain at their current level.

1. What is the best estimate of these bonds' remaining life? Round your answer to the nearest whole number.

     years

2. If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?
   1. Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTC.
   2. Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTM.
   3. Since Lourdes wishes to issue new bonds at par value, the coupon rate should be set the same as that on the existing bonds.
   4. Since Lourdes wishes to issue new bonds at par value, the coupon rate should be set the same as the current yield on the existing bonds.
   5. Since interest rates have risen since the bond was first issued, the coupon rate should be set at a rate above the current coupon rate.

   select correcthe t number. ?

Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? What if rates suddenly fall by 2 percent instead? What does this problem tell you about the interest rate risk of lower-coupon bonds?" PLEASE show how to solve using a calculator not excel

Ethics risk management is a key aspect of any business. Branch managers were able to manipulate the system for personal gain. Do you think there is a stronger or weaker response to unethical actions like these today?  

Does it differ by audience (consumers, employees, managers, executives, government)?

A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.55 million per year for 20 years. Plan B requires a $13 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.91 million per year for 20 years. The firm's WACC is 9%.

1. Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55.

   Plan A: $   million

   Plan B: $   million

   Calculate each project's IRR. Round your answer to two decimal places.

   Plan A: %

   Plan B: %

2. By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent.

   %

3. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.

   %

4. Why is NPV better than IRR for making capital budgeting decisions that add to shareholder value? The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Kokomochi is considering the launch of an advertising campaign for its latest dessert​ product, the Mini Mochi Munch. Kokomochi plans to spend

$ 6.4$6.4

million on​ TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by

$ 8.8$8.8

million this year and

$ 6.8$6.8

million next year. In​ addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try​ Kokomochi's other products. As a​ result, sales of other products are expected to rise by

$ 1.6$1.6

million each year.​Kokomochi's gross profit margin for the Mini Mochi Munch is

33 %33%​,

and its gross profit margin averages

22 %22%

for all other products. The​ company's marginal corporate tax rate is

35 %35%

both this year and next year. What are the incremental earnings associated with the advertising​ campaign?

Complete the table​ below:  ​(Round to the nearest​ dollar.)

Year 2 :

Bodie Bonds is making his retirement plans. He currently has savings of $125,000. He hopes to retire in 15 years. His retirement expenses are expected to be $60,000 during the first year of retirement; Bodie expects these expenses to grow by 2% a year to keep up with inflation. Bodie wishes to provide for 30 years of retirement. Assume that all cash flows arise at year end (not year beginning) and that the rate of return (interest rate or discount rate) is 6%.

[Please show your work on this page.]

How much would you have to invest today to receive a. $15,000 in 8 years at 6 percent? b. $20,000 in 12 years at 8 percent? c. $6,000 each year for 5 years at 10 percent? d. $50,000 each year for 20 years at 12 percent?

JRN Inc. is expected to have a high growth rate in the next 3 years so its dividends are expected to grow at 20% per year in the next 3 years. After that dividends are expected to grow at a stable 5% per year forever. Its most recent dividend was $3 per share and its equity cost of capital is 12%. What is the stock's intrinsic value per share?

Answers:

A) $65.70

B) $71.20

C) $56.30

D) $63.20

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of risky funds is as follows:

The correlation between the fund returns is 0.10.

What is the Sharpe ratio of the best feasible CAL? (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a franchise agreement, Monitor receives $750,000 in exchange for satisfying the following separate performance obligations: (1) franchisees have a five-year right to operate as a Monitor Muffler retail establishment in an exclusive sales territory, (2) franchisees receive initial training and certification as a Monitor Mechanic, and (3) franchisees receive a Monitor Muffler building and necessary equipment. The stand-alone selling price of the initial training and certification is $18,000, and $570,000 for the building and equipment. Monitor estimates the stand-alone selling price of the five-year right to operate as a Monitor Muffler establishment using the residual approach. Monitor received $90,000 on July 1, 2018, from Perkins and accepted a note receivable for the rest of the franchise price. Monitor will construct and equip Perkins’ building and train and certify Perkins by September 1, and Perkins’ five-year right to operate as a Monitor Muffler establishment will commence on September 1 as well. Required: 1. What amount would Monitor calculate as the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment? 2. What journal entry would Monitor record on July 1, 2018, to reflect the sale of a franchise to Dan Perkins? 3. How much revenue would Monitor recognize in the year ended December 31, 2018, with respect to its franchise arrangement with Perkins? (Ignore any interest on the note receivable.)

Consider a project with free cash flows in one year of ​$ 146,335 or ​$ 179,830 with each outcome being equally likely. The initial investment required for the project is ​$92,400​, and the​ project's cost of capital is 20%. The​ risk-free interest rate is 7%.

a. What is the NPV of this​ project?

b. Suppose that to raise the funds for the initial​ investment, the project is sold to investors as an​ all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this way long dash —that ​is, what is the initial market value of the unlevered​ equity?  

c. Suppose the initial ​$92,400 is instead raised by borrowing at the​ risk-free interest rate. What are the cash flows of the levered​ equity, what is its initial value and what is the initial equity according to​ MM?

You want to finance a car and Mango Bank offers you a 5% annual interest rate, and you have to pay $225 at the end of each month. Banana Bank offers you the same rate, but you have to pay $225 at the beginning of the month, in addition you have a final payment of $50. The period is five years (60 months) in both cases. What is the present value of either option, which option is better?