Questions
What will you still owe after the 13th year of a 15-year, $450,000 mortgage at 4.35%...

What will you still owe after the 13th year of a 15-year, $450,000 mortgage at 4.35% APR if you only make the minimum monthly payments?

A. $77,826

B. $114,827

C. $791,338

D. $78,201

Please work out the problem!

In: Finance

Management of Kevin Hall, a confectioner, is considering purchasing a new jelly bean-making machine at a...

Management of Kevin Hall, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $290,200. They project that the cash flows from this investment will be $110,820 for the next seven years. If the appropriate discount rate is 14 percent, what is the IRR that Kevin Hall management can expect on this project? (Do not round discount factors. Round other intermediate calculations to 0 decimal places e.g. 15 and final answer to 2 decimal places, e.g. 5.25%.)

IRR is ----------

enter the IRR in percentages rounded to 2 decimal places

In: Finance

Consider a project to supply Detroit with 27,000 tons of machine screws annually for automobile production....

Consider a project to supply Detroit with 27,000 tons of machine screws annually for automobile production. You will need an initial $5,000,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,200,000 and that variable costs should be $225 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $575,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $332 per ton. The engineering department estimates you will need an initial net working capital investment of $480,000. You require a return of 11 percent and face a tax rate of 22 percent on this project. Calculate the accounting, cash, and financial break-even quantities

In: Finance

​Covan, Inc. is expected to have the following free cash​ flow: Year 1 2 3 4...

​Covan, Inc. is expected to have the following free cash​ flow:

Year

1

2

3

4

times times times•••

FCF

10

12

13

14

Grow by 5%per year

a. Covan has 8 million shares​ outstanding, ​$3 million in excess​ cash, and it has no debt. If its cost of capital is 13%​, what should be its stock​ price? (round to nearest cent)

b. Covan adds its FCF to​ cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year​ 2, what is its expected​ price? (round to nearest cent)

c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year​ 2? (round to one decimal place)

In: Finance

Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll...

Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl frequently run out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high.

Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,300 per month, and the rent is $3,000 per month. In addition, she must make a tax payment of $11,000 in December. The current cash on hand (on December 1) is $700, but Koehl has agreed to maintain an average bank balance of $4,000 - this is her target cash balance. (Disregard the amount in the cash register, which is insignificant because Koehl keeps only a small amount on hand in order to lessen the chances of robbery.)

The estimated sales and purchases for December, January, and February are shown below. Purchases during November amounted to $100,000.

Sales Purchases
December $180,000 $35,000
January 30,000 35,000
February 50,000 35,000
  1. Prepare a cash budget for December, January, and February.
    I. Collections and Purchases:
    December
    January
    February
    Sales $ $ $
    Purchases $ $ $
    Payments for purchases $ $ $
    Salaries $ $ $
    Rent $ $ $
    Taxes $   --- ---
    Total payments $ $ $
    Cash at start of forecast $ --- ---
    Net cash flow $ $ $
    Cumulative NCF $ $ $
    Target cash balance $ $ $
    Surplus cash or loans needed $ $ $

  2. Suppose Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. All customers accept these terms, and all other facts in the problem are unchanged. What would the company's loan requirements be at the end of December in this case? (Hint: The calculations required to answer this part are minimal.)
    $

In: Finance

Suppose that you work for a U.S. senator who is contemplating writing a bill that would...

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:

(c1p8) Year Retail Store Sales
1 $ 1,225
2 1,285
3 1,359
4 1,392
5 1,443
6 1,474
7 1,467
  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)

In: Finance

Find and describe five (5) stocks or bonds from Caribbean based companies. For example you may...

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.

In: Finance

The adjacent table contains the details of four bonds currently traded in the market. Using this...

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.

Maturity

Price

Coupon

1

$   97.29

4.00%

2

$   93.41

3.50%

3

$   94.00

5.00%

4

$   96.65

6.50%

In: Finance

Lourdes Corporation's 15% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years,...

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. ?

In: Finance

Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of...

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

In: Finance

Ethics risk management is a key aspect of any business. Branch managers were able to manipulate...

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)?

In: Finance

A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure...

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.

In: Finance

Kokomochi is considering the launch of an advertising campaign for its latest dessert​ product, the Mini...

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.)

Incremental Earnings Forecast

Year 1

Sales of Mini Mochi Munch

$

Other Sales

$

1600000

Cost of Goods Sold

$

Gross Profit

$

Selling, General, and Admin. Expenses

$

6400000

Depreciation

0

EBIT

$

Income tax at 35%

$

Unlevered Net Income

$

Year 2 :

In: Finance

Bodie Bonds is making his retirement plans. He currently has savings of $125,000. He hopes to...

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%.

Question

Answer

What is the amount required in the retirement fund on the day Bodie retires? [Hint: calculate PV of expenses, the form of this stream of expenses is that of a growing annuity]

What is the amount of savings required each year during Bodie’s working life (assume that each year’s savings is the same)?

[Please show your work on this page.]

In: Finance

How much would you have to invest today to receive a. $15,000 in 8 years at...

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?

In: Finance