Forward versus Money Market Hedge on Receivables. Assume the following information:

180‑day U.S. interest rate = 0.08

180‑day British interest rate = 0.10

180‑day forward rate of British pound = $1.42

Spot rate of British pound = $1.48

Assume that Banc Corp. from the United States will receive 421,000 pounds in 180 days. How much more (or less) would the firm receive in 180 days if it uses a forward hedge instead of a money market hedge?

Questions 1 - 6 are based on the following information: B A US multinational corporation has operations in Bolivia through which it plans to sell a new product of 500,000 cans of beans per year for the next 3 years, at a price of BOB 4 per can after incurring a variable cost of BOB 2.50 per can. The company will also incur a fixed cost of $120,000 per year. The company has invested $900,000 today in manufacturing equipment for its Bolivian operations, which will be depreciated to $0 at the end of its 3-year life. The corporation's required rate of return is 20 % and has a tax rate of 25 %. The spot rate was BOB 6.91/$ before it unexpectedly changed to BOB 7.25/$. 1. What is the value of the Bolivian operations prior to the unexpected change in the spot rate assuming the operations have a 3-year life only? (round to the nearest dollar) A). US$237,699 B). US$166,903 C). US$107,453 D). US$159,076 E). None of the above

"By applying capital investments with long - term benefits, the company is attempting to produce value. This value is dependent on expected future cash flows as well s on the cost of funds". Explain this statement with regards to the role of cost of capital in financial management decisions. The subject is financial management

Compute the Equivalent Annual Cost for the two machines described below. Assume that both do identical jobs, both will be depreciated using the straight line method to zero salvage value, will have zero scrap value at the end of their useful lives. Use a 10% discount rate and a 30% tax rate.

• Machine A
• Useful life 7 years
• Initial cost $70,000
• Annual operating costs $5,000 after-tax

• Machine B
• Useful life 4 years
• Initial cost $30,000
• Annual operating costs $8,000 after-tax

Important::
This is a multiple Answer question. Choose all correct answers.

Group of answer choices

The Equivalent Annual Cost of Machine A is $14,378

The Equivalent Annual Cost of Machine A is $16,378

The Equivalent Annual Cost of Machine A is $19,378

The Equivalent Annual Cost of Machine B is $9,464

The Equivalent Annual Cost of Machine B is $15,214

The Equivalent Annual Cost of Machine B is $17,464

A call option has an exercise price of $30. The stock price is currently $27 and the appropriate interest rate is 6%. The option expires in exactly one year and the sigma (The return variability of underlying asset expressed as a decimal) is 0.50 or 50%.
At expiration the stock underlying the option is selling for $34.00. What do you do? What is your loss or gain?

Group of answer choices

A. Let the option expire unexercised since the $4.00 gain is less than the price we paid for the option.

B. Exercise the option and make a profit of $4.00 ($34.00 - $30.00).

C. Exercise the option and make a profit of between $2.00 and $4.00.

D. Exercise the option and make a profit of between $0.00 and $2.00.

E. Exercise the option and make a loss of between -$2.00 and $0.00.

Olsen Outfitters Inc. believes that its optimal capital structure consists of 50% common equity and 50% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of r_s = 12%. New common stock in an amount up to $8 million would have a cost of r_e = 14%. Furthermore, Olsen can raise up to $3 million of debt at an interest rate of r_d = 11% and an additional $5 million of debt at r_d = 14%. The CFO estimates that a proposed expansion would require an investment of $3.5 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.

Parramore Corp has $17 million of sales, $1 million of inventories, $2 million of receivables, and $1 million of payables. Its cost of goods sold is 70% of sales, and it finances working capital with bank loans at an 8% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.

1. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places.
     days
2. 
   
3. If Parramore could lower its inventories and receivables by 9% each and increase its payables by 9%, all without affecting sales or cost of goods sold, what would be the new CCC? Do not round intermediate calculations. Round your answer to two decimal places.
     days
4. 
   
5. How much cash would be freed up, if Parramore could lower its inventories and receivables by 9% each and increase its payables by 9%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.
   $
6. 
   
7. By how much would pretax profits change, if Parramore could lower its inventories and receivables by 9% each and increase its payables by 9%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.
   $

Gilligan Corporation was established on February 15, Year 1. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 30, Year 1, Gilligan's stockholders' equity accounts report the following balances: Common stock, $6 par, 500,000 shares authorized 55,000 shares issued and outstanding $ 330,000 Paid-in capital in excess of par - Common 440,000 $ 770,000 Retained earnings 1,400,000 Total Stockholders' Equity $ 2,170,000 On December 31, Year 1, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share.

How will the issuance of the stock dividend affect the financial statements?

Unemployment compensation has been a benefit available to most American workers for many decades. This benefit is provided though a combination of State and Federal programs. Funding for these programs comes from taxes paid by businesses on their payrolls. Discussion and debate has been on going regarding the level of benefits that should be paid, the length of time that these benefits should be paid, and the relative ecomomic benefit that the payments ultimately have.

Please comment on unemployment benefits, unemployment taxes and related matters by considering the following questions:

1. If you are aware of situations where the unemployment benefit system has benefited someone, or a situation where it has been abused by someone, please describe the situation. You don't need to use specific names, places or businesses, but give us a general discussion of what you knew to be true.

2. Give your opinion as to why the situtation was either beneficial or abusive. Suggest ways that the system could have worked inorder to catch the people who were taking advantage of the situation.

3. Discuss whether you believe that the taxes paid by businesses are excessive (consider the % required and the level of payroll that is taxed). Do these taxes help encourage or discourage businesses from locating in our state?

Why do banks use swaps to manage their currency exposure in the foreign exchange market

1. You are currently paying $300 in interest on your credit cards annually. If, instead of paying interest, you saved this amount every year, how much would you accumulate in a tax-deferred account earning 7% over the next 10 years?

2.

What is the monthly payment for a $146500 thirty-year mortgage at 5% APR?

Describe the importance of a dividend. What are some of the advantages and disadvantages to the stock holder?