Lawrence Industries' most recent annual dividend was $1.22 per share (D0equals$ 1.22), and the firm's required return is 13%. Find the market value of Lawrence's shares when dividends are expected to grow at 10% annually for 3 years, followed by a 6% constant annual growth rate in years 4 to infinity.
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| Stock Fund | Bond Fund | ||
| Scenario | Probability | Rate of Return | Rate of Return |
| Severe recession | 0.05 | −38% | −14% |
| Mild recession | 0.25 | −6% | 10% |
| Normal growth | 0.45 | 16% | 4% |
| Boom | 0.25 | 40% | 4% |
| b. |
Calculate the values of expected return and variance for the stock fund. (Do not round intermediate calculations. Enter "Expected return" value as a percentage rounded to 1 decimal place and "Variance" as decimal number rounded to 4 decimal places.) |
| Expected return | % |
| Variance | |
| c. |
Calculate the value of the covariance between the stock and bond funds. (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a decimal number rounded to 4 decimal places.) |
| Covariance |
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Analyzing Operating Cash Flows (Direct Method)
Lincoln company owns no plant assets and reported the following income statement for the current year:
| Sales | $375,000 | |
| Cost of goods sold | $235,000 | |
| wages expense | 55,000 | |
| rent expense | 21,000 | |
| insurance expense | 7,500 | 318,500 |
| net income | $56,500 |
| End Of Year | Beginning of year | |
| Accounts Receivable | $21,600 | $19,600 |
| Inventory | 24,000 | 26,400 |
| Prepaid insurance | 3,200 | 2,800 |
| Accounts payable | 8,800 | 7,200 |
| Wages Payable | 3,600 | 4,400 |
Calculate the net cash flow from operating activities using the direct method. show a related cash flow for each revenue and expense.
| Cash Received from Customers |
$ 0 |
|
| Cash paid for merchandise purchased | $ 0 | |
| Cash Paid to Employees | 0 | |
| Cash Paid to rent | 21,0000 | |
| Cash Paid for Insurance | 0 | 0 |
| Net Cash Provided by operating Activities | 0 |
Compute its operating cash flow to current liabilities (OCFCL) ratio. (Assume current liabilities consist of accounts payable and wages payable.)
Round answer to two decimal places.
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Bond Value as Maturity Approaches
An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity equal to 8.4%. One bond, Bond C, pays an annual coupon of 11%; the other bond, Bond Z, is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 8.4% over the next 4 years, what will be the price of each of the bonds at the following time periods? Assume time 0 is today. Fill in the following table. Round your answers to the nearest cent.
| t | Price of Bond C | Price of Bond Z |
| 0 | $ | $ |
| 1 | ||
| 2 | ||
| 3 | ||
| 4 |
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Problem 4-16 Future Value for Various Compounding Periods Find the amount to which $400 will grow under each of the following conditions. Round your answer to the nearest cent.
4% compounded annually for 5 years
4% compounded semiannually for 5 years
4% compounded quarterly for 5 years
4% compounded monthly for 5 years $
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Find the present values of the following cash flow streams. The appropriate interest rate is 9%. Round your answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)
| Year | Cash Stream A | Cash Stream B |
| 1 | $100 | $300 |
| 2 | 400 | 400 |
| 3 | 400 | 400 |
| 4 | 400 | 400 |
| 5 | 300 | 100 |
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Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1; that is, they are ordinary annuities. Round your answers to the nearest cent. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.)
ode, press FV, and find the FV of the annuity due.)
Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.
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2.
Refer to Table 10-1, which is based on bonds paying 10 percent
interest for 20 years. Assume interest rates in the market (yield
to maturity) decline from 16 percent to 12 percent.
|
a. What is the bond price at 16 percent?
b. What is the bond price at 12 percent?
|
c. What would be your percentage return on
investment if you bought when rates were 16 percent and sold when
rates were 12 percent? (Do not round intermediate
calculations. Input your answer as a percent rounded to 2 decimal
places.)
|
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You want to buy a car, and a local bank will lend you $30,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 6%, with interest paid monthly.
What is the monthly loan payment?
What is the loan's EFF%?
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We often talk about manufacturing and goods related trade with China. What information can you find on trade in services between the two countries?
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A recent survey examined the use of social media platforms. Suppose the survey found that there is a 0.61 probability that a randomly selected person will use Facebook and a 0.28 probability that a randomly selected person will use LinkedIn. In addition, suppose there is a 0.26 probability that a randomly selected person will use both Facebook and LinkedIn.
(a)
What is the probability that a randomly selected person will use Facebook or LinkedIn?
(b)
What is the probability that a randomly selected person will not use either social media platform?
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Find the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.)
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What is the primary difference between the responsibility of a private corporation to its shareholders versus a publicly traded corporation? Explain with examples.
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Q2. A high profit margin firm, like Coke requires fewer unit sales, why?
Q3 If a profit appears for some reason under perfect competition, what happens to profit?
Q4. if the imperfect competition power is completely lost, then zero profit would return…then profit is not sustainable..example of firm that this happened to?___.
Answer all the questions, i will give u a thumb!
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