​Pybus, Inc. is considering issuing bonds that will mature in 25 years with an annual coupon rate of 11 percent. Their par value will be ​$1000​, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds​ and, if it​ does, the yield to maturity on similar AA bonds is 10.5 percent. ​ However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A​ rating, the yield to maturity on similar A bonds is 11.5 percent. What will be the price of these bonds if they receive either an A or a AA​ rating?

• You are a financial manager at a soft-drink company. Until today the company bought empty cans from an outside supplier. You are considering whether to purchase a machine and begin manufacturing cans in-house to achieve cost savings.
• The cost of purchasing a can machine is $850,000 and the lifespan of the machine is 8 years. At the end of 8 years, the company expects to sell the machine for $120,000. Assume the machine is depreciated each year at $95,000 per year.
• The cost savings generated by the can machine will be $160,000 per year.
• Assume that the project requires an investment in Net Working Capital (NWC) of $20,000, and none of this is recovered at the end of the project.
• The machine would be purchased at year 0, the NWC investment occurs at year 0, and all subsequent cash flows occur in years 1-8.
• Assume the discount rate is 10% and the corporate tax rate is 21%.
• Determine the NPV of purchasing the can machine. Should you accept or reject the project?

Please construct an Excel spreadsheet to solve this problem.

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The business has a $ 200,000 outstanding loan with the local bank but no other debt obligations. Last week, the loan, which has a monthly payment of $ 1,500, was not paid. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is just unable to generate sufficient funds to pay the over-due loan payment as well as the payments due over the next two months. Maria is considering selling all of the lighting fixtures in her building which will raise enough funds to make three loan payments. The bank has suggested to Maria that she sell off all her inventory. And it appears that the bank has withdrawn at least one loan payment from Maria’s personal bank account. 1) Can you suggest a strategy to help Maria with the sale of the lighting fixtures? 2) What is the impact of her selling off all her inventory? 3) Has the bank acted improperly by withdrawing the missed loan payment from Maria’s personal account given that this loan was made to her business ?

The 2017 financial statements for Growth Industries are presented below.

Sales and costs are projected to grow at 20% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.60.

What is the required external financing over the next year

Perfect Lawns and Gardens is a small lawn equipment manufacturer. The company is analyzing a proposed project. It expects to sell 3,000 push lawn mowers, give or take 15 percent. The expected variable cost per unit is $95 and the expected fixed costs are $125,000 per year. Both cost estimates are considered accurate within a plus or minus 5 percent range. The sale price is estimated at $180 a unit, give or take 2 percent. The project requires $240,000 of fixed assets, which will be worthless when the project ends in four years. The assets will be depreciated according to the 5-year MACRS depreciation schedule. Also required is $65,000 of net working capital investment to start the project. The tax rate is 21 percent and the required rate of return is 12 percent. What is the net present value of the worst-case scenario? What is the IRR of the worst-case scenario?

I have solved the question two different ways and I keep getting thosee answers above and it says they are wrong please help me!

Max Wholesaler borrowed $5,000 on a 12%, 120-day note. After 45 days, Max paid $1,750 on the note. Thirty days later, Max paid an additional $1,500. Use ordinary interest.

a. Determine the total interest using the U.S. Rule. (Round your intermediate balances and interest amounts to the nearest cent. Round your final answer to the nearest cent.)

Total interest amount            $

b. Determine the ending balance due using the U.S. Rule. (Round your intermediate balances and interest amounts to the nearest cent. Round your final answer to the nearest cent.)

Ending balance due            $

A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?

a. Use the U.S. Rule to solve for total interest cost. (Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.)

Total interest cost            $   

b. Use the U.S. Rule to solve for balances. (Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.)

c. Use the U.S. Rule to solve for final payment. (Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.)

Final payment            $

Wilde Software Development has a 12% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 4% rate after Year 3. Wilde’s tax rate is 25%.

Is the Efficient Market Hypothesis wrong if someone with inside (confidential) information is able to make a profit on trades?

The value of outstanding bonds change whenever the going rate of interest changes. In general, short-term rates are more volatile than long-term rates. Therefore, short-term bond prices are more sensitive to interest rate changes than are long-term bond prices. Is this statement true or false? Make up a reasonable example using a short-term and a long-term bond to help answer the question.

Cooper Ltd. has 2 operating divisions: domestic sales and international sales.  They also have 2 support divisions: accounting support and human resources support. For the past year, Cooper’s cost records show the following information:

Required:

1. Allocate the 2 support divisions’ costs to the operating divisions using the Direct Method.
2. Allocate the 2 support divisions’ costs to the operating divisions using the Reciprocal Method.
3. Allocate the 2 support divisions’ costs to the operating divisions using the Step Down Method – Allocate Accounting Support first.
4. What method do you recommend and why?
5. Cooper Ltd. would like to share the services of a consultant with another company, Hofstadter Inc.  The consultant will work a total of 1,000 hours for both companies: 700 for Cooper and 300 hours for Hofstadter Inc.  The total cost of the contract will be $368,000.  If Cooper were to contract directly with the consultant for 700 hours, the cost would have been $350,000. If Hofstadter were to contract directly with the consultant, the contract would have cost them $ 150,000. How should the companies divide up the cost of the consultant?

In broad terms, why is some risk diversifiable? Why is other risk non-diversifiable? Differentiate between the two types of risk. Does it follow that an investor can control the level of unsystematic risk in a portfolio, but not the level of systematic risk?

Your firm is considering investing $7,500,000 in a factory to build home ethanol systems that will allow individuals to create ethanol from grass clippings. There is an 80% chance that the technology will work as planned and expected net cash flows will be $1,240,000 per year and a 20% chance of technical problems that will reduce expected net cash flows to $40,000 per year. Either way, net cash flows would begin a year from today and continue for 20 years (when your patents will expire and new technology will allow personal solar power systems to become viable). Alternatively, in two years, your firm will know whether the technology will work and thus whether net cash flows will be $1,240,000 or $40,000 per year. Should your firm build now or wait two years if the required return on the project is 10% per year?