-What is the Profitability Index of a project that costs $28,000 today and is expected to generate annual cash inflows of $3,000 for the following 11 years. Use discount rate of 7%. Round to two decimal places.

-Installing a solar panel system on your roof comes with a total upfront cost of $18,000 after all tax credits. If the solar panels reduce your utility bill by $1000 per year, what is the Payback Period of installing the solar panel system? Round to one decimal place.

if the fair market value of the gifted property on the date it was received is less than the donor's adjusted basis, then the basis used to calculate loss is the

Ritter Corporation’s accountants prepared the following financial statements for year-end 2019: (Do not round intermediate calculations.) RITTER CORPORATION Income Statement 2019 Revenue $ 760 Expenses 570 Depreciation 91 Net income $ 99 Dividends $ 79

RITTER CORPORATION Balance Sheets December 31 2018 2019 Assets Cash $ 56 $ 67 Other current assets 166 172 Net fixed assets 371 391 Total assets $ 593 $ 630 Liabilities and Equity Accounts payable $ 116 $ 127 Long-term debt 141 147 Stockholders’ equity 336 356 Total liabilities and equity $ 593 $ 630 a. What is the change in cash during 2019? b. Determine the change in net working capital in 2019. c. Determine the cash flow generated by the firm’s assets during 2019.

1. You are a portfolio manager with $10 million in stocks. You like the stocks you own, but the portfolio beta is 1.2 and you are concerned about a market decline. Your investors expect you to be “fully invested”, so you do not want to eliminate risk entirely. You decide that you would like to reduce the portfolio’s beta using futures, but only for the next 3 months. You know that the spot S&P index is at 1900. The dividend rate on the stocks in the index is 2.2%/year. The 3-month risk-free rate is .36%. At what price do you expect the 3-month futures to be trading? The value of one mini S&P contract is $50 times the index. How many contracts do you need to reduce portfolio beta to 1.0? Are you long or short?

2. You have a portfolio of Treasury notes. You have a report that shows the change in price of your portfolio from yesterday to today. You also know how much the 5-year Treasury benchmark yield changed. Estimate the duration of your portfolio using only the following info. Assume no accrued interest from yesterday, and no portfolio purchases or sales.

                               8/26/2017     8/27/2017

                           Portfolio value in millions at the close of the market         $50.125     $50.250

5-year Treasury benchmark yield to maturity     1.46%                 1.41%

                           Next, you would like to reduce the duration of your portfolio by 1.0 years, but do not want to sell any of your bonds. The 5-year Treasury note futures trade at 118.50. The contract is for $100,000 par amount of underlying notes. (That means that the value of one contract is 118.50*100,000/100=$118,500.) The duration of the futures underlying is 4.7 years. How many futures contracts do you need to short to reduce the combined duration by 1.0 years?

3. Today is Jan 27, 2016. You are negotiating with a bank to borrow $3 million for 90 days     at a rate of 3-month LIBOR plus 1.00%. You are confident they will approve you, but their credit process takes 30-45 days. You are worried that LIBOR will rise from today’s level, and would like to “lock in” today’s rate level. Eurodollar futures are trading at :

Bid     Ask

Feb 2016     99.3775     99.3800

Mar 2016     99.3450     99.3500

Apr 2016     99.3100     99.325

Last day of trading for each month is about the 15th. What action could you take? Ignore margin. Recall that the rate implied by the Eurodollar contract is 3-month LIBOR. Contract size is $1,000,000 notional.

4. BMW expects to sell an average of 2,000 autos each month for the next 3 years in the U.S. They build the cars in Germany; therefore, their costs are incurred in euros. The average sale price in the U.S. is $50,000/auto. They expect prices to stay at that level over the next several years. They would like to hedge so that their revenue is very predictable (in euros) from their U.S. sales. U.S. and German interest rates are flat for all maturities through 3 years at 2% in the U.S., and -0.35% in Germany. The current spot exchange rate is $1.12/euro. What should their hedge be?

You own a 10-acre vineyard and earn income by selling your grapes to wineries. Your vineyard is currently planted to Merlot grapes, but you are thinking of replanting with Syrah grapes because they are commanding a higher market price per ton. Merlot fetches $1900 per ton but Syrah sells for $2500 per ton, those prices are expected to remain stable, and you produce 5 tons per year per acre (so 50 tons per year total). Either way, you plan to sell the vineyard 5 years from now (at the end of the year) for 6-times (6x) the annual income (in year 5) from the sale of grapes (that is, you'll get the income from grape sales and then sell the vineyard for 6 times that amount at the end of year 5). However, if you switch to Syrah, it will cost you $89,000 immediately and the vines won’t produce any grapes until year 4 (that is, years 1-3 will have no sales if you plant Syrah, but years 4 and 5 will). The applicable discount rate is 13% per year. What is the NPV of switching? Round to the nearest cent. [Hint: Create a timeline showing the incremental annual cash flows from switching and find their NPV. Some cash flows will be negative (first 3 years) and some (years 4 and 5) will be positive.]

Williamson Industries has $5 billion in sales and $1.869 billion in fixed assets. Currently, the company's fixed assets are operating at 95% of capacity.

1. What level of sales could Williamson Industries have obtained if it had been operating at full capacity? Write out your answer completely. For example, 25 billion should be entered as 25,000,000,000. Round your answer to the nearest cent.
   $  
2. 
   
3. What is Williamson's target fixed assets/sales ratio? Do not round intermediate calculations. Round your answer to two decimal places.
     %
4. 
   
5. If Williamson's sales increase 15%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio? Write out your answer completely. For example, 25 billion should be entered as 25,000,000,000. Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest cent.
   $  

When analyzing key macroeconomics to assess GDP growth/decline, how would you measure the performance relative to sequential and year-to-year data?

Jan sold her house on December 31 and took a $30,000 mortgage as part of the payment. The 10-year mortgage has a 6% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year.

a. What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent.

$  

b. How much interest was included in the first payment? Round your answer to the nearest cent.

$  

How much repayment of principal was included? Do not round intermediate calculations. Round your answer to the nearest cent.

$  

How do these values change for the second payment?

1. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases.
2. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal decreases.
3. The portion of the payment that is applied to interest and the portion of the payment that is applied to principal remains the same throughout the life of the loan.
4. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal also declines.
5. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal also increases.

-Pick one I-V

c. How much interest must Jan report on Schedule B for the first year? Do not round intermediate calculations. Round your answer to the nearest cent.

$  

Will her interest income be the same next year?
Pick one

Her interest income will increase in each successive year.

Her interest income will remain the same in each successive year.

She will not receive interest income, only a return of capital.

Her interest income will decline in each successive year.

She will receive interest only when the mortgage is paid off in 10 years.

d. If the payments are constant, why does the amount of interest income change over time?

1. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal increases.
2. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal increases.
3. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal declines.
4. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal declines.
5. As the loan is amortized (paid off), the beginning balance declines, but the interest charge and the repayment of principal remain the same.

Pick one I - V

On a 30-year, fixed-rate loan with a monthly payment of $1,000 and an interest rate of 9%, what is the outstanding balance due on the loan with after the borrower has made 18 years of payments?

You just paid $800,000 to become the sole equity investor in an unlevered firm. If things go well, you will sell the firm to Google for $1,600,000 in one year. If things go poorly, you will sell the firm to Facebook for $600,000 in one year. It is equally likely that things will go well versus poorly. What is your expected return on this investment?

(only answer question below)

Assume it’s an alternate reality, and you just paid $400,000 to become the sole equity investor in the same firm described in the prior question, except the firm has a debt-to-value ratio of 50%. The interest rate on the firm’s debt is 10%, and the firm plans to retire the debt in one year (i.e. pay it in full). At that point, you will sell your equity to Google/Facebook depending on whether things went well or poorly. Assume it’s an M&M world (no taxes, frictions, etc.). What is your expected return on this investment?

a. 50.2%

b. 65.0%

c. 38.0%

d. 55.7%

Malaysian Island Resort. Theresa Nunn is planning a​ 30-day vacation on Pulau​ Penang, Malaysia, one year from now. The present charge for a luxury suite plus meals in Malaysian ringgit​ (RM) is 1,044​/day. The Malaysian ringgit presently trades at RM3.1350​/$. She determines that the dollar cost today for a​ 30-day stay would be $9,990.43. The hotel informs her that any increase in its room charges will be limited to any increase in the Malaysian cost of living. Malaysian inflation is expected to be 2.7625​% ​annum, while U.S. inflation is expected to be 1.293​%.

a. How many dollars might Theresa expect to need one year hence to pay for her​ 30-day vacation?

b. By what percent will the dollar cost have gone​ up? Why?

You have just been offered a job. Your base salary will be $90,000 per year and the first year’s annual salary will be received one year from the day you start working. You receive a bonus immediately of $12,500. Your salary will grow 4 percent per year and you will receive a bonus of 10 percent of your salary. You expect to work 30 foryears. Your discount rate is 11 percent. What is the present value of your offer?

Group of answer choices

A. $1,428,726.78

B. $1,427,488.04

C. $1,433,232.96

Telnik Corporation bonds pay $82.50 in interest, paid semi-annually with a $1,000 par value. The bonds mature in 15 years. Your required rate of return is 9 percent.

A. Calculate the value of the bond

B. Calculate the value of the bond if interest rates unexpectedly increased by 1%

C. An alternative investment offers the same coupon rate but matures in 5 years. What would be its value at a required return of 9 percent and 10 percent

D. Explain why the market would require a lower return on the alternative investment than on the alternative investment

Terri Allessandro has an opportunity to make any of the following​ investments The purchase​ price, the​ lump-sum future​ value, and the year of receipt are given below for each investment. Terri can earn a rate of return of 8% on investments similar to those currently under consideration. Evaluate each investment to determine whether it is​ satisfactory, and make an investment recommendation to Terri.

Investment   Purchase Price   Future Value   Year of Receipt
A   $22,617   $32,000   4
B   $1,700   $5,000   18
C   $2,040   $7,000   14
D   $2,216   $16,000   40