You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 11 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

  
a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.)

  
b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.)

c. Which project would you select based on the profitability index?

• Project X

• Project Y

Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Determine the net present value of the projects based on a zero percent discount rate.

b. Determine the net present value of the projects based on a discount rate of 10 percent. (Do not round intermediate calculations and round your answers to 2 decimal places.)

BOND YIELDS

Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065 and it sells for $1,270.

1. What is the bond's nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.
   %
   
   What is the bond's nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.
   %
   
   Would an investor be more likely to earn the YTM or the YTC?
   -Select-Since the YTC is above the YTM, the bond is not likely to be called.Since the coupon rate on the bond has declined, the bond is not likely to be called.Since the YTM is above the YTC, the bond is likely to be called.Since the YTC is above the YTM, the bond is likely to be called.Since the YTM is above the YTC, the bond is not likely to be called.Item 3
   
2. What is the current yield? (Hint: Refer to Footnote 7 for the definition of the current yield and to Table 7.1.) Round your answer to two decimal places.
   %
   
   Is this yield affected by whether the bond is likely to be called?
   1. If the bond is called, the current yield and the capital gains yield will remain the same.
   2. If the bond is called, the capital gains yield will remain the same but the current yield will be different.
   3. If the bond is called, the current yield and the capital gains yield will both be different.
   4. If the bond is called, the current yield and the capital gains yield will remain the same but the coupon rate will be different.
   5. If the bond is called, the current yield will remain the same but the capital gains yield will be different.
   
   -Select-IIIIIIIVVItem 5
   
3. What is the expected capital gains (or loss) yield for the coming year? Use amounts calculated in above requirements for calcuation, if reqired. Round your answer to two decimal places. Enter a loss percentage, if any, with a minus sign.
   %
   
   Is this yield dependent on whether the bond is expected to be called?
   1. If the bond is not expected to be called, the appropriate expected total return is the YTC.
   2. If the bond is expected to be called, the appropriate expected total return will not change.
   3. The expected capital gains (or loss) yield for the coming year depends on whether or not the bond is expected to be called.
   4. The expected capital gains (or loss) yield for the coming year does not depend on whether or not the bond is expected to be called.
   5. If the bond is expected to be called, the appropriate expected total return is the YTM.

• Discuss the features that all financial statements prepared under IFRS 1 must possess.

BOND VALUATION

Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 9%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 10%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.

$

Given the following information, find the yield to maturity (YTM)

DTD- 03/15/2014

Coupon rate- 4.625%

Maturity- 03/15/2024

market price- 93.749 per share (total market price= 22,812.50)

Cost price- 100.30 per share (total cost price = 25,813.25)

City Farm Insurance has collection centers across the country to speed up collections. The company also makes its disbursements from remote disbursement centers so the firm's checks will take longer to clear the bank. Collection time has been reduced by three and one-half days and disbursement time increased by two days because of these policies. Excess funds are being invested in short-term instruments yielding 4 percent per annum.    
  
a. If City Farm has $4.55 million per day in collections and $3.55 million per day in disbursements, how many dollars has the cash management system freed up? (Enter your answer in dollars not in millions (e.g., $1,234,567).)
  

Freed-up funds=

b. How much can City Farm earn in dollars per year on short-term investments made possible by the freed-up cash? (Enter your answer in dollars not in millions (e.g., $1,234,567).)
  

Interest on freed-up cash=

Zion Williams has been asked to prepare a report on potential funding sources for expansion of SI. Zion understands that private equity is a broad term covering instances where investors provide capital for businesses not listed on a stock exchange. This can range from a few thousand dollars seed capital for a venture capital start-up right through to management buyouts worth hundreds of millions of dollars. In return, private equity investors generally take a sizeable stake in the business. Required In a thousand words (1000 words) please prepare a background briefing for Zion including the following: i. discuss the resurgence of the private equity asset class globally ii. review the different types of private equity investments iii. explain the opportunities and risks that come with private equity investing (

describe the history of the forex, its participants and factors that influence exchange rates

Your company is considering investing in one of two mutually exclusive projects. The cost of capital is 11%. The first project Has $25,000 annual cash inflows, a 10-year life, and will cost $120,000 at time zero. The second project has a 7-year life, Annual cash inflows of $20,000 per year, and a cost of $75,000 at time zero. Which project has the highest NPV. Assuming that these projects will most likely be repeated indefinitely into the future, which project would add the most value to the company? Justify your answer using the EAA

Assume that Pogue's stock now sells for $18 per share. The company wants to sell some 20-year, annual interest, $1,000 par value bonds. Each bond will have 25 warrants, each warrant entitles the holder to buy 1 share of stock at a price of $21. Pogue's pure bonds yield 8%. Assume that the warrants will have a market value of $1.75 when the stock sells at $18. What annual dollar coupon must the company set on the bonds with warrants if they are to clear the market (i.e., the market is in equilibrium)? Round your answer to the nearest cent.

$   

What annual coupon interest rate must the company set on the bonds with warrants if they are to clear the market (i.e., the market is in equilibrium)? Round your answer to two decimal places.

  %

Many businesses around the world still fail because their capital investment decisions are based upon a calculation on the back of an envelope and do not take any of the correct factors into account. Even larger businesses often get this wrong. This is a true sign of poor resource management.

• Do you agree or disagree?

• Discuss the alternative methods of investment appraisal and describe the limitations of these to help justify your arguments.

• How do you think that capital budgeting decisions should ideally be made by different types of organisations

What are real options? Identify the tools and techniques available for managers for analyzing the profitability of the project. Discuss how the identified criteria are used in selecting profitable capital projects.