In: Finance

##### The Bensington Glass Company entered into a loan agreement with the​ firm's bank to finance the​...

The Bensington Glass Company entered into a loan agreement with the​ firm's bank to finance the​ firm's working capital. The loan called for a floating rate that was 27 basis points ​(0.270.27 percent) over an index based on LIBOR. In​ addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.16 percent and a minimum of 1.71 percent. Calculate the rate of interest for weeks 2 through 9

 Date LIBOR Week 1 1.92% Week 2 1.69% Week 3 1.49% Week 4 1.31% Week 5 1.57% Week 6 1.67% Week 7 1.71% Week 8 1.87% Week 9 1.87%

The rate of interest for week 2 is %.
​(Round to two decimal​ places.)

In: Finance

##### (For this part, you MUST present sufficient solution steps, and MUST apply specific Excel functions =PV(…),...

(For this part, you MUST present sufficient solution steps, and MUST apply specific Excel functions =PV(…), =FV(…), =PMT(…), =NPER(…), =RATE(…), =PRICE(…) or =YIELD(…) whenever applicable. Please show me the EXCEL functions that was used to help me better understand was equals what. Using Excel finance formulas

Case 3:

We find the data for a municipal bond issued by the Illinois state government.

The bond’s “last trade date” (i.e., settlement date) is June 05, 2019.

The bond’s “maturity date” is March 14, 2054.

The bond’s “coupon rate” is fixed as “5.000%” per year.

The bond’s coupon “payment frequency” is “semi-annual”.

The bond’s “last trade yield” (i.e., yield-to-maturity) is quoted as “4.280%” per year.

(a) Based on the aforementioned settlement date, maturity date, coupon rate, coupon payment frequency and yield to maturity, what shall be the corresponding bond PRICE (relative to redemption par of 100)?

(b) Assumes that the Fed suddenly tightens its monetary policy now, causing interest rates to rise across financial markets. The aforementioned IL municipal bond’s yield-to-maturity also rises from 4.280% to “5.280%” per year. Will the bond PRICE go up or go down then? By how much?

(c) Assumes that the Fed suddenly loosens its monetary policy now, causing interest rates to rise across financial markets. The aforementioned IL municipal bond’s yield-to-maturity also drops from 4.280% to “3.280%” per year. Will the bond PRICE go up or go down then? By how much?

(d) Based on your answers to (b) and (c), is there a positive, negative or zero association between bond YIELD and its PRICE? (Hint: Positive association means “moving in the same direction”, negative association means “moving in the opposite directions”, while zero association means “one moves but the other does not get affected”.)

In: Finance

##### Every two years, Warrior Lacrosse develops a new lacrosse stick design. Over the past year, the...

Every two years, Warrior Lacrosse develops a new lacrosse stick design. Over the past year, the company has invested $25,000 in their latest stick, the Warrior-X. In addition, the firm has hired a consultant, for$10,000 to determine whether there will be a market for the stick. The consultant has advised the firm to go ahead and start production. Warrior expects to the new equipment needed to mold the stick to cost $500,000. The equipment will be depreciated using 3-year MACRS. In three years, Warrior plans to sell the equipment for$25,000. The company expects to produce sell the new stick line for 3 years. They predict that they can sell 300,000 sticks for $200 each in each of the three years. During the first year, they company expects sales from its current model, Warrior-Cradle to decline by$100,000. After that, the Warrior Cradle will no longer be produced. The company predicts that operating costs for the Warrior-X will be 25% of sales. If the company’s tax rate is .21 and their required return is .09, should the stick be produced? Please show the project’s NPV, IRR and Profitability Index

3- year MACRS Depreciation

(1) .3333

(2) .4444

(3) .1482

(4) .0742

 A B 0 -90000 -2500 1 25000 1500 2 50000 1500 3 50000 1500 4 50000 1500 NPV PROFILE k NPV’s for A NPV’s for B 0.05 $63,488.00$2,818.93 0.075 $54,210.50$2,523.99 0.08 $52,458.19$2,468.19 0.1 $45,766.00$2,254.80 0.125 $38,059.75$2,008.46 0.15 $31,009.79$1,782.47 IRRs 29% 47%

Question 2

If the required return for both projects A and B is 8% and the projects are mutually exclusive, which project(s) should be selected?

In: Finance

##### Hi, I was wondering if anyone could explain what capital asset pricing is? My homework suggests...

Hi,

I was wondering if anyone could explain what capital asset pricing is? My homework suggests that the capital asset pricing model considers the relationship between the fluctuations in a security’s returns versus the markets.

When explaining, please provide an example as that would help me understand better! Thank you!

In: Finance

##### Go online and look at Netflix latest corporate earnings: 1- what do you think of the...

Go online and look at Netflix latest corporate earnings:
1- what do you think of the performance of Netflix ?
2- what do you think of the expansion of Netflix from a streaming busines to an original content busines?
3- do you think that Netflix has close competition ? From which companies ?

In: Finance

##### 2. What are the advantages and disadvantages of the friendly versus hostile approaches to a corporate...

2. What are the advantages and disadvantages of the friendly versus hostile approaches to a corporate takeover? Be specific

In: Finance

##### Please solve and explain: After paying $3 million for a feasibility study, Stanley wrote a proposal... Please solve and explain: After paying$3 million for a feasibility study, Stanley wrote a proposal with the following cash flow estimates for a 25-year capital project. Equipment cost: $34 million, Shipping costs:$1 million, Installation: $19 million, Salvage:$4, Working capital investment: $2 million, Revenues are expected to increase by$20 million per year and cash operating expenses by $9 million per year. The firm’s marginal tax rate is 40 percent, its weighted average cost of capital is 9%, and the firm requires a 3 year payback. Assume conventional straight line depreciation. Evaluate the project using NPV, IRR, PI, and PB. Answer: IO =$56 million

Δ D = $2.16 million NCF1-25 =$7.464 million

NCF25 = $4.4 million NPV =$17.826 million > 0, so Accept

IRR = 12.71% > 9%, so Accept

PI = 1.32 > 1, so Accept

PB = 7.50 years > 3 so Reject

ACCEPT the project; PB can lead to wrong decisions

In: Finance

##### Benson Designs has prepared the following estimates for a​ long-term project it is considering. The initial...

Benson Designs has prepared the following estimates for a​ long-term project it is considering. The initial investment is ​$44,850​, and the project is expected to yield​ after-tax cash inflows of ​$9,000 per year for 8 years. The firm has a cost of capital of 11​%.

a.  Determine the net present value​ (NPV) for the project.

b.  Determine the internal rate of return​ (IRR) for the project.

c.  Would you recommend that the firm accept or reject the​ project?

In: Finance

##### a)The term value has various meaning and expressions. Discuss the following expressions of value i.Fair Market...

a)The term value has various meaning and expressions. Discuss the following expressions of value

i.Fair Market Value

ii.Intrinsic value

iii.Going concrn valuee

iv.Book value

b)Explain the concept of ‘Efficient Capital Market’ stating its relevance in valuation

c)List and discuss five factors which should be considered when valuing a corporation

d)List and discuss four characteristics or features of a good or better valuation exercise

In: Finance

##### Holding period returns can be confused with annual returns. However the only time a hpr should...

Holding period returns can be confused with annual returns. However the only time a hpr should be compared to annual returns is when the holding period is actually one year . In Many cases the holding period can be less than one year or several years. After you make a holding period return calculation you should always convert it to an approximate annual return when making comparisons with other asset . Let’s look at an asset and calculate its holing return. Assume you paid $53 for one share of Stock Y and held it for two years prior to selling it for$55. During that time you also received annualized did I vends of \$2 a share.

1- what is the how for stock Y ?
2- how does that compare to stock Z that you held for one year and received a HPR of 8% ?

In: Finance

##### 34) Subprime assets lost value rapidly between 2007 and 2009. This lowered the value of banks...

34) Subprime assets lost value rapidly between 2007 and 2009. This lowered the value of banks that had exposure to these assets and financial institutions that had exposure to banks that were exposed to subprime risk. Since the assets were hard to value they were not acceptable as collateral. This made banks illiquid and this scared away the suppliers of bank capital. A liquidity crisis turned into a credit crisis for many financial institutions such as WAMU, Wachovia, Lehman and others.

it is True False

30 The market value of a bank’s net worth is defined as the value of its assets less the value of its liabilities. If a bank’s assets lose value and its liabilities do not change in value, the bank’s net worth will decline.

it is True False

31 ) A bank is insolvent when:

 value of its assets exceed its liabilities. value its liabilities exceed its assets. value of its assets increase in value. value of its capital exceeds its liabilities.

In: Finance

##### 23)Use the following data about a fixed coupon corporate bond to answer the following question. The...

23)Use the following data about a fixed coupon corporate bond to answer the following question. The yield to maturity of the bond is greater than 8% settlement 11/14/2016 maturity 11/14/2026 rate 10% price 101 redemption 100 frequency 2 basis 0

is it :True or False

26)

1.  Bank Asset Bond A Bank Liability L Settlement 6/27/2019 Settlement 6/27/2019 Maturity 6/27/2029 Maturity 6/27/2022 Rate 10% Rate 8% Yield 9% Yield 8% Redemption 100 Redemption 100 frequency 2 frequency 2 basis 0 basis 0 price of bond price of bond The priice of the bank asset is between 105 and 107 The price of the bank liability is 100
2. it is :true or false

In: Finance

##### Which government regulation on the advertising industry is the most consumer-friendly?

Which government regulation on the advertising industry is the most consumer-friendly?

In: Finance