The shares of XYZ Inc. are currently selling for $120 per share. The shares are expected to go up by 10 percent or down by 5 percent in each of the following two months (Month 1 and Month 2). XYZ Inc. is also expected to pay a dividend yield of 2 percent at the end of Month 1. The risk-free rate is 0.5 percent per month.

1. What is the value of an American call option on XYZ shares, with an exercise price of $125 and two months to expiration? Use the binomial model to obtain the answer.

Big TimeBig Time Investor Group is opening an office in​ Portland, Oregon. Fixed monthly costs are office rent ​($$8,900​), depreciation on office furniture left parenthesis $($1,700)​, utilities ​($2,500​), special telephone lines ​($1,600​), a connection with an online brokerage service ​($2,600​), and the salary of a financial planner ​($17,700​). Variable costs include payments to the financial planner ​(88​% of​ revenue), advertising left parenthesis (13% of​ revenue), supplies and postage ​(33​% of​ revenue), and usage fees for the telephone lines and computerized brokerage service left parenthesis 6 %(6% of​ revenue).

​(Round your answers to the nearest whole​ number.)

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

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

(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”.)

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

Please base your answers to questions 2-6 on the information, below, for Projects A and B

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?

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

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

 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?

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

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:

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

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