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 riskfree rate is 0.5 percent per month.
In: Finance
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).
1. 
Use
the contribution margin ratio approach to compute
Big Time's breakeven revenue in dollars. If the average trade
leads to $1,000 
2. 
Use the equation approach to compute the dollar revenues needed to earn a monthly target profit of $12,600. 
3. 
Graph
Big Time's CVP relationships. Assume that an average trade leads to $1,000 in revenue for Big Time. Show the breakeven point, the sales revenue line, the fixed cost line, the total cost line, the operating loss area, the operating income area, and the sales in units (trades) and dollars when monthly operating income of $12,600 is earned. 
4. 
Suppose that the average revenue
Big Time earns increases to $2,000 per trade. Compute the new breakeven point in trades. How does this affect the breakeven point? 
(Round your answers to the nearest whole number.)
In: Finance
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(…), =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 “semiannual”.
The bond’s “last trade yield” (i.e., yieldtomaturity) 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 yieldtomaturity 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 yieldtomaturity 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 company has invested $25,000 in their latest stick, the WarriorX. 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 3year 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, WarriorCradle to decline by $100,000. After that, the Warrior Cradle will no longer be produced. The company predicts that operating costs for the WarriorX 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 26 on the information, below, for Projects A and B
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 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
In: Finance
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 with the following cash flow estimates for a 25year 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
NCF125 = $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 longterm project it is considering. The initial investment is $44,850, and the project is expected to yield aftertax 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 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
In: Finance
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 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)
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 
it is :true or false
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Which government regulation on the advertising industry is the most consumerfriendly?
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