Questions
In your own words, compare and contrast the real rate of return, the nominal rate of...

In your own words, compare and contrast the real rate of return, the nominal rate of return, and the ex ante nominal rate of return, using either real-life examples or hypothetical examples.

In: Finance

When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every...

When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star cost about $9. Based on actuarial tables, “Joltin’ Joe” could expect to live for 20 years after the actress died. Assume that the EAR is 9.5 percent. Also, assume that the price of the flowers will increase at 3.6 percent per year, when expressed as an EAR. Assume that each year has exactly 52 weeks, and Joe began purchasing flowers the week after Marilyn died.

  

What is the present value of this commitment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

In: Finance

There are two mutually exclusive projects, where the basic information is provided below. Assume a DN...

There are two mutually exclusive projects, where the basic information is provided below. Assume a DN alternative does not exist. MARR is 10% per year. Which project do you choose and why?

Long term

Short Term (Lease)

Initial Cost

$45,000

$15,000

Major overhaul costs (every ten years)

$12,000

Not existent

Minor overhaul costs (every 5 years)

$6000

Not existent

Annual Operating cost

$2000

$1500

Useful Life

Infinity

10

Salvage value

$1,500

$2,500 (deposit return)

In: Finance

Manitowoc Crane​ (A).Manitowoc Crane​ (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are...

Manitowoc Crane​ (A).Manitowoc Crane​ (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 10,000 units per year at the yuan equivalent of $25,000 each. The Chinese yuan​ (renminbi) has been trading at Yuan8.40​/$, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan9.30​/$, after which it will remain unchanged for at least a decade. Accepting this forecast as​ given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either​ (1) maintain the same yuan price and in effect sell for fewer​ dollars, in which case Chinese volume will not​ change; or​ (2) maintain the same dollar​ price, raise the yuan price in China to offset the​devaluation, and experience a​ 10% drop in unit volume. Direct costs are​ 75% of the U.S. sales price.

a.What would be the​ short-run (one-year) impact of each pricing​ strategy?

b.Which do you​ recommend?

a.If Manitowoc Crane maintains the same yuan price and same unit​ volume, what will be the​ firm's gross​ profits?

​$ __  (Round to the nearest​ dollar.)

In: Finance

Retained earnings are generated by the firm's internal operations and are immediately reinvested to earn more...

Retained earnings are generated by the firm's internal operations and are immediately reinvested
to earn more money for the company and its shareholders. Therefore, such funds have
zero cost to the company. Do you agree with the statement? Explain

In: Finance

(1)   Gap analysis is used to measure the direct effect of interest rate changes on bank...

(1)   Gap analysis is used to measure the direct effect of interest rate changes on bank earnings. Suppose that the interest rate has risen. If the amount of variable-rate assets of a bank is greater than the amount of variable-rate liabilities, will the net earnings of the bank increase or decrease?
If the amount of variable-rate liabilities of a bank is greater than the amount of variable-rate assets, will the net earnings of the bank increase or decrease?
(2)   Explain the duration of a security.
(3)   How is the duration of a security different from the maturity of a security?   

In: Finance

Part A) The CFO of Jack McCoy Legal Advisors is continually receiving capital funding requests from...

Part A) The CFO of Jack McCoy Legal Advisors is continually receiving capital funding requests from its division managers. These requests are seeking funding for positive net present value projects. The CFO continues to deny all funding requests due to the financial situation of the company. Apparently, the company is:

1. operating at the accounting break-even point.

2. operating at the financial break-even point.

3. facing hard rationing.

4. operating with zero leverage.

5. operating at maximum capacity.

Part B) T-Pain is the capital budgeting manager of Lonely Island Inc. and is faced with selecting from the following independent projects:

Boat: Investment = $75 M, NPV = $141 M, IRR = 16%, PI = 2.88

Poseidon: Investment = $25 M, NPV = $48 M, IRR = 121%, PI = 2.92

Mermaid: Investment = $75 M, NPV = $68 M, IRR = 22%, PI = 1.91

Flippy Floppy: Investment = $75 M, NPV = $55 M, IRR = 7%, PI = 1.73

Buoy: Investment = $25 M, NPV = $39 M, IRR = 18%, PI = 2.56

Titanic: Investment = $100 M, NPV = -$45 M, IRR = 2%, PI = 0.55

If Mr. Pain has a CAPX budget of $125 M, which project(s) should he choose?

1. Project Poseidon, Mermaid, and Buoy

2. Projects Poseidon, Flippy Floppy, and Buoy

3. Projects Poseidon, Mermaid, and Buoy

4. Projects Boat, Poseidon, and Buoy

5. Projects Poseidon and Titanic

Part C) Blue Bloods Furniture is exploring the production of a new line of dinner tables. The project has expected cash flows of $-49,000, $25,000, and $34,000. What is the NPV of the project with an interest rate of 12%?

Part D) The GAP Inc. is considering hiring a new mascot for its Old Navy subsidiary. They will shoot the commercials today and run them over the next four years. What is the discounted payback period of the investment if it requires an investment of $70,000 and provides cash flows of $20,000, $10,000, $50,000, and $30,000? Assume that the cash flows are received at the end of each year (not continuously) and that the appropriate discount rate is 10%. Round your answer, if appropriate, to two decimal places.

*please show work to all parts of the question thank you*

In: Finance

2. A bond has a $1,000 par value, semiannual interest payments of $45, and a current...

2. A bond has a $1,000 par value, semiannual interest payments of $45, and a current market value of $1,045. The bonds mature in 11.5 years. The coupon rate is ________%, the current yield is ________%, and the yield to maturity is ________%.

A. 9.00; 8.61; 8.38

B. 9.00; 8.59; 8.33

C.9.00; 8.72; 8.64

D. 9.50; 8.87; 8.73

In: Finance

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent...

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next 3 years, with the growth rate falling off to a constant 7 percent thereafter.

  

If the required return is 12 percent and the company just paid a $1.50 dividend. what is the current share price?

Multiple Choice

  • $48.12

  • $50.08

  • $44.43

  • $47.06

  • $49.10

In: Finance

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 10 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $6 per share 11 years from today and will increase the dividend by 8 percent per year thereafter.

  

If the required return on this stock is 13 percent, what is the current share price?

Multiple Choice

  • $35.35

  • $36.41

  • $33.58

  • $37.12

  • $31.28

In: Finance

There is a new road project which is expected to be finished in 4 years. This...

There is a new road project which is expected to be finished in 4 years. This project has an initial cost of 1 million$. After the initial cost is paid, the road project is expected to provide 250,000$ in year 1, 300,000 in year 2, 320,000 in year 3 and 450,000 in year 4. It is known that the internal rate of return in this project 10.96%. What is the net present value?

In: Finance

Please comment on Alibaba current Revenue, Profit Margin, Earning ,EBITDA and Price/Earning ratio affect the profitability...

Please comment on Alibaba current Revenue, Profit Margin, Earning ,EBITDA and Price/Earning ratio affect the profitability of the company

In: Finance

Why might a firm use short-term sources of funds? Which is typically more flexible and easier...

  1. Why might a firm use short-term sources of funds? Which is typically more flexible and easier to access, short or long term debt? Why might a firm prefer long term debt over short term debt?

In: Finance

A mutual fund holds the following assets at the beginning of the year: 8,000 shares of...

A mutual fund holds the following assets at the beginning of the year:

8,000 shares of FB, price $180

1250 shares of AMZN, price $1100

1100 shares of GOOG, price $950

The mutual fund has 910,000 number of shares issued at this point. The mutual fund has 1.2% operating expenses, 0.5% 12b-1 fees and a 4% front-end load. Expenses and fees are deducted from assets at the end of the year. At the end of the year, the assets held by the fund are worth $ 4.4m (before expenses) and there are 900,000 shares outstanding. Just before the end of the year, the fund realized $0.3m capital gains and received $0.2m dividends. What is the reported return on the fund? (Provide your answer in %, rounded to two decimals, omitting the % sign. Please show all formulae, solutions and steps.)

In: Finance

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 27 percent...

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 27 percent for the next 3 years, with the growth rate falling off to a constant 7 percent thereafter.

  

If the required return is 14 percent and the company just paid a $2.20 dividend. what is the current share price?

Multiple Choice

  • $54.72

  • $51.68

  • $49.01

  • $53.62

  • $55.81

In: Finance