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Critically discuss the effect of increasing the amount paid upfront when corporations make capital purchases, focusing on the benefits and drawbacks
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What recent factors have made U.S. markets less attractive to foreign investors and issuers?
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“If a stock goes up, you should sell it to lock in the gain and buy another stock, but if it goes down you should hold it to recoup the loss”.
Evaluate this statement a) with no taxes, and b) with taxes.
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Barron’s recently reported results of a study showing that if one picked stocks at random, the performance of that strategy generally beat the performance of the S&P 500. Is this result surprising? Explain.
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The City of Allentown is issuing a 30-year bond with a face value of $80,000,000 and a stated annual interest rate of 5 percent. The town will make interest payments twice a year.
1. Calculate the semiannual interest payment.
2. Calculate how much Allentown will receive from the bond offering under the following conditions:
a. Market interest rates remain unchanged at the time of the offering.
b. Market interest rates increase to 6 percent at the time of the offering
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Decision #1: Which set of Cash Flows is worth more now?
Assume that your grandmother wants to give you generous gift. She wants you to choose which one of the following sets of cash flows you would like to receive:
Option A: Receive a one-time gift of $ 10,000 today.
Option B: Receive a $1500 gift each year for the next 10 years. The first $1400 would be
received 1 year from today.
Option C: Receive a one-time gift of $18,000 10 years from today.
Compute the Present Value of each of these options if you expect the interest rate to be 3% annually for the next 10 years. Which of these options does financial theory suggest you should choose?
Option A would be worth $__________ today.
Option B would be worth $__________ today.
Option C would be worth $__________ today.
Financial theory supports choosing Option _______
Compute the Present Value of each of these options if you expect the interest rate to be 6% annually for the next 10 years. Which of these options does financial theory suggest you should choose?
Option A would be worth $__________ today.
Option B would be worth $__________ today.
Option C would be worth $__________ today.
Financial theory supports choosing Option _______
Compute the Present Value of each of these options if you expect to be able to earn 9% annually for the next 10 years. Which of these options does financial theory suggest you should choose?
Option A would be worth $__________ today.
Option B would be worth $__________ today.
Option C would be worth $__________ today.
Financial theory supports choosing Option _______
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Case Study:
A local family business is facing a decision. Constantine’s Grocery has been a landmark company in a small city in the USA. Over the past 60 years, what began as a single fresh fruit and vegetable store became a full service grocery store chain with many stores throughout the city. Constantine is incorporated with only 6 shareholders, all family members. The decision it is facing is how to raise much needed capital to maintain its current business operations and to allow the possibility of growth in the future. The family believes it needs an additional $135 million dollars. This sum is too large for a bank line of credit and no one in the family has additional funding to invest into the company. The family is considering other alternatives.
One alternative is to publicly issue debt (corporate bonds), the other alternative is to issue common stock to the public.
Superior papers will explain the following elements:
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You are buying a car for $20,000 with financing at 5%. No payments are due for 6 months from today. After that payment, you must make 15 more payments of the same amount. If your down payment is $4,000. What would the recurring monthly payments be?
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How is the inflation premium and risk premiums determined? I understand that the liquidity risk and maturity risk make up the risk premium, but how are these things determined, and who decides them?
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On the third tab build the full amortization table for a 30 year Constant Payment Mortgage (CPM) Loan with a 4.5% interest rate compounded monthly. The initial loan amount should be $2,500,000. in excel
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On the second tab build the full amortization table for a 15 year Constant Amortizing Mortgage (CAM) Loan with a 6% interest rate compounded monthly. The initial loan amount should be $7,500,000. in excel
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On the first tab build the full amortization table for a 30 year Interest Only (IO) Loan with a 5.5% interest rate compounded monthly. The initial loan amount should be $5,000,000. In Excel
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In: Finance
In: Finance