kwesa corporation has a premium bond making semiannual payments . the bond pays a 9% coupon, has a YTM of 7%, and has 13 years to maturity. the modigliani company has a discount bond making semiannual payments. This bond pays 7%coupon, has YTM of 9%, and also has 13 years to maturity. if interest rate remain unchanged, what do you expect the price of these bonds to be?
i) a year from now
ii) in 3 years
iii) in 8 years
iv) in 12 years
whats going on here
In: Finance
d. One of the distinguishing features of international finance is exchange rate. Would you prefer a weaker U.S. dollar or a strong U.S. dollar?
100 words or less
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Explain in a paragraph, There is speculation that the U.S. will experience higher relative inflation rates over the following 24 months or longer. Explain fully how this would influence the USD in foreign exchange markets. Would the dollar be stronger?
In: Finance
Expansion versus replacement cash flows Tesla Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summarized in the following table. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Project A |
Project B |
||
Initial investment |
−$4,652,000 |
$1,543,000* |
|
Year |
Operating cash flows |
||
1 |
$556,000 |
$371,000 |
|
2 |
925,000 |
371,000 |
|
3 |
1,359,000 |
371,000 |
|
4 |
2,224,000 |
371,000 |
|
5 |
3,400,000 |
371,000 |
*After-tax cash inflow expected from liquidation.
a. If Project A, which requires an initial investment of −$4,652,000, is a replacement for Project B and the $1,543,000 initial investment shown for Project B is the after-tax cash inflow expected from liquidating it, what would be the net cash flows for this replacement decision?
b. How can an expansion decision such as project A be viewed as a special form of a replacement decision? Explain.
In: Finance
a. What is Mike’s basis in the
residence?
b. What is Carol’s amount realized from the sale of the
residence?
c. What amount of real estate taxes can Mike deduct?
d. What amount of real estate taxes can Carol deduct?
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Revenue |
Cost |
Profit |
|
Budget |
168,000 |
120,000 |
40% |
Actuals |
157,000 |
125,500 |
25% |
Variance |
-11,000 |
5,500 |
-15% |
do analysis with this table, and give an advice to make business better
In: Finance
Medical expenses before 10%-of-AGI floor |
$30,000 |
Casualty loss (not covered by insurance) before statutory floors |
30,000 |
Interest on home mortgage |
10,000 |
Interest on credit cards |
800 |
Property taxes on home |
13,000 |
Charitable contributions |
17,000 |
State income tax |
15,000 |
Tax return preparation fees |
1,200 |
What is the amount of itemized deductions the Thurstons may claim?
In: Finance
Your friend promises you an investing opportunity that she claims has no risk but will provide a guaranteed 20% annual return. (Note: U.S. Treasuries are providing a return of 2%.) What should you do? Group of answer choices Split the difference: put half of your investment in your friend's investing opportunity and half in U.S. Treasuries. This is possible but you should at least check out your friend's track record and if there are investors who have been receiving 20% return anually, go ahead and invest. Don't invest. This sounds like a scam because it is not consistent with the relation between risk and return. This sounds like a sweet deal. Invest $100,000 with your friend.
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In 2017, there is a move to repeal the estate and gift tax. This tax, which impacts families with asset transfers exceeding $22 Million, impact few families in the U.S. discuss why so many people, who are not even impacted by this tax, strongly oppose it. Provide an example from your research on a case (different from your peers) regarding death or gift taxes and provide an analysis of the outcome of the case.
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explain difference between Operating and Terminal Cash Flow 250 words
In: Finance
In: Finance
Market Top Investors, Inc., is considering the purchase of a $365,000 computer with an economic life of four years. The computer will be fully depreciated over four years using the straight-line method, at which time it will be worth $114,000. The computer will replace two office employees whose combined annual salaries are $95,000. The machine will also immediately lower the firm’s required net working capital by $84,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 24 percent. The appropriate discount rate is 9 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Please help figure out where I am making a mistake:
Streight line Method depreciation: Accumulated Depreciation = Cost of Asset/Economic Life | |||||
Year | 0 | 1 | 2 | 3 | 4 |
Savings in annual cost before tax) | $95,000 | $95,000 | $95,000 | $95,000 | |
Depreciation Exense | ($91,250) | ($91,250) | ($91,250) | ($91,250) | |
Net Savings before tax | $3,750 | $3,750 | $3,750 | $3,750 | |
Less Tax | $2,850 | $2,850 | $2,850 | $2,850 | |
After Tax Savings | $900 | $900 | $900 | $900 | |
Initial Investemetn | ($365,000) | ||||
After Tax Salvage Value | $ 86,640.00 | ||||
Working Capital | $84,000 | ($84,000) | |||
Add back depreciation expense | $91,250 | $91,250 | $91,250 | $91,250 | |
Net Cash Flow | ($281,000) | $ 92,150.00 | $92,150 | $92,150 | $94,790 |
PV Factor @9% | 1 | 0.917431193 | 0.841679993 | 0.77218348 | 0.77218348 |
PV | ($281,000) | $ 84,541.28 | $77,560.81 | $71,156.71 | $73,195.27 |
NPV | $25,454.08 |
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In: Finance
Show all steps and equations.
2) You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Alumina II costs $420,000, has a five-year life, and has pretax operating costs of $36,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 35 percent and your discount rate is 10 percent, which do you prefer? Why?
In: Finance
Consider a company that issues a dual-currency bond with a face
value of €45
million, which pays an interest rate of 3.5 percent a year in
dollars. Indicate
how the company can manage the risk on this bond issue and
calculate the net cash
flows associated with the transactions. A bond with a face value of
€45 million
that pays 5 percent annual interest in euros is available for
purchase. The fixed
rates on a currency swap are 4 percent in dollars and 4.75 percent
in euros and
the exchange rate is €1.15/$. (8)
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