As a winner of a breakfast cereal competition, you can choose one of the following prizes:

• $100,000 now.
• $100,000 at the end of 5 years.
• $10,000 a year forever (starting from this year).
• $11,000 a year forever (starting from next year).
• $2,000 next year and increasing thereafter by 2% a year forever
• $6,000 starting this year, growing at 1% per annum
• $800,000 at the end of 20 years
• $5,000 a year for 5 years starting next year
• $1,000 a year, starting this year for 12 payments
• $10,000 in year 2 and $50,000 in year 5

If the interest rate is 5%, which is the most valuable prize? Show your working for each.

Luca Lucchesi has $10 million today and is setting up a trust fund for his 2 children.

If r=4%, how much should the fund pay each child next year?

Mr. Lucchesi is also thinking that his children need to learn to make their own mark in the financial world. So he is thinking of withholding the trust fund payments until 5 years (i.e. t=5). Determine the perpetual annual payments that could be supported in such a scenario.

magnificent miner is a mining startup.due to development costs of its new mine, no dividends will be paid for the first 5 years, after that they pay a $2 divident which wil grow by 10% per annum for the nest five years, remaining contant thereafire, assumming the reuierd return is 12% per annum , what is the share price today?

(b) in five years time

(c) in 10 years time

Rafael is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table:

Rafael calculated the portfolio’s beta as 0.8575 and the portfolio’s expected return as 8.72%.

Rafael thinks it will be a good idea to reallocate the funds in his client’s portfolio. He recommends replacing Atteric Inc.’s shares with the same amount in additional shares of Baque Co. The risk-free rate is 4%, and the market risk premium is 5.50%.

According to Rafael’s recommendation, assuming that the market is in equilibrium, how much will the portfolio’s required return change? (Note: Round your intermediate calculations to two decimal places.)

0.78 percentage points

0.53 percentage points

0.84 percentage points

0.68 percentage points

Analysts’ estimates on expected returns from equity investments are based on several factors. These estimations also often include subjective and judgmental factors, because different analysts interpret data in different ways.

Suppose, based on the earnings consensus of stock analysts, Rafael expects a return of 6.54% from the portfolio with the new weights. Does he think that the revised portfolio, based on the changes he recommended, is undervalued, overvalued, or fairly valued?

Overvalued

Undervalued

Fairly valued

Suppose instead of replacing Atteric Inc.’s stock with Baque Co.’s stock, Rafael considers replacing Atteric Inc.’s stock with the equal dollar allocation to shares of Company X’s stock that has a higher beta than Atteric Inc. If everything else remains constant, the portfolio’s beta would ____ , and the required return from the portfolio would____ .

1)   When you go through an IPO you

1. raise capital from venture capitalists.
2. raise debt from a bank.
3. sell shares to the general public.
4. issue preferred stock.  

2)   In the Principal/Agent relationship the Agent has

1. the right to dismiss the Principal.
2. no fiduciary responsibility towards the Principal.
3. inferior skills.
4. superior knowledge.

3)   Which of the following is notan example of a Principal/Agent relationship?

1. Student/Professor.
2. Firm/Investment Bank.
3. Equity Holder/Management.
4. Management/Debt Holder.

4)  The amount of debt that a firm can take on is affected by

1. the Principal/Agent relationship between debt and equity investors.
2. covenants in the debt instruments.
3. market risk.
4. all of the above.

5)  The tax deductibility of interest results in a lower cost of capital for the firm.

      True/False

6)Firms in the Death Stage will typically increase their debt load.

      True/False

Boeing Corporation has just issued a callable​ (at par)​ three-year, 4.7 % coupon bond with​ semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $98.65.

a. What is the​ bond's yield to​ maturity?

b. What is its yield to​ call?

c. What is its yield to​ worst?

Weiland Co. shows the following information on its 2016 income statement: sales = $173,000; costs = $91,400; other expenses = $5,100; depreciation expense = $12,100; interest expense = $8,900; taxes = $21,090; dividends = $9,700. In addition, you’re told that the firm issued $2,900 in new equity during 2016 and redeemed $4,000 in outstanding long-term debt. a. What is the 2016 operating cash flow? b. What is the 2016 cash flow to creditors? c. What is the 2016 cash flow to stockholders? d. If net fixed assets increased by $23,140 during the year, what was the addition to NWC?

1. Compute the future value of:
   1. An initial $2,000 compounded annually for 10 years at 8%
   2. An initial $2,000 compounded annually for 10 years at 10%
   3. An annuity of $2,000 for 10 years at 8%
   4. An annuity of $2,000 for 10 years at 10%

You are trying to decide how much to save for retirement. Assume you plan to save $8,000 per year with the first investment made one year from now. You think you can earn 8.5​% per year on your investments and you plan to retire in 39 ​years, immediately after making your last $8,000 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing $8,000 per​ year, you wanted to make one​ lump-sum investment today for your retirement that will result in the same retirement​ saving, how much would that lump sum need to​ be? c. If you hope to live for 24 years in​ retirement, how much can you withdraw every year in retirement​ (starting one year after​ retirement) so that you will just exhaust your savings with the 24th withdrawal​ (assume your savings will continue to earn 8.5​% in​ retirement)? d.​ If, instead, you decide to withdraw $435,000 per year in retirement​ (again with the first withdrawal one year after​ retiring), how many years will it take until you exhaust your​ savings? (Use​ trial-and-error, a financial​ calculator: solve for​ "N", or​ Excel: function​ NPER) e. Assuming the most you can afford to save is $1,600 per​ year, but you want to retire with $1,000,000 in your investment​ account, how high of a return do you need to earn on your​ investments? (Use​ trial-and-error, a financial​ calculator: solve for the interest​ rate, or​ Excel: function​ RATE)

You proposed a portfolio for your client with 60% in stock A and 40% in stock B. Stock A has an average weekly return of 0.88% and stock B has an average weekly return of 1.32%. Beta for stock A and B are 0.8 and 1.3 respectively. Now you want to deliver a performance report to the client regarding portfolio performance on a weekly basis. (a). What’s the portfolio average weekly return?

(b). What’s the portfolio beta?

(c). You have calculated the portfolio weekly standard deviation: 3.9%. What’s the Sharpe ratio of the portfolio? Assuming weekly market return is 0.9% and weekly riskfree rate is 0.04%.

(d). Still assume the portfolio weekly standard deviation is 3.9%, weekly market return is 0.9% and weekly risk-free rate is 0.04%, what’s Jensen’s Alpha of the portfolio?

Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7.4%, has a YTM of 6.8%, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6.8%, has a YTM of 7.4%, and also has 13 years to maturity. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In three years? In eight years? In 12 years? In 13 years? What's going on here? Illustrate your answers by graphing bond prices versus time to maturity. Please work on Excel, that's how I need to see this problem worked out THANKS SO MUCH

Assume that two athletes sign 10-year contracts that pay out a total of $100 million over the life of the contracts. One contract will pay the $100 million in equal installments over the 10 years. The other contract will pay the $100 million in installments, but the installments increase 5% per year. Which athlete received the better deal? You must show your work and explain your position in detail.

I've seen this question answered but can someone show step-by-step how they arrived at their answer?

Portfolio analysis

4. Suppose you form a portfolio that invests 10% in T, 20% in JPM, 30% in NEM and 40% in CVX. Calculate (a) portfolio monthly returns, (b) portfolio's average monthly return, and (c) standard deviation of portfolio monthly returns. Discuss. Highlight your final answers.

Average Return E (r) of each stock: The average return on each of these stocks were calculated in excel using today's price-yesterdays price/yesterday's price and then the average taken from 114 days of adj. closing cost.

Ave. Return E(T)=0.85% StDEV(T)=4.46%

Ave. Return(JPM)=1.36% StDEV(JPM)=6.94%

Ave.Return E(NEM)=0.60% StDEV(NEM)10.30%

Ave. Return E(CVX)=0.90% StDEV(CVX)5.74%

Weight

WW(T)=10%

W(JPM)20%

W(NEM)30%

W(CVX)40%

E (r)ptf = W(T)*E(T) + W(JPM)*E(JPM) + W(NEM)*E(NEM)+ W(CVX)*E(CVX)

******I calculated in excel and got these answers: Is the E(r)ptf the portfolio monthly returns or the average monthly return? How do you calculate the (a) portfolio montly returns and (b) the average monthly return?

E(r) ptf=0.90%

StDEV(r) ptf=2.51%

Snowy Mountain Timber Ltd is considering purchasing a new wood saw that costs $70,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labour needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $3,500 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Snowy Mountain’s tax rate is 34 percent, and its opportunity cost of capital is 10.70 percent. The project's NPV is $ .

The project should be (accept or rejected?).

(Round your intermediate calculations to three decimal places and round each of your final answers to the nearest dollar. Use parenthesis to enter negative amounts.)

Take Five Systems, a new start-up, is developing a new iPhone application (“app”) and provides you with the following assumptions:

1. Development and testing of the new app will take four months. Month five is the first month of revenue generation.

2. Initial monthly app sales of 5,000 downloads at a price of $2.99

3. Unit sales will grow at 15% per month for months six through twelve and then will be flat thereafter

4. The app will become obsolete and will need to be revised/replaced after month 18

1. Take Five Systems is concerned about the accuracy of their revenue estimates in Question 1. Specifically, they wish to use sensitivity analysis to evaluate the impact on Month 18 revenue of the following:

   1. Variations in 2% increments between 9-21% in the growth rate of unit sales in Months 5-12 (that is, 9%, 11%,..., 19%, 21%)

   2. Variationin500unitincrementsbetween2,500and7,500inthelevelofinitial sales (that is, 2,500, 3,000,..., 7,000, 7,500)