Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $2,180,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 37 days. Its annual cost of goods sold was $1,200,000. The firm had fixed assets totaling $355,000. Strickler's payables deferral period is 43 days. Assume a 365-day year. Do not round intermediate calculations.

1. Calculate Strickler's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places.

   days

2. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places.

   Total assets turnover: ×

   ROA: %

3. Suppose Strickler's managers believe the annual inventory turnover can be raised to 10 times without affecting sale or profit margins. What would Strickler's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 10 for the year? Do not round intermediate calculations. Round your answers to two decimal places.

   Cash conversion cycle: days

   Total assets turnover: ×

   ROA: %

Thomson Trucking has $10 billion in assets, and its tax rate is 30%. Its basic earning power (BEP) ratio is 20%, and its return on assets (ROA) is 5%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

Although the Chen Company's milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $112,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $19,900 per year. It would have zero salvage value at the end of its life. The project cost of capital is 10%, and its marginal tax rate is 25%.

Should Chen buy the new machine? Do not round intermediate calculations. Round your answer to the nearest cent.

Negative value, if any, should be indicated by a minus sign.

NPV: $

Chen SHOULD or SHOULDN'T purchase the new machine.

If interest rates rise after a bond issue, what will happen to the bond’s price and YTM? Does the time to maturity affect the extent to which interest rate changes affect the bond’s price? The values of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to interest rate changes than are long-term bond prices. Is that statement true or false? Explain. (Hint: Make up a “reasonable” example based on a 1-year and a 20-year bond to help answer the question.)

Factors that result in higher or lower stock prices?

What drives stock prices?

Important factors that drive stock market prices?

500 words minimum

You need $575 in 6 months for your auto insurance bill. If your investments earn 3% APR (compounded monthly), ), how much do you have to invest each month, starting next month, for 4 months, such that your investment will grow to just cover your auto insurance bill?

$140

$142

$144

$141

You plan to buy a house in 18 months.
The cost of the house at that time will be $300,000 .
How much do you have to invest each month, starting next month, for 12 months to exactly pay for the house if you r investments earn 2.00% APR (compounded monthly)?

$23,582

$22,675

$24,290

$24,525

$25,261

You plan to retire in year 10
Your retirement will last 20 years.
You want to have $60,000 each year of your retirement.
How much would you have to invest each year, starting in one year, for 6 years , to exactly pay for your retirement ,if your investments earn 5.00% APR (compounded annually)?

$101,704

$99,710

$96,861

$98,798

$94,961

You are planning to save for retirement over the next 20 years. To do this, you will invest $1,100 a month in a stock account and $800 a month in a bond account. The return of the stock account is expected to be 10 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a return of 8 percent. How much can you withdraw each month from your account assuming a 20-year withdrawal period?

A.120,943.05

B.9877.02

C.10,208.16

D.513,326.32

E.10,078.59

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