1. Below, you will see a pricing curve for Oil Futures. Your client is an oil producer (they are extracting oil from the ground and selling it to refineries)    They wish to hedge their estimated production for March 2021, June 2021, and September 2021.

Oil Pricing Curve

June 2020 $52.35

Sept 2020 $51.00

Dec 2020    $50.05

Mar 2021 $48.10

June 2021 $47.15

Sept 2021    $44.25

1. Oil future prices are said to be in __________.
2. What hedge rates could your client lock into today for Mar21, Jun21, and Sep21?
3. On settlement date for each of the 3 hedges, assume the spot price of oil has dropped to $38.00 per barrel. Show the calculations (2 steps) of the settlement for each of the above three dates. ($38.00/barrel is the price for each of the three dates)

ABC’s the most recent free cash flow (FCF0) is $200 million. The free cash flow is expected to grow at a rate of 40 percent, and 20 percent in the second year. After two years, it is expected to grow forever at a constant rate of 5 percent. The cost of common stock (rs) is 12% and the weighted average cost of capital (WACC) is 9%. ABC balance sheet shows $20 million in short term investments that are unrelated to operations. The balance sheet also shows $100 million in debt, $50 million in preferred stocks, and $250 million in common stocks.If the company has 40 million shares of common stocks, what is your best estimate for the stock price per share today? Assume that company's book values of debt and preferred stocks are very close to the market vales.

1. You're buying a used car for $8000 but paying $1500 in cash immediately. You’ll be borrowing the difference from a local bank. Your first payment to the bank will occur at the end of the 8th month. The last payment will occur at the beginning of the 43rd month. The payments will all be equal in size.   

The interest rate on the car loan is 0.50% per month (the equivalent of 6% per year - when annualized as an APR). i.e. Use r = 0.50% (per month) in your computations.

A) What is the size of the first payment?

B) Now assume that the size of the car payments increases by 2% every month. What is the size of the first payment?

C) Now assume that the size of the car payments decreases by 2% every month. What is the size of the 4th (fourth)  payment?

D) Now assume that the size of the car payments decreases by 0.50% every month. What is the size of the 9th (ninth) payment?

E) Now assume that the size of the car payments increases by 0.50% every month. What is the size of the 9th (ninth) payment?

Please help me this is urgent!!

Firm C currently has 320,000 shares outstanding with current market value of $33 per share and generates an annual EBIT of $1,500,000. Firm C also has $1 million of debt outstanding. The current cost of equity is 9 percent and the current cost of debt is 6 percent. The firm is considering issuing another $3 million of debt and using the proceeds of the debt issue to repurchase shares (a pure capital structure change). It is estimated that the cost of the new debt will be 7 percent and that the cost of equity will rise to 10 percent with the additional debt. The marginal tax rate is 34 percent.

a. What is the current market value of the firm?

b. What will the firm’s market value be after the announcement of the new debt issue? (Note that total market value of debt will be D0 + D1 and the interest costs that must be subtracted from EBIT when calculating the market value of equity must be calculated in two parts and then added: Kd0D0 + Kd1D1).

c. What will the estimated new share price be after the capital structure change announcement?

d. How many shares are outstanding after the repurchase?

6. Make sure that you draw a high quality, detailed timeline – similar in quality to those in Example 12 and Problem 15.

Assume that you wish to begin saving for your child’s college education via making deposits into an investment account that is expected to earn 8% per year for the first 14 years. After year 14, you will place the money in a less risky investment account that is expected to earn only 5% per year, for as long as you have money in the account.

You currently have $5,000 available, and you will deposit that amount into the savings account today. Thereafter you have decided to make savings deposits 3, 4, 5, … , 9 and 10 years from today. Each of these deposits will be larger than the prior deposit by 7%.  

You’ve estimated that one year of college will cost $52,000 in 18 years, and that the three subsequent years will each cost 5% more than the prior year.

A) Determine the size of the first deposit required at time 3. (Hint: The answer is NOT $9475.37. If you got this, you did not deal with the $5000 at t=0 at all. The correct answer is between $8600 and $8700).

Please help me this is urgent!!!

You bought 500 forever stamps just before the price went up in January of 2014 at $0.46/stamp, a $0.03 savings per stamp. If you could have paid off a credit card charging 12% per year instead of investing in stamps, how fast must you use the stamps to breakeven? Assume the $0.49 price never changes before you run out of stamps. (Hint use 12% / year as your effective interest rate per year)

a. 3 months

b 6 months

c 10 months

d 12 months

e 36 months

It is given that the effective rate of interest for the n-th year period is in = 0.01 + e^(−n)

(a) Find a(t) for t being an integer.

(b) If the principal is $100, find the total amount of interest earned in year 3, 4 and 5.

A loan amortization schedule allows you to see the amount you are paying towards interest and the outstanding balance of the loan. Since the amount of interest is based on the outstanding principal, you can compute the interest portion directly by multiplying the interest rate by the beginning of the period outstanding balance. When you subtract interest from the overall payment, you see the portion being applied towards the principal, which reduces the ending period outstanding balance, which hence becomes the beginning of the period balance period for the next time period.

Required:

How many times have you been provided an amortization schedule when applying for a loan? Why do you think amortization schedules are important? How should the government mandate loan information disclosure? Write 300 words.

Please write in your own words. Please don't copy from anywhere. Thank You!

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $745,000. This cost will be depreciated straight-line to zero over the project’s 7-year life, at the end of which the sausage system can be scrapped for $103,000. The sausage system will save the firm $219,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $71,000.

a)What is the aftertax salvage value of the equipment?

Aftertax salvage value=

b) What is the annual operating cash flow?

OCF=

c) If the tax rate is 23 percent and the discount rate is 10 percent, what is the NPV of this project?

NPV=

Suppose your company needs to raise $18 million and you want to issue 27-year bonds for this purpose. Assume the required return on your bond issue will be 5 percent, and you're evaluating two issue alternatives: a 5 percent semiannual coupon bond and a zero coupon bond. Your company's tax rate is 31 percent.

a. You will need to issue ............. of the coupon bonds to raise the $18 million. You will need to issue ................ of the zeroes to raise the $18 million.

(Round your answers to the nearest whole number. (e.g., 32))

b. In 27 years, your company's repayment will be $ .............. if you issue the coupon bonds. If you issue the zeroes, your company's repayment will be $ ..................

(Do not include the dollar sign ($). Do not round your intermediate calculations. Round your answers to the nearest whole number. (e.g., 32))

c. Your aftertax cash outflow for the first year will be $ ................. if you issue the coupon bonds, and a cash inflow of $ ....................if you issue the zeroes.

(Do not include the dollar signs ($). Do not round your intermediate calculations. Round your answers to the nearest whole number. (e.g., 32))

Pls try to answer with Excel.

In 2016, Natural Selection, a nationwide computer dating service, had $504 million of assets and $202 million of liabilities. Earnings before interest and taxes were $122 million, interest expense was $27.5 million, the tax rate was 40 percent, principal repayment requirements were $24.2 million, and annual dividends were 25 cents per share on 22 million shares outstanding.

1. Calculate the following for Natural Selection: (Round your answers to 2 decimal places.)

A: Liabilities to equity ratio=

B: Times interest earned ratio=

C: Times burden covered

2. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover: (Round your answers to 1 decimal place.)

A: Interest payment requirements? %

B: Principal and interest requirements? %

C: Principal, Interest, and common dividend payments? %

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,300,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,900,000 in annual sales, with costs of $1,910,000. The project requires an initial investment in net working capital of $186,000 and the fixed asset will have a market value of $221,000 at the end of the project. Assume that the tax rate is 21 percent and the required return on the project is 12 percent. a. What are the net cash flows of the project each year? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) b. What is the NPV of the project?(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)

Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $195,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $910,000 per year. The fixed costs associated with this will be $234,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $1,000,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 25 percent and a required return of 15 percent.

a. Calculate the payback period for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b. Calculate the NPV for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

c. Calculate the IRR for this project. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Geography and the Foreign Exchange Market

a. What is the geographical location of the foreign exchange market?

b. What are the two main types of trading systems for foreign exchange?

c. How are foreign exchange markets connected for trading activities?