Discussion, at least 150 words.

How Fair is “Check Into Cash?” In 1993, the first Check Into Cash location opened in Cleveland, Tennessee. Today there are 1,250 Check Into Cash centers among an estimated 22,000 payday advance lenders in the United States. There is no doubt about the demand for such organizations, but the debate continues on the “fairness” of payday-advance loans. A payday loan is a small, unsecured, short-term loan ranging from $100 to $1,000 (depending upon the state) offered by a payday lender such as Check Into Cash. A payday loan can solve temporary cash-flow problems without bouncing a check or incurring late-payment penalties. To receive a payday advance, borrowers simply write a personal post-dated check for the amount that they wish to borrow, plus the payday loan fee. Check Into Cash holds their checks until payday when the loans are either paid off in person or the check is presented to the borrowers’ banks for payment. Although payday-advance borrowers usually pay a flat fee in lieu of interest, it is the size of the fee in relation to the amount borrowed that is particularly aggravating to opponents of the pay-day advance industry. A typical fee is %15 for every $100 borrowed. Payday advance companies that belong to the Community Financial Services Association of America (CFSA), an organization dedicated to promoting responsible regulation of the industry, limit their member companies to a maximum of four rollovers of the original amount borrowed. Thus, a borrower who rolled over an initial $100 loan for the maximum of four times would accumulate a total of $75 in fees all within a 10-week period. On an annualized basis, the fees would amount to a whopping 391%. The 391% is an annual nominal rate {15% x (365/14 weeks). An annual rate of 391% is a huge cost in relation to interest charged on home equity loans, personal loans, and even credit cards. However, advocates of the payday-advance industry make the following arguments: Mot payday loan recipients do so either because funds are unavailable through conventional loans or because the payday loan averts a penalty or bank fee which is, in itself, onerous. According to Check Into Cash, the cost for $100 of overdraft protection is $26.90, a credit card late fee on $100 is $37, and the late/disconnect fee on a $100 utility bill is $46.16. Bankrate.com reports that non-sufficient funds (NSF) fees average $26.90 per occurrence. A payday advance could be useful, for example, if you have six outstanding checks at the time you are notified that the first check has been returned for insufficient funds and you have been charged an NSF fee of $26. A payday advance could potentially avert subsequent charges of $26 per check for each of the remaining five checks and allow you time to rearrange your finances. When used judiciously, a payday advance can be a viable option to meet a short-term cash flow problem despite its high cost. Used unwisely, or by someone who continuously relies on a payday loan to try to make ends meet, payday advances can seriously harm one’s personal finances. What is your opinion?

Discuss how your organization could use an operations management linear programming application to solve a problem or improve a business process.

Two competing commercial banks situated in the same region have comparable asset portfolios, but one operates with a total capital ratio of 10%, while the other operates with a ratio of 12%. Compare the opportunities and risk profiles of the two banks.

Discuss the differences between primary source and secondary source of repayment for commercial clients of commercial banks? (20 marks

What are the 2 components of the periodic return?

1) A slowdown in the U.S economic growth will

A) boost $ value because inflation fears will be calmed. B) boost $ value because the federal reserve will expand money supply. C) lower $ value because the U.S will be a less attractive place to invest in. D) lower $ value because intrest rate will rise

2) In 1995 ¥ went from $0.0125 to $0.0095238. By how much did $ appreciate against ¥?

3) Suppose that the Brazilian real devalues by 40% against the dollar. By how much will the dollar appreciate against the real?

4) Suppose the spot direct quotes for the pound sterling in New York is $1.3981. What is the direct quote for the dollar in London?

5) If the Euro devalued by 17% against the U.S dollar, this is equivalent to revaluation of the dollar against Euro by?

Stock-Trak Exercises

2. Explore some of the Internet links to stock market research tools provided by Stock-Trak.

3. Look up stock ticker symbols for these companies: American Express, ExxonMobil, Liz Claiborne, McDonald’s, Procter & Gamble, Southwest Airlines, and Xerox.

4. Some companies have ticker symbols with only a single letter, for example, the letters A, B, C, D, E, F, G, K, N, O, Q, R, S, T, X, and Y are one-letter tickers. What are these companies’ names?

5. Can you guess what the company names are for the ticker symbols AAPL, BUD, DIS, FDX, HOG, LZB, PEP, PILL, PZZA, REV, SBUX, and YUM?

What are the political and financial consequences of the Census undercounting the population in Texas?

1. Dave’s Pizza – Fulton Pizza Merger

Dave’s pizza is considering a merger with Fulton Pizza. The offer under discussion is a cash offer of $352 million for Fulton Pizza. Both companies have niche markets in the pizza industry, and the companies believe a merger will result in significant synergies due to economies of scale in manufacturing and marketing, as well as significant savings in general and administrative expenses.

Matt Robinson, the financial officer for Dave’s, has been instrumental in the merger negotiations. Matt has prepared the following pro forma financial statements for Fulton assuming the merger takes place. The financial statements include all synergistic benefits from the merger:

Matt knows that Fulton will require investments each year for maintenance of plant. The table below has required investments and sources of financing:

The management of Dave’s feels that that capital structure at Fulton is not optimal. If the merger takes place, Fulton will immediately increase its leverage with a $71 million debt issue, which would be followed by a $96 million dividend payment to Dave’s. This will increase Fulton’s debt-to-equity ratio from 0.50 to 1.00. Dave’s will also be able to use a $16 million tax loss carryforward in 2016 and 2017 from Fulton’s previous operations. The total value of Fulton is expected to be $576 million in five years, and the company will have $192 million in debt at that time.

Stock in Dave’s currently sells for $94 per share, and the company has 11.6 million shares of stock outstanding. Fulton has 5.2 million shares of stock outstanding. Both companies can borrow at 8%. The risk-free rate is 6%, and the expected return on the market is 13%. Matt believes the current cost of capital for Dave’s is 11%. The beta for Fulton at its current capital structure is 1.30.

Matt has asked you to analyze the financial aspects of the potential merger. Specifically, he has asked you to answer the following questions:

1. Suppose Fulton’s shareholders will agree to a merger price of $68.75 per share. Should    Dave’s proceed with the merger?
2. What is the highest price per share that Dave’s should be willing to pay for Fulton?
3. Suppose Dave’s is unwilling to pay cash for the merger but will consider a stock exchange. What exchange ratio would make the merger terms equivalent to the original merger price of $68.75 per share?
4. What is the highest exchange ratio Dave’s would be willing to pay and still undertake the merger?                             

Find the price of a bond with face value of $100 and $10 annual coupons that matures in 5 years, given that the continous compounding rate is 6%.

Torque Manufacturing forecasts that its production will require 600,000 tons of bauxite over its planning period. Demand for Torque's products is stable over time. Ordering costs amount to an average of $15.00 per order. Holding costs are estimated at $1.25 per ton of bauxite. If Torque uses an inventory quantity of 3,000 tons, what will be the total annual cost of inventory?

The answer is $4,875 but I don't know how they got it. Can anyone help?