a. You have just purchased the options listed below. Based on the information given, indicate whether the option is in the money, out of the money, or at the money, whether you would exercise the option if it were expiring today, what the dollar profit would be, and what the percentage return would be. (Enter “0” if there is no profit or return from not exercising the option. Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places.)

a. You have just purchased the options listed below. Based on the information given, indicate whether the option is in the money, out of the money, or at the money, whether you would exercise the option if it were expiring today, what the dollar profit would be, and what the percentage return would be. (Enter “0” if there is no profit or return from not exercising the option. Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places.)

b. Now suppose that time has passed and the stocks’ prices have changed as indicated in the table below. Recalculate your answers to part a.

New Prices Today. Fill out chart the same way as above with these new prices

Call - 11.23

Putt - 11.23

Call - 27.00

Putt - 27.00

A firm has a capital structure that is 75% equity and 25% debt. They would like to buy some machinery that would cost $1,500,000. The firm has a flotation cost of equity of 6.5% and a flotation cost of debt of 5.75%. If they buy the equipment, how much will the firm have to pay in flotation costs? Assume that the firm maintains their current capital structure. Please do in Excel.

The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $115 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $115 is $13.26.

a. If the risk-free interest rate is 6% per year, what must be the price of a 3-month call option on C.A.L.L. stock at an exercise price of $115 if it is at the money? (The stock pays no dividends.) (Do not round intermediate

b-3. How far can the stock price move in either direction before you lose money? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? What is the net cost of establishing that position now? (Do not round intermediate calculations. Round your answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required.)

Find the effective rate of an account that earns 3.5% compounded:

semiannually
quarterly
monthly
weekly
daily
continuously

please dumb this down for me as much as possible

Which of the following would likely encourage a firm to increase the debt in its capital structure?

a. the corporate tax rate increases

b. the personal tax rate increases

c. due to market changes, the firm's assets become less liquid

d. changes in bankruptcy code make bankruptcy less costly to the firm

e. the firms sales and earnings become more volatile

provide rational for each letter in order to support your decision.

A project has annual cash flows of $7,000 for the next 10 years and then $10,500 each year for the following 10 years. The IRR of this 20-year project is 13.96%. If the firm's WACC is 9%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

Project A costs $3,000, and its cash flows are the same in Years 1 through 10. Its IRR is 15%, and its WACC is 10%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

Given the following information about the cash flows of a project that lasts for 6 years, answer the next 3 questions. The initial outlay is $100,000 , incremental cash flows for the next 6 years are $20,000 , $30,000 , $40,000 , $40,000 , $70,000 , $70,000. The discount rate is 13%.

1. What is the pay back period of the project?

2. What is the NPV of the project?

3. What is the IRR of the project?

(please type the answers) (accounting 640)

What was the most interesting topic that was covered in accounting 640 ? Was there something that you learned that you can apply to your current position or in another course you may be taking?

Use a one step binomial option pricing model to value a 1 year at the money call option on AT&T. Assume interest rates are 2%. How does your value compare with the market price?

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%.

What is Project A’s IRR? Do not round intermediate calculations. Round your answer to two decimal places.

%

What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places.

%

If the projects were independent, which project(s) would be accepted according to the IRR method?

-Select-NeitherProject AProject BBoth projects A and BCorrect 1 of Item 3

If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method?

-Select-Neither Project AProject BBoth projects A and BCorrect 2 of Item 3

Could there be a conflict with project acceptance between the NPV and IRR approaches when projects are mutually exclusive?

-Select-YesNoCorrect 3 of Item 3

The reason is -Select-the NPV and IRR approaches use the same reinvestment rate assumption so both approaches reach the same project acceptance when mutually projects are considered.the NPV and IRR approaches use different reinvestment rate assumptions so there can be a conflict in project acceptance when mutually exclusive projects are considered.Correct 4 of Item 3

Reinvestment at the -Select-IRRWACCCorrect 5 of Item 3 is the superior assumption, so when mutually exclusive projects are evaluated the -Select-NPVIRRCorrect 6 of Item 3 approach should be used for the capital budgeting decision.

International Machinery Company (IMC) is a Swedish multinational manufacturing company. Currently, IMC's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2,650 and a cash inflow the following year of $3,350. IMC estimates that its risk-adjusted cost of capital is 14%. Currently, 1 U.S. dollar will buy 7.1 Swedish kronas. In addition, 1-year risk-free securities in the United States are yielding 6%, while similar securities in Sweden are yielding 5%.

a. If the interest parity holds, what is the forward exchange rate of Swedish krona per U.S. dollar? Do not round intermediate calculations. Round your answer to two decimal places.

Swedish krona per U.S. dollar

b. If IMC undertakes the project, what is the net present value and rate of return of the project for IMC in home currency? Do not round intermediate calculations. Round your answers to two decimal places.

NPV:  Swedish kronas

Rate of return:  %

IRR Project K costs $42,881.70, its expected cash inflows are $10,000 per year for 8 years, and its WACC is 14%. What is the project's IRR? Round your answer to two decimal places.

Write at least two large paragraphs to describe your critical thoughts and reflections about watching the Movie The Race to Rebuild America’s Infrastructure. Specifically, what do you think about the issue of an aging and deteriorating American public infrastructure system? What are the possible consequences of an aging and deteriorating American public infrastructure system? How do we take action to address this issue?

Amy is a fixed-income portfolio manager. One year ago, given her expectations of a stable yield curve over the coming 12 months and noting that the yield curve was upward sloping, She elected to position her portfolio solely in 20-year US Treasury bonds with a coupon rate of 4% and a price of $101.7593. After a year, she sells the bonds at a price of $109.0629.

a. Which yield curve strategy was most likely implemented by Amy last year?

Circle one. Sell Convexity / A barbell structure / Riding the yield curve

b. Now Amy is expecting the interest rates over the next 12 months to be highly volatile. She is seeking your advice on how to reposition the portfolio. Would you recommend her to sell or buy the call options on the bonds held in the portfolio, and why?