7. Suppose you bought a new home for $240,000 using a 30-year mortgage with monthly payments of $1,516.96. The annual interest rate of the mortgage is 6.5%. After the first 2 years (24 monthly payments), how much money have you paid in interest and how much in principal?

(a) Interest: $36,407.12; Principal: $5,544.74 (b) Interest: $1,516.96; Principal: $234,455.26 (c) Interest: $30,862.38; Principal $1,516.96 (d) Interest: $30,862.38; Principal: $5,544.74

13. A young couple just had their first baby and they wish to insure that enough money will be available to pay for her college education. They decide to make deposits into an educational savings account on each of their daughter’s birthdays, starting with her first birthday in one year (year 1). The educational savings account pays an interest rate of 9.0%. The parents deposit $2,100 on their daughter’s first birthday and plan to increase the size of their deposits by 8.0% each year. Assuming that the parents have already made the deposit for their daughter’s 18th birthday (year 18), then the amount available for college expenses on her 18th birthday is:

(a) $151,431.19 (b) $86,732.81 (c) $32,102.46 (d) $145,990.78

With celebrity​ bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of the music are used to pay interest and principal on the bonds. In April of​ 2009, EMI announced that it intended to securitize its back catalogue with the help of the Bank of Scotland. The bond was issued with a coupon rate of 6.8​% and will mature on this day 34 years from now. The yield on the bond issue is currently 6​%.

At what price should this bond trade​ today, assuming a face value of ​$1,000 and annual​ coupons? The price of the bond today should be

.

F-I is the answers I need

Stock A and Stock B produced the following returns during the past five years (Year -1 is one year ago, Year -2 is two years ago, and so forth):

Year                            Stock A’s Returns,   Stock B’s Returns,

-1                                        –18.00%                                   –14.50%

-2                                          33.00                                         21.80

-3                                          15.00                                         30.50

-4                                          –0.50                                         –7.60

-5                                          27.00                                         26.30

1. Calculate the average rate of return for each stock during the past five years.
2. Assume that someone held a portfolio consisting of 50 percent Stock A and 50 percent Stock B. What would have been the realized rate of return on the portfolio in each year for the past five years? What would have been the average return on the portfolio during this period?
3. Calculate the standard deviation of returns for each stock and for the portfolio.
4. Calculate the coefficient of variation for each stock and for the portfolio. If you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio? Why?
5. Assume a third stock, Stock C, is available for inclusion in the portfolio. Stock C produced the following returns during the past five years:

Year                               Stock C’s Return, σ

-1                                            32.00%

-2                                          –11.75

-3                                            10.75

-4                                            32.25

-5                                            –6.75

Input these values and calculate the average return, standard deviation, and coefficient of variation for Stock C.

6. Assume that the portfolio now consists of 33.33 percent Stock A, 33.33 percent Stock B, and 33.34 percent Stock C. How does this composition affect the portfolio return, standard deviation, and coefficient of variation versus when 50 percent was invested in A and in B?
7. Make some other changes in the portfolio, making sure that the percentages sum to 100 percent. For example, enter 25 percent for Stock A, 25 percent for Stock B, and 50 percent for Stock C. Notice that remains constant and that s_p changes. Why do these results occur?
8. In part b, you should see that the standard deviation of the portfolio decreased only slightly because Stocks A and B were highly positively correlated with each other. The addition of Stock C causes the standard deviation of the portfolio to decline dramatically, even though s_C = s_A = s_B. What does this change indicate about the correlation between Stock C and Stocks A and B?
1. Would you prefer to hold a portfolio consisting only of Stocks A and B or a portfolio that also includes Stock C? If others react similarly, how might this fact affect the stocks’ prices and rates of return?

Calculate the value of a stock with the following expectations for dividend payments: $1.75 in Year 1, $2.00 in Year 2, and then annual dividend growth of 1.5% per year indefinitely. Assume a discount rate of 9%. Solve the problem two different ways: first by using the algebraic formula for the Gordon Growth Model combined with PV of uneven dividend payments, then by using Excel to calculate and sum the dividends and their respective present values for the next 150 years

Assume a par value of $1,000. Caspian Sea plans to issue a 6.00 year, semi-annual pay bond that has a coupon rate of 8.16%. If the yield to maturity for the bond is 7.60%, what will the price of the bond be?

Assume you are the Director of Financial Planning and Analysis for your company. Make a recommendation to the CFO (me!) on how your company should approach capital budgeting and selection of projects for investment. Your recommendation can include discussion of any or all of the key topics studied in Chapters 10-14:

a) Preferred methodologies/tools (NPV, IRR, Payback)

b) Base Case, Scenario, & Simulation analyses

c) Real Options analysis

d) Impacts of Capital Structure and Leverage

What you choose to base your recommendation upon is less important than the articulation of the conceptual framework and the accurate application of that concept. Given this is a one-page recommendation, clearly you will not be able to incorporate all of the concepts above so pick one or two and demonstrate your comprehension of how it should be applied in financial analysis and capital budgeting. It needs to include, the recommendation, background about the recommendation, three reasons of rationale, risk analysis, and the next steps. These only need to be a few sentences each.

Please Explain the Valuation Model for a domestic corporation and a MNC. Discuss each part of the formula and how changes in exchange rates effect values.

Cash Budgeting

Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl frequently run out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high.

Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,100 per month, and the rent is $1,500 per month. In addition, she must make a tax payment of $11,000 in December. The current cash on hand (on December 1) is $300, but Koehl has agreed to maintain an average bank balance of $5,000 - this is her target cash balance. (Disregard the amount in the cash register, which is insignificant because Koehl keeps only a small amount on hand in order to lessen the chances of robbery.)

The estimated sales and purchases for December, January, and February are shown below. Purchases during November amounted to $100,000.

1. Prepare a cash budget for December, January, and February.

   I. Collections and Purchases:
   	December	January	February
   Sales	$	$	$
   Purchases	$	$	$
   Payments for purchases	$	$	$
   Salaries	$	$	$
   Rent	$	$	$
   Taxes	$	---	---
   Total payments	$	$	$
   Cash at start of forecast	$	---	---
   Net cash flow	$	$	$
   Cumulative NCF	$	$	$
   Target cash balance	$	$	$
   Surplus cash or loans needed	$	$	$

   
   
2. Suppose Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. All customers accept these terms, and all other facts in the problem are unchanged. What would the company's loan requirements be at the end of December in this case? (Hint: The calculations required to answer this part are minimal.)
   $____________

Please answer any or all, thank you!!

______ 30. Most industrialized nations in the world now use a _____________________________, where

exchange rates fluctuate due to changes in demand.

                                                          A. floating exchange rate system

                                                          B. fixed exchange rate system

                                                          C. purchasing power parity exchange rate system

                                                          D. central bank regulatory system

______ 31. Firms hold cash balances

                                                          A. to complete transactions that are necessary in business operations.

                                                          B. as compensation to banks for providing loans and services.

                                                          C. to earn “Interest Revenue.”

                                                          D. A and B.

                                                          E. A and B and C.

______ 32. To reduce the length of its “Cash Conversion Cycle” (CCC), a company could

                                                          A. adopt a new inventory system that reduces the inventory conversion period.

                                                          B. reduce the average “Days Sales Outstanding” (DSO) on its “Accounts                                                            Receivable.”

                                                          C. reduce the amount of time the company takes to pay its suppliers.

                                                          D. A and B.

                                                          E. A and B and C.

______ 33. A lock box system for cash collections from customers is most beneficial to firms which    

                                                          A. make collections over a wide geographic area.

                                                          B. have widely dispersed manufacturing facilities.

                                                          C. have a large marketable securities account to protect.

                                                          D. hold inventories at many different sites.

______ 34. A(n) ____________________ opportunity exists if a currency trader has the opportunity to earn a

                      positive cash flow with no risk involved in the transaction.

                      A. gold standard

                      B. arbitrage

                      C. interest rate parity

D. market equilibrium

Consider a newly issued straight bond with par value of $1,000 and 3 years until maturity. It makes semi-annual coupon payments at a coupon rate of 12%. The bond sells at a yield to maturity of 14%.

a. List the cash flows of the bond.

b. Calculate the current value of these cash flows as if they were zero-coupon bonds. For example, in half a year, the bond is going to pay a coupon of $60. Treat this coupon payment as a zero-coupon bond with par value of $60 and find its present value.

c. Determine the price of the straight bond. Compare this result to the portfolio of zero-coupon bonds from b.

d. Determine the price of the bond on the day after the first coupon, assuming that the yield to maturity has not changed.

Repeat your calculations for a yield to maturity of 10%.

No Explanation needed only True or false

1. Networking capital may be defined as “Current Assets” minus “Current Liabilities.”

2. The forward rate is the rate applied to buy currency for immediate delivery.

3. The shorter a firm’s “Cash Conversion Cycle” (CCC), the better. A shorter CCC will result in lower “Interest Expense” for the firm.

4. Exchange rates influence a multinational firm’s inventory policy because changing currency values can affect the value of inventory.

5. If a single U.S. dollar will buy fewer units of a foreign currency in the forward market than in the spot market, then the forward currency is said to be selling at a premium to the spot rate.

6. Holding minimal levels of inventory (i.e., the “lean and mean” or “restricted” working capital policy) can reduce inventory carrying costs and cannot lead to any adverse effects on profitability.

7. The sound working capital policy is designed to maximize the time between cash expenditures on raw materials and the collection of cash from credit sales.

8. The United States and most other major industrialized nations currently operate under a system of floating exchange rates.

9. A given indirect currency quotation is the reciprocal of the direct quotation.

10. Prior to 1971, the United States used a fixed exchange rate system, with the U.S. dollar being tied to gold.

11. Due to advanced technology and the similarity of general procedures, multi-national financial management is no more complex than financial management for domestic firms.

12. A country’s central bank can “prop up” or raise the value of its currency on the market by selling additional reserves of its own currency on the open market.

13. The volatility of exchange rates under a floating rate system increases the uncertainty of the cash flows for a multinational corporation.

14. According to today’s edition of The Wall Street Journal, $1.5769 U.S. dollars can purchase one euro. This is an indirect quote in terms of U.S. dollars.

15. Under a “relaxed” current asset investment policy, a firm holds only small amounts of current assets relative to sales.

ABC offers a broad portfolio of best quality vegetable oil based ingredients for application in food an non food item. The company made large profits in recent years and set aside a large reserve for future investments. The finance director of ABC bhd is in the process of preparing its capital budget for the forthcoming period and its examining a number of capital investment proposals that have been received from its directors. One of the projects coded as project R involves installation of solar panels to its existing production factory to save energy costs. The solar panels are fitted to the roof of its factory in order to reduce the company’s redendency on oil as an energy source. The solar panels would save energy cost and have an expected life of ten years. The nest cash inflow from this project is estemated at $30,000 per yearThe internal rate of return of the solar panel project is 12%. The company consultant has estimated the portfolio beta as 1.29. The project details are given below:

1. Calculate the figures which have not been provided.
2. Using capital asset pricing model, calculate the required return for each project (Risk Fre Rate 4%, market rate at 8%)
3. Diversification can eliminate all risks inherent in investment projects. Discuss in the context of the above.