We will do one more quick retirement account analysis problem to see the impact of: (1) trying to save either a fixed amount each year or a constant percentage of your salary each year and (2) starting your retirement saving immediately or waiting 10 years to really start your retirement savings. Let’s assume that you put a savings deposit into your 401k account at the end of each year by saving money over that previous year period (i.e. so I normally think of them as beginning of year transactions for my cash flow table since I think of the “Period” column in my present value table as “time elapsed between time zero (e.g. today or whenever the cash flow table starts) and when the cash flow will take place.” (e.g. a cash flow in the row labelled “Period 1” occurs at the end of Year 0 or beginning of Year 1, so 1 years time has elapsed since “time 0”) Assume you graduate with your B.S. in Chemical Engineering in Spring semester 2023, take few months off to travel around Europe, and then start work in January 2024 with a starting salary of $70,000. You can also assume where it becomes important that you get an average yearly raise of 2% each year (i.e. so you make $70,000 your first year on the job, $71,400 your second year, etc.). Assume that you are going to retire 40 years later in January 2064. Assume that you are going to live the average of 20 years into retirement, i.e. that you will die in January 2084, and that you want to pay yourself $100,000 per year in retirement income each year, and that both while saving and throughout retirement that your 401k earns 7% in effective interest compounded yearly. Case 1: Using an NPV analysis and assuming that you want to completely expend your retirement savings right when you die (i.e. NPV=0 for the entire series of cash flows then in this case) and that you start saving with your first deposit at the end of 2024, how much would you have to save each year into your retirement account if you wanted to save the exact same amount each year? Case 2: Using an NPV analysis and assuming that you want to completely expend your retirement savings right when you die (i.e. NPV=0 for the entire series of cash flows then in this case) and that you start saving with your first deposit at the end of 2024, how much would you have to save each year on a percentage of your salary basis into your retirement account if you wanted to save the exact same percentage of your salary each year you are working (HINT: Here you may want to add a column to your cash flow table to track your yearly salary as it increase due to raises)? Case 3: Using an NPV analysis and assuming that you want to completely expend your retirement savings right when you die (i.e. NPV=0 for the entire series of cash flows then in this case) and that you have fun in your 20’s and early 30’s and wait to start saving with your first deposit at the end of 2034 (i.e. so now retirement is only 30 years after you start saving), how much would you have to save each year into your retirement account if you wanted to save the exact same amount each year? Write a short discussion of how you feel about your ability to achieve these types of retirement goals and savings and comment on the effect of waiting to start saving for retirement.

Let us say that long-term debt has an interest rate and short-term debt does not. Then why not finance your entire operation with non interest bearing short-term payables? Could save you money! What does the current ratio really measure and should it vary depending on the certainty of sales revenue? Note: textbooks probably get this wrong in my opinion.

A corp is considering paying dividends to shareholders.The corp has a $2.00 of per share earnings before taxes. Corp tax rate is 21%, personal dividend income tax rate is 15%, personal non-dividend income tax is 25% What is the after-tax value that will accure to shareholders if all $2.00 is distributed and the corp is a C-corp. What is the after tax value that would accure to shareholders, but now assume it is an S-corp.

Please show work and some small explanations would be nice, i need to be able to know how to do this myself thanks!

When creating a budget, how much should you factor variances into such an analysis?

P.8. Opportunity cost of capital. F&H Corp. continues to invest heavily in a declining industry. Here is an excerpt from a recent speech by F&H’s CFO:

     We at F&H have of course noted the complaints of a few spineless investors and uninformed security analysts about the slow growth of profits and dividends. Unlike those confirmed doubters, we have confidence in the long-run demand for mechanical encabulators, despite competing digital products. We are therefore determined to invest to maintain our share of the overall encabulator market. F&H has a rigorous CAPEX approval process, and we are confident of returns around 8% on investment. That’s a far better return than F&H earns on its cash holdings. The CFO went on to explain that F&H invested excess cash in short-term U.S. government securities, which are almost entirely risk-free but offered only 4% rate of return.

a. Is a forecasted 8% return in the encabulator business necessarily better than a 4% safe return on short-term U.S. government securities? Why or why not?

b. Is F&H’s opportunity cost of capital 4%? How in principle should the CFOdetermine the cost of capital?

Discussion board:

Risk, Return, and the Capital Asset Pricing ModelAs a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the following in-formation pertaining to two common stock investments, Tech.com Incorporated and Sam’s Grocery Cor-poration. You are told that a one-year Treasury Bill will have a rate of return of 5% over the next year. Also, information from an investment advising service lists the current beta for Tech.com as 1.68 and for Sam’s Grocery as 0.52. You are provided a series of questions to guide your analysis.

Estimated Rate of Return

Economy             Probability          Tech.com            Sam’s Grocery                   S&P 500

Recession            30%                        –20%                                     5%                          – 4%

Average               20%                        15%                                        6%                          11%

Expansion            35%                        30%                                        8%                          17%       

Boom                    15%                        50%                                        10%                        27%

1. Which of these two-stock portfolios do you prefer? Why

A loan of $100,000 is made today. This loan will be repaid by 10 level repayments, followed by a final smaller repayment, i.e., there are 11 repayments in total. The first of the level repayments will occur exactly 2 years from today, and each subsequent repayment (including the final smaller repayment) will occur exactly 1 year after the previous repayment. Explicitly, the final repayment will occur exactly 12 years from today. If the interest being charged on this loan is 8.5% per annum compounded half-yearly, and the final smaller repayment is $300, Calculate the loan outstanding exactly 11 years from today.

The current spot price of Copper is $2.7445 per pound. The storage costs are $0.05 per pound per year payable monthly. Physical holding of copper now can yield $0.13 per pound per year which is achievable monthly. The price of a 9-month futures contract of copper is currently listed as 2.7685. Assume that interest rates are 10% per annum and monthly compounded.

a) If the cost-of carry relationship is held under no-arbitrage conditions, what should the 9-month futures price be (4 d.p.)?

b) Is the listed 9-month futures price provide arbitrage opportunity (assume transaction costs are negligible)? Justify.

c) If the listed futures price is correct, what would be the underlying annual yield.

show all steps ,formula ,and calculations

1. a) A call option with a strike price of $68 on a stock selling at $82 costs $15.3. What are the call option’s intrinsic and time values?

2. b) A put option on a stock with a current price of $37 has an exercise price of $39. The price of the corresponding call option is $2.85. According to put-call parity, if the effective annual risk-free rate of interest is 4% and there are three months until expiration, what should be the price of the put?

3. c) A call option on Jupiter Motors stock with an exercise price of $75 and one-year expiration is selling at $6. A put option on Jupiter stock with an exercise price of $75 and one-year expiration is selling at $4.0. If the risk-free rate is 10% and Jupiter pays no dividends, what should the stock price be? show all steps and formula plz

Write a note on the salient features of a corporation explaining the benefits and limitations to the firm and to the investors with this form of business organization.

Consider a two-state call option valuation problem given the current stock price $240 and the two possibilities for the change in the price are $270 and $170. Also, the strike price is $250 and the risk-free rate is 10%. a) What is the hedge ratio of the call? b) Calculate the value of a 1-year call option using discrete compounding. show all steps and formula please

Laquita deposits $5500 in her retirement account every year. If her account pays an average 6% interest and she makes 38 deposits before she retires, how much monet can she withdraw in 20 equal payments beginning one year after her last deposit? please show cash flow diagram and solve NOT with excel but with the interest rate formula equations!!!

Stock A has an expected annual return of 24% and a return standard deviation of 28%. Stock B has an expected return 20% and a return standard deviation of 32%. If you are a risk averse investor, which of the following is true?

A. You would never include Stock B in your portfolio, as it offers a lower return and a higher risk.

B. Under certain conditions you would put all your money in Stock B.

C. You would never invest in either one of the two stocks.

D. For a low enough correlation coefficient between the returns of the two stock, you might want to invest in both.

E. I choose not to answer

Please give an explanation :)

Assume a call option on Greshak Corp. currently sells for $6.00 in the market and the current rate on S-T Federal securities is 5.00%. The call option on Greshak's stock has 4 months to expiration and a strike price of $35.00. If the underlying shares of Greshak Corp. sell for $46.00, what is the price of a put option with a $52.00 strike price and 4 months to expiration (assume the options are European style options)?  YOU MUST SHOW ALL WORK TO RECEIVE CREDIT. MAKE SURE YOU USE AT LEAST 4 DECIMAL PLACES IN ALL CALCULATIONS