1. Google will not pay out a dividend for two years (t=1 and t=2). For the next two years, they will pay out a dividend of $6.00 per share (t=3 and t=4). The dividend will grow at a rate of 5% per year every year after this. If the required rate of return of Google’s stock is 22%, Google’s stock price is $________.

What is the amount of interest earned in the 33rd semi-annual deposit interval of a sinking fund that is set up to pay back a debt of $220000 over 19 years? The fund earns 4.62% compounded semi-annually and the deposits are made semi-annually.

Parramore Corp has $12 million of sales, $2 million of inventories, $2 million of receivables, and $2 million of payables. Its cost of goods sold is 75% of sales, and it finances working capital with bank loans at an 9% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.

1. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places.
     days
2. 
   
3. If Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold, what would be the new CCC? Do not round intermediate calculations. Round your answer to two decimal places.
     days
4. 
   
5. How much cash would be freed up, if Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.
6. 
   
7. By how much would pretax profits change, if Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.
   

A proposed cost-saving device has an installed cost of $645,000. The device will be used in a five-year project, but is classified as manufacturing and processing equipment for tax purposes. The required initial net working capital investment is $55,000, the marginal tax rate is 35%, and the project discount rate is 9%. The device has an estimated year 5 salvage value of $75,000. What level of pre-tax cost savings do we require for this project to be profitable? The CCA rate is 20%.

Financing Deficit

Garlington Technologies Inc.'s 2016 financial statements are shown below:

Balance Sheet as of December 31, 2016

Income Statement for December 31, 2016

Suppose that in 2017 sales increase by 15% over 2016 sales and that 2017 dividends will increase to $186,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2016. Use an interest rate of 9%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new-debt will be in the form of a line of credit. Round your answers to the nearest dollar. Do not round intermediate calculations.

Ximena is trying to get a mortgage loan of $170,000. The bank quotes her a 15-year rate of 5.6% and a 30-year rate or 7.5%. Both of these loans involve equal monthly payment.

a. What is monthly payment for the 15-year loan? What is the total interest paid?

b. What is the monthly payment for the 30-year loan? What is the total interest paid?

c. What is the APR for each option?

NPV

Your division is considering two projects with the following cash flows (in millions):

1. What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
   Project A ___ $   million
   Project B____ $   million

   What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
   Project A ___ $   million
   Project B  ___ $ million

   What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
   Project A  ___$  million
   Project B ___$   million

2. What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations.
   Project A __%
   Project B___%

   What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations.
   Project A___%
   Project B___%

   What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations.
   Project A___%
   Project B___%

3. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 90.37%.)
   -Select-Project AProject BNeither A, nor B

   If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 90.37%.)
   -Select-Project AProject BNeither A, nor B

   If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 90.37%.) -Select-Project AProject BNeither A, nor B

1) A sinking fund is established to discharge a debt of $20,000 in 10 years. If deposits are made at the end of each 6-month period and interest is paid at the rate of 4%, compounded semiannually, what is the amount of each deposit? (Round your answer to the nearest cent.)

2) If $1500 is deposited at the end of each quarter in an account that earns 4% compounded quarterly, after how many quarters will the account contain $70,000? (Round your answer UP to the nearest quarter.)

Discuss the Argentinian Peso crisis and the Asian currency crisis. What did they have in common, and how did they differ? Why did they collapse? What two unique elements of the peso crisis are not normal to most currency crisis? Discuss the common components of most crisis, and what would be expected to occur under floating exchange rates given similar circumstances

What are the advantage of being in the EU and adopting the euro? What are the chief drawbacks ? Why didn’t some countries like England, Switzerland adopted euro?

Loan Amortization

Your company is planning to borrow $1.5 million on a 7-year, 8%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.

Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $3.4 million per year to beneficiaries. The yield to maturity on all bonds is 18.5%.

a. If the duration of 5-year maturity bonds with coupon rates of 14.6% (paid annually) is four years and the duration of 20-year maturity bonds with coupon rates of 8% (paid annually) is 11 years, how much of each of these coupon bonds (in market value) will you want to hold to both fully fund and immunize your obligation?

b. What will be the par value of your holdings in the 20-year coupon bond?

An insurance company must make payments to a customer of $8 million in one year and $4 million in four years. The yield curve is flat at 9%.

a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase?

b. What must be the face value and market value of that zero-coupon bond?