How do I find the dollar and duration gap from a bank? For example JPMorgan chase Bank

Winnebagel Corp. currently sells 27,520 motor homes per year at $44,207 each, and 12,392 luxury motor coaches per year at $98,699 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 19,671 of these campers per year at $15,153 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 5,177 units per year, and reduce the sales of its motor coaches by 1,044 units per year. What is the amount to use as the annual sales figure when evaluating this project?

Case Study- Microsoft Solving a Good Problem for a Company to Have (2004)

Strategic Overview:

Microsoft announced at the annual shareholders meeting in November 2002 that, despite having $40 billion in cash on its balance sheet, the company would be taking any substantive measures to distribute the cash to its roughly 4.2 billion shareholders. Microsoft state that the cash was needed to satisfy judgements that could arise from ongoing corporate and private antitrust lawsuits. While the company had a history of buying back its stock, Microsoft had never paid a dividend since going public in 1986. The no dividend policy made sense historically as high-tech, growth companies with high P/E’s, typically don’t issue dividends, but instead elect to plow their profits back into the business. But as of the shareholder meeting, Microsoft’s growth had slowed to about 10 percent annually, from 30 percent or more in the company’s early years, and the stock, as evidenced by its inclusion in the Dow Jones Industrial Average, had begun to look more like a stable blue chip that a high-flying tech issue. The announcement made at the 2002 meeting angered many shareholders. Growth had stagnated and the company was sitting on a pot of cash. It was an efficient business that was generating $1 billion a month in free cash. In a shrinking interest rate environment, Microsoft’s returns on short term investments were insignificant and reduced the firm’s return on equity. The state of affairs led one investor at the meeting to comment, “We need a reason to hold the stock. We need a dividend. We need something.”

Options:

Management was under pressure to act. They could choose between a myriad of options including: 1) Doing nothing, 2) Using the cash to finance acquisitions and expansion, 3) Returning the cash to shareholders by beefing-up the ongoing stock repurchase program, a program that had the company buying back shares at the rate of up to $ 6 billion a quarter, or 4) Returning cash to shareholders by issuing dividends. Given the company had virtually no debt (see below), share repurchase appeared to be an efficient way to solve the problem. Buybacks are tax efficient to individua investors and protect shares from dilution due to option exercise. Unlike repurchases, investors assume that dividends payments, once begun, will continue indefinitely.

Decision:

In mid-January of 2003, three months after the November 2002 shareholder meeting, the company surprised the investment community by announcing its first-ever annual cash dividend of 8 cents per share (2 cents per quarter). The dividend represented a total outlay of more than $850 million which translated into just over a quarter of 1 percent of the share price. While the dividend made big news, it was met with criticism that the dollar amount was insignificant. Following the announcement speculation immediately rose over Microsoft’s change in philosophy. One suggested reason for the dividend was President Bush proposed tax reform plan which would exempt shareholders from income tax on dividends (later changed to a 0.15 tax rate). Another possible reason, and the one that Microsoft stated publicly, is that many of the company’s legal risks are largely behind them. The company settled with the Justice Department and many private antitrust claimants and has made progress with the European Union.

Shareholder Reaction and Company Update:

Microsoft’s stock price dropped about $4 or 7% the day following the dividend announcement. This was partially attributable to the relatively weak outlook for the current quarters, but the falling price was likely an indication that some investors concluded that Microsoft had exhausted its growth options and the future looked uncertain. Despite the dividend payments and despite the stock buy back, Microsoft continued to increase its cash balance. In July of 2004, the company announced it would issue a special cash dividend of $3 per share payable on December 2, 2004. With almost 11 billion shares outstanding, the special dividend would return almost $33 billion in cash to shareholders. In July of 2004, the company also announced that it would begin to pay a regular quarterly dividend of $0.08 per quarter. The move represented a doubling of the dividend – the second time the dividend had doubled since the initial dividend issuance. But even with the latest doubling, Microsoft’s yield will still be below the 1.7% average yield for the S&P 500.

Questions:

1. Was the decision to start paying a cash dividend of $0.02 per share per quarter a good decision?

2. Was the $3 per share special dividend desirable?

3. What, if anything, should Microsoft have done with its $64 billion of cash and short term investments?

Problem 11-06 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,090,000, and it would cost another $16,500 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $552,000. The machine would require an increase in net working capital (inventory) of $10,500. The sprayer would not change revenues, but it is expected to save the firm $487,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%. What is the Year 0 net cash flow? $ 1,063,000 What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar. Year 1 $ Year 2 $ Year 3 $ What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar. $ If the project's cost of capital is 14 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should the machine be purchased?

Sarah opened this portfolio when she turned 45. Semi annual deposits of $3000 into an account averaging 3.4% compounded semi-annually . A $25000 bond earning 7.8% compounded monthly. Based on this information ....... a) What will be the value of the portfolio when she turns 65 Show your work. B)When she turns 65 she cashes in the entire portfolio . she keeps 80,000 to travel around the world for a year and invests the remaining money in an account that pays 7.2% compounded quarterly. How much will the account be worth after 3 years

Discuss any significant cultural and corporate governance differences between the United States and the countries that the majority of the positive global diversification activities occurred

counyries like china,japan and brazil

Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 8 percent annual interest and has 17 years remaining to maturity. The current yield to maturity on similar bonds is 10 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. What is the current price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.)

b. By what percent will the price of the bonds increase between now and maturity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

TexMex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other TexMex products and would reduce their pre-tax annual cash flows. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) Do not round the intermediate calculations and round the final answer to the nearest whole number.

NPV PROFILES: TIMING DIFFERENCES

An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $15.36 million. Under Plan B, cash flows would be $2.2744 million per year for 20 years. The firm's WACC is 12.7%.

a.Construct NPV profiles for Plans A and B. Round your answers to two decimal places. Round your answers to two decimal places. Do not round your immediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. If the amount is zero enter "0". Negative should be indicated by minus sign.

Discount Rate            NPV Plan A               NPV Plan B

          0%                    $...... million              $....... million

          5                       $...... million              $....... million

        10                       $...... million              $....... million

        12                       $...... million              $....... million

        15                      $....... million              $....... million

        17                      $....... million              $...... million

        20                      $....... million              $...... million

b. Identify each project's IRR. Round your answers to two decimal places.

c. Project A ___________%

d. Project B ___________%

e. Find the crossover rate. Round your answer to two decimal places. Do not round your intermediate calculations

______________%

f. Is it logical to assume that the firm would take on all avaialble independent, average-risk projects with returns greater than 12.7%?

_______________________

I all available projects with returns greater than 72% have been undertaken, does thiss mean that cash flows from past investments have an opportunity cost of only 12.7%, because all the company can do with these cash flows is to replace money that has a cost of 12.7%?

____________________

Does this imply that the WACC is the correct reinvestment rate assumption for a project's cash flows?

Lizard Lick Towing has sales of $601,506, COGS and SG&A totaling $212,765, depreciation expense of $122,525, and taxes paid of $80,400. A partial listing of its balance sheet accounts is as follows:

What is the amount of Lizard Lick's cash flow from assets?

Tim Tebow's Puppy Rescue has sales of $2.19 M, net income of $0.174 M, net fixed assets of $1.69 M, and current assets of $0.73 M. The firm has $0.32 M in accounts receivables. What is the common-size statement value of A/R? Enter all percentages as a decimal (ex. 25.7% as 0.257).

Dunder-Mifflin is considering opening a new branch in Columbia with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project.

At the end of the project the equipment will be sold for an estimated $300,000. The project will not directly produce any sales but will reduce operating costs by $725,000 a year. The tax rate is 35 percent. The project will require $45,000 of inventory which will be recouped when the project ends. What is the NPV of this project if the firm requires a 13.7 percent rate of return? Enter the dollar amount as an integer value (ex. -$5,000.45 as -5000 or +$3,450.70 as 3451).