RAK, Inc., has no debt outstanding and a total market value of $220,000. Earnings before interest and taxes, EBIT, are projected to be $40,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 10 percent higher. If there is a recession, then EBIT will be 20 percent lower. RAK is considering a $135,000 debt issue with an interest rate of 4 percent. The proceeds will be used to repurchase shares of stock. There are currently 11,000 shares outstanding. RAK has a tax rate of 35 percent.

Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.

Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession

Mass Waste Disposal Inc. is considering the construction of a facility at a cost of $20 million. The project will produce positive cash flows of $7 million per year for the next 4 years but the 5th and final year will have a net negative cash flow of $5 million. If the reinvestment rate is 10% and the cost of capital is 9%, the MIRR of this project is ________ and the project should be ________. (accepted/rejected) Show all work and explain

The following are option price quotations for The North West Company on July 27, 2019:

The North West Company stock market price $29.89

a. What is the intrinsic value and time value for each option?

b. Calculate the breakeven share price for each option.

c. Suppose on July 27, 2019 you take the long position (buy) in one August 16, 2019 call option on The North West Company and hold your position to the expiry date. Calculate your net profit given the following stock prices (Po) $ 20, 25, 30, 35, and 40.

d. Suppose on July 27, 2019 you take the short position (sell) in one August 16, 2019 put option on The North West Company and hold your position to the expiry date. Calculate your net profit given the following stock prices (Po) $ 20, 25, 30, 35, and 40.

Assume that on a recent day, the September 2019 S&P Index futures contract (i.e., the S&P contract which expires in September) closed at 2890, up 7 points on the day. The value of the contract is set at 250 × the index.

When you bought the contract, you had to put up initial margin of $35,000. The maintenance margin is $31,000. At what contract price will you get a margin call?
Explain.

You have just sold your house for $1,000,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $800,000. The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 5.25% (APR), how much cash will you have from the sale once you pay off the mortgage?

Sunburn Sunscreen has a zero coupon bond issue outstanding with a $21,000 face value that matures in one year. The current market value of the firm’s assets is $22,800. The standard deviation of the return on the firm’s assets is 26 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously. Based on the Black-Scholes model, what is the market value of the firm's equity and debt?

Equity $ _______  

Debt $ ________

Consider a stock which is currently selling for $50. Construct a two-step binomial tree, 1-month and 2-months respectively for each of the two steps. The stock market volatility is 30%, the rate of interest is assumed to be 5% and the exercise price is $52. (i) Calculate the price of an American Put. (ii) Provide a graphical illustration to demonstrate how the put price and the put payoff change with respect to changes in the stock price. (iii) Put all in an excel attachment or copy and paste entire excel sheet

8. When the victim of a defamatory statement is a public figure:

a. the elements of the tort of defamation are exactly the same;

b. the public figure has no right to sue for defamation;

c. the public figure can only sue business or political enemies or defamation;

d. the public figure is also required to prove actual malice; that is, the Defendant made the defamatory statement knowing the statement was false.

19. A distinctive mark, logo or name, can be entitled to trademark

protection, even without formal filing, provided the public has formed

__________between the mark, logo, or name and the product in

question.

a. strict adherence;

b. technical meaning;

c. secondary meaning

d. none of the above.

20. Regarding search and seizure in Washington, which statement is most accurate?

a. there are situations where the right to be free from an unreasonable search and seizure is greater under Washington law than under federal law;

b. there is no state law concerning search and seizure;

c. there are no situations where the right to be free from an unreasonable search and seizure is greater under Washington law than under federal law;

d. none of the above statements are true.

21. _________is the Latin term referring to the requisite criminal act.

a. .actus reus;

b .mens rea

c.caveat emptor

d.res ipsa loquitor

22. The police show up at the door of Castleberry’s home without a warrant and wish to search his home. A search without a warrant is:

a. per se unreasonable

b. permitted under federal law, but not in Washington;

c. only done incident to an arrest;

d. all of the above

Financial analysis for Barnes & Noble including, liquidity, profitability and solvency ratios, cash flow problems, inventory problems and ratios, debt obligation problems, including debt/equity ratios, stock valuation

Elliot Karlin is a​ 35-year-old bank executive who has just inherited a large sum of money. Having spent several years in the​ bank's investments​ department, he's well aware of the concept of duration and decides to apply it to his bond portfolio. In​ particular, Elliot intends to use

$ 1 million of his inheritance to purchase 4 U.S. Treasury​ bonds:

1. An 8.68%​,​13-year bond​ that's priced at $1,099.55 to yield 7.47%.

2. A 7.852%​,​15-year bond​ that's priced at $ 1028.65$to yield 7.53 %.

3. A​ 20-year stripped Treasury​ (zero coupon)​ that's priced at $198.52 to yield 8.25%.

4. A​ 24-year, 7.43%bond​ that's priced at $955.96 to yield 7.84 %.

Note that these bonds are semiannual compounding bonds.

a. Find the duration and the modified duration of each bond.

b. Find the duration of the whole bond portfolio if Elliot puts $250,000 into each of the 4 U.S. Treasury bonds.

c. Find the duration of the portfolio if Elliot puts $350,000 each into bonds 1 and 3 and $150,000

each into bonds 2 and 4.

d. Which portfolio —b or c—should Elliot select if he thinks rates are about to head up and he wants to avoid as much price volatility as​ possible? Explain. From which portfolio does he stand to make more in annual interest​ income? Which portfolio would you​ recommend, and​ why?

a. The duration and modified duration can be calculated using a​ spreadsheet, such as Excel. It gives the precise duration measure because it avoids the​ rounding-off errors, which are inevitable with manual calculations.

The company produces a single product. Last year, the company's variable production costs totaled $8,000 and its fixed manufacturing overhead costs totaled $4,800. The company produced 4,000 units during the year and sold 3,600 units. Assuming no units in the beginning inventory:

Consider a stock which is currently selling for $50. Construct a two-step binomial tree, 1-month and 2-months respectively for each of the two steps. The stock market volatility is 30%, the rate of interest is assumed to be 5% and the exercise price is $52.

(i) Calculate the price of an American Put.

(ii) Provide a graphical illustration to demonstrate how the put price and the put payoff change with respect to changes in the stock price.

(iii) Put all in an excel format

If the balance sheet of a firm indicates that total assets exceed current liabilities plus shareholders' equity, then the firm must have:

Corporations are referred to as public companies when their: