Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $940 and has an existing customer base of 490. Paul plans to raise the annual fee by 7 percent every year and expects the club membership to grow at a constant rate of 3 percent for the next five years. The overall expenses of running the health club are $114,000 a year and are expected to grow at the inflation rate of 4 percent annually. After five years, Paul plans to buy a luxury boat for $400,000, close the health club, and travel the world in his boat for the rest of his life. Assume Paul has a remaining life of 25 years and earns 10 percent on his savings.

How much will Paul have in his savings on the day he starts his world tour assuming he has already paid for his boat? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Account value at retirement $

What is the annual amount that Paul can spend while on his world tour if he will have no money left in the bank when he dies? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Annual withdrawal $

The Faulk Corp. has a bond with a coupon rate of 7 percent outstanding. The Gonas Company has a bond with a coupon rate of 13 percent outstanding. Both bonds have 15 years to maturity, make semiannual payments, and have a YTM of 10 percent.

(A) If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?
(B) What if rates suddenly fall by 2 percent instead?

Review the reasons for the increasing number of female entrepreneurs in China?

Please write around 600 words at least.

The yield to maturity of a $1000 bond with a 7% coupon rate, semiannual coupons, and two years to maturity is 7.6% APR, compounded semiannually. What must its price be?

Alpha Insurance Company is obligated to make payments of $2 million, $3 million, and $4 million at the end of the next three years, respectively. The market interest rate is 8% per annum.

i. Determine the duration of the company’s payment obligations.

ii. Suppose the company’s payment obligations are fully funded and immunized using both 6-month zero coupon bonds and perpetuities. Determine how much of each of these bonds the company will hold in the portfolio. (7 marks )

Cash Budget

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $51,000, marketable securities of $72,000, and accounts receivable of $149,100 ($117,000 from July sales and $32,100 from August sales). Sales on account for July and August were $107,000 and $117,000, respectively. Current liabilities as of September 1 include $6,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $20,000 will be made in October. Bridgeport’s regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Assume 360 days per year for interest calculations.

2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

The budget indicates that the minimum cash balance   be maintained in November. This situation can be corrected by   and/or by the   of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will   the minimum desired balance.

Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 11 percent, a YTM of 9 percent, and 11 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond has a coupon rate of 9 percent, a YTM of 11 percent, and also has 11 years to maturity. Both bonds have a par value of $1,000.

(a) What is the price of each bond today?
(b) If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 2 years? In 6 years? In 10 years? In 11 years?

Understand the importance/value of workplace-based pension plans and the relative merits of DBPs and DCPs.

300-400 words, APA Citation/Reference

Evaluating Choices: Time, Risk, and Value.

• What is time value of money?
• Discuss how the expression “a bird in the hand is worth two in the bush” relate to the concept of the time value of money?

Edited: To add missing information.

#6 Google currently has a 5 million common shares outstanding, and a 1 million preferred shares outstanding, and 100,000 bonds outstanding. Use your answers in #3, #4, and #5 to calculate Google Weighted Average Cost of Capital (WACC) if the corporate tax rate is 35%.

Needed information for #6

#3 = As a financial analyst, you know that both DGM and the CAPM used in # 1 and # 2 above can be inaccurate, so you decided to calculate the average cost of equity of google. What is the average cost of equity of Google?

Ans: 13.76%

#4 =Google has a preferred stock that pays an annual dividend of 6$ to shareholders. What is the cost of Google’s preferred stocks if it is currently priced at $100?

Ans: 6%

#5 = Google has one bond outstanding that matures in 20 years. This bond has a coupon rate of 8%, paid semiannually. The bond currently sells for $1,124. What is the pre-tax cost of debt of Google?

Ans: 3.43%

End of needed information for #6

And then it builds off this question.

Motorola Mobility LLC is a company that develops mobile devices. Headquartered in Chicago, Illinois, United States, the company was formed on January 4, 2011 by the split of Motorola Inc. into two separate companies; Motorola Mobility took on the company's consumer-oriented product lines, including its mobile phone business and its cable modems and set-top boxes for digital cable and satellite television services, while Motorola Solutions retained the company's enterprise-oriented product lines. Early 2012, Google decided to purchase Motorola mobility LLC for $12.5b. Google had a plan to keep Motorola mobility for 5 years. Google financial analysis team made the following forecasts:

And that the average book value of asset is $8b and Google’s required rate of return is its WACC.

-Calculate net present value (NPV) for the above investment decision. Would you accept or reject this investment decision? Why?

-Calculate payback period. If you know that google accepts projects with 4 years payback period. Would you accept that project?

-Calculate the Motorola project internal rate of return (IRR). Would you accept or reject this project? Why?

Please show work so I can better understand it, preferably in excel. Thanks!

Questions 1 &2 below are just posted as a reference. They don't need to be answered.

1- In the previous 5 years, Google paid an annual dividend as follows:

Google is expected to pay a dividends of $3 in the next year (2012). What is the cost of equity of Google if its current stock price is $90?

2- As a technology-based firm, Google has a high beta of 1.4. if the risk-free rate of return is 5% and the market risk premium is 3%, calculate the cost of equity of Google using the capital asset pricing model (CAPM)?

You purchase 120 shares for $70 a share ($8,400), and after a year the price falls to $65. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense):

1. 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.

     

2. 65 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.

     

3. 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.

     

Lisa Lasher buys 410 shares of stock on margin at $27 per share. If the margin requirement is 50 percent, how much must the stock rise for her to realize a 20-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.

Identify the ways in which credit can best be used.

How would you go about estimating the cost of capital for a new, early stage or emerging growth company? What are the similarities and differences in doing so for a mature, established company?