Please do in excel showing the work Wansley Lumber is considering the purchase of a paper company, which would require an initial investment of $300 million. Wansley estimates that the paper company would provide net cash flows of $40 million at the end of each of the next 20 years. The cost of capital for the paper company is 13%. a. Should Wansley purchase the paper company? b. Wansley realizes that the cash flows in Years 1 to 20 might be $30 million per year or $50 million per year, with a 50% probability of each outcome. Because of the nature of the purchase contract, Wansley can sell the company 2 years after purchase (at Year 2 in this case) for $280 million if it no longer wants to own it. Given this additional information, does decision-tree analysis indicate that it makes sense to purchase the paper company? Again, assume that all cash flows are discounted at 13%. c. Wansley can wait for 1 year and find out whether the cash flows will be $30 million per year or $50 million per year before deciding to purchase the company. Because of the nature of the purchase contract, if it waits to purchase, Wansley can no longer sell the company 2 years after purchase. Given this additional information, does decision-tree analysis indicate that it makes sense to purchase the paper company? If so, when? Again, assume that all cash flows are discounted at 13%.

Please explain, Excel assignment.

Prepare an amortization table for a 30-year mortgage where the homeowner is borrowing $170,000 at a 3.75% interest rate. In addition to the monthly table, provide a summary table showing the interest paid, principal paid, and ending balance on a yearly basis. Create three separate graphs illustrating interest paid over time, principal paid over time, and ending balance over time for the 30 annual periods in the summary table.

Repeat the analysis, changing the interest rate to 8.75% and comment (briefly) on the impact of mortgage rates on home affordability.

17-1 Consider a 6 percent 10-year bond purchased at face value($1000). Assuming a reinvestment rate of 5 percent, calculate

1. The interest on interest =
2. the total dollar return =
3. the realized compound yield =

Merger Bid

Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.10 (given its target capital structure). Vandell has $8.85 million in debt that trades at par and pays an 7.2% interest rate. Vandell’s free cash flow (FCF₀) is $2 million per year and is expected to grow at a constant rate of 5% a year. Both Vandell and Hastings pay a 30% combined federal and state tax rate. The risk-free rate of interest is 6% and the market risk premium is 6%.

Hastings Corporation estimates that if it acquires Vandell Corporation, synergies will cause Vandell’s free cash flows to be $2.4 million, $2.7 million, $3.4 million, and $3.63 million at Years 1 through 4, respectively, after which the free cash flows will grow at a constant 5% rate. Hastings plans to assume Vandell’s $8.85 million in debt (which has an 7.2% interest rate) and raise additional debt financing at the time of the acquisition. Hastings estimates that interest payments will be $1.5 million each year for Years 1, 2, and 3. After Year 3, a target capital structure of 30% debt will be maintained. Interest at Year 4 will be $1.460 million, after which the interest and the tax shield will grow at 5%.

Indicate the range of possible prices that Hastings could bid for each share of Vandell common stock in an acquisition. Round your answers to the nearest cent. Do not round intermediate calculations.

The Financial Industry Regulatory Authority(FINRA) explanation and history?

National Association of Securities Dealers(NASD) explanation and history?

Consider the following two projects, and assume a company's cost of capital is 15 percent. Find the IRR and NPV of each project. Which projects add value to the company? If the company can choose only a single project, which project should it choose? Please show through excel sheets and equations.

For each of the scenarios below, explain the shift(s) in:

 Demand :

 Supply :

 Federal Funds Rate (FFR) :

 Money Supply (MS) :

a) The Fed increases reserve requirements.

b) The Fed conducts an open market purchase.

c) The Fed lowers the discount rate below the current equilibrium federal funds rate.

d) The Fed reduces reserve requirements and sterilizes this by conducting an open market sale of securities. (The term “sterilize” means to leave the Federal Funds Rate (FFR) unchanged)

Assume that the 1-year zero-coupon bond is sold at $89.78 and the yields to maturity for the coupon bonds selling at market prices equal to their face values are 11% and 13% for 1-year and 1.5-year issues respectively. Coupons are paid every 6 months and face values are $100 for all the bonds.

(a) Calculate the spot rate curve (s_0.5, s₁, s_1.5).

(Keep your answer in decimal format 4 decimal places, e.g. 0.1234. Do not give in percent format e.g. 12.34%.)

     s_0.5:     s₁:      s_1.5 :

(b) Compute the quasi-modified duration for each of these bonds. (Keep 2 decimal places, e.g. xx.12.)

     Zero-coupon bond:

11% coupon bond:  

    13% coupon bond:  

(c)  Determine the current price of an 14% coupon bond with face value $100 and 18 months to maturity. (Keep 2 decimal places, e.g. xx.12.)

What are the 10 principles of financial management and their definitions?

Discuss the advantages and disadvantages of ETFs (Exchange Traded Funds) to the banking industry.