Assume that you contribute $260 per month to a retirement plan for 20 years. Then you are able to increase the contribution to $520 per month for another 30 years. Given a 7.2 percent interest rate, what is the value of your retirement plan after the 50 years?
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MS Corporation's balance sheet as of today is as follows:
| Long-term debt (bonds, at par) | $10,000,000 |
| Preferred stock | 2,000,000 |
| Common stock ($10 par) | 10,000,000 |
| Retained earnings | 4,000,000 |
| Total debt and equity |
$26,000,000 |
The bonds have an 6.4% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt?
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Bitcoin prices are highly volatile compared to other currencies… and in fact most types of other securities as well.
• Briefly outline reasons why Bitcoin may be considered unusually risky. Feel free to add any quotes or data to support your thinking.
• Summarize how regulators (US or international) are considering getting involved.
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1 A renewable energy electricity supply technology has the following characteristics:
|
Capital cost ($) |
Annual operating cost ($) |
Lifetime (years) |
Salvage value ($) |
Annual electricity supplied (MWh) |
|
380 000 |
29 500 |
25 |
42 000 |
380 |
Note: to simplify the calculation of present worth, for assessment periods less than the lifetime, neglect the residual value of the technology, and assume salvage values are only incurred at the end of the lifetime of the technology.
I would appreciate if you can solve any part of this question.
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Carlton Co. is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,110,000, and it would cost another $23,500 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 $654,000. The machine would require an increase in net working capital (inventory) of $9,000. The sprayer would not change revenues, but it is expected to save the firm $390,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%.
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
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) Briefly explain how product costs are viewed on a flow-of-activity basis.
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What will decrease these account items – Debit or Credit? Fill in the blanks. Liabilities __________ Expenses __________ Gains _____________
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For the past year, Kayla, Inc., has sales of $45,797, interest expense of $3,620, cost of goods sold of $16,134, selling and administrative expense of $11,481, and depreciation of $5,980. If the tax rate is 35 percent, what is the operating cash flow?
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For each definition, list the “ratio category (or grouping)” that is described by filling in the blanks from (a) to (f) and provide one example for each category or grouping. a) Determines a company’s ability to pay off short term obligations or debts as they come due. ________________________ b) Relates company’s internal performance to the external judgment of the marketplace in terms of what it is worth. ¬________________________ c) Identifies percentage of earnings paid out to shareholders and what is reinvested for internal growth. ________________________ d) Speed at which company turns over its inventory, receivables and long-term assets. ________________________ e) How a company is financed between debt [lenders] and equity [owners]. ________________________ f) Measures return on sales, assets and total capital. ________________________
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EVALUATING RISK AND RETURN Stock X has a 10.5% expected return, a beta coefficient of 1.0, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for a diversified investor? For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is more risky. Stock Y has the higher beta so it is more risky than Stock X. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is more risky. Stock Y has the lower standard deviation so it is more risky than Stock X. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. Stock Y has the higher beta so it is less risky than Stock X. Calculate each stock's required rate of return. Round your answers to two decimal places. rx = % ry = % On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?
Calculate the required return of a portfolio that has $4,000 invested in Stock X and $8,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.
rp = % If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?
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What are the major differences between virtual storefronts, such as Bluefly, and bricks-and-clicks operations, such as Walmart? What are the advantages and disadvantages of each?
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Please Use TI BAII Plus Calculator and Show How You Get the Answer with it.
The Company is evaluating an asset that may increase sales by $120,000 every year for 4 years. There is no expected change in net operating working capital. The company's cost of capital is 6.5%. The proposed asset costs $400,000, will require $20,000 to modify for operations, and falls in the 3-year class MACRS for depreciation rates: .33, .45, .15, and .07 for years 1 through 4, respectively. At the end of the 4 years, it is expected that the asset may sell for $5,000. The company's tax rate is 21%. SHOW ALL WORK.
a) What is the initial outlay for this project?
b) What are the operating cash flows in Years 1 through 4?
c) As part of the terminal cash flow in Year 4, what is the after-tax salvage value of the asset?
d) What is the net present value of this proposed asset investment? Should it be accepted or rejected? SHOW ALL WORK ON THE TI BAII Plus Calculator.
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Jack is planning to buy a 9-year bond with semi-annual coupons and a coupon rate of 6.9 percent p.a. The face value is $1,000. Given an annual yield of 5.4 percent, what is the bond’s current price? (to the nearest cent)?
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Boston Technologies is considering whether or not to refund a $100 million, 14% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $6 million of flotation costs on the 14% bonds over the issue's 30-year life. Boston's investment banks have indicated that the company could sell a new 25-year issue at an interest rate of 9% in today's market. Neither they nor Boston's management anticipate that interest rates will fall below 9% any time soon, but there is a chance that rates will increase.
A call premium of 12% would be required to retire the old bonds, and flotation costs on the new issue would amount to $6 million. Boston's marginal federal-plus-state tax rate is 40%. The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short-term government securities returning 6% annually during the interim period.
What is the bond refunding's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.
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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 1.60 (given its target capital structure). Vandell has $9.55 million in debt that trades at par and pays an 7.4% interest rate. Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 6% a year. Both Vandell and Hastings pay a 40% combined federal and state tax rate. The risk-free rate of interest is 7% and the market risk premium is 7%.
Hastings Corporation estimates that if it acquires Vandell Corporation, synergies will cause Vandell’s free cash flows to be $2.3 million, $3.1 million, $3.3 million, and $3.93 million at Years 1 through 4, respectively, after which the free cash flows will grow at a constant 6% rate. Hastings plans to assume Vandell’s $9.55 million in debt (which has an 7.4% 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 $1.419 million, after which the interest and the tax shield will grow at 6%.
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 bid for each share should range between $ per share and $ per share.
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