You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,500 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that is, you must repay the remaining balance on the mortgage. How much will be this balloon payment?

1. Reel Fast Charters, based in the Bahamas, runs multi-day fishing charters for wealthy anglers.  They have been very successful in their first five years in operation and Brian (the owner) is considering adding a second boat.  A new 80’ Viking would cost $5,000,000 with another $1,000,000 needed to upgrade the interior to a level that would attract the wealthy clients they desire.  The boat would be depreciated straight-line over 15 years, but would be sold at the end of five years, for an estimated $5,000,000.  The new boat would generate estimated additional revenue of $2,000,000 per year and would have associated expenses of $625,000.  No additional working capital would be necessary.  The firm’s tax rate is 30% and the required rate of return is 12%.  Calculate the NPV and IRR.  Should the new boat be purchased?  

ABC needs $719,000 to take advantage of a special offer from their key supplier. The loan will allow them to reduce their accounts payable and begin taking trade discounts. They plan to repay the loan in one year out of their normal operating cash flows. The bank has offered a one-year discount loan at an annual percentage rate of 5.25%. Given this information, how many dollars of interest is ABC expected to pay for this arrangement?

You are borrowing $26,000 to buy a car. You have a choice of a 36 month loan at an annual interest rate of 4.1 percent or a 60 month loan where the annual interest rate is 0.5 percent higher. If you select the 60 month loan instead of the 36 month loan, how much more total dollars of interest will you pay over the life of the loan?

Your investment club has only two stocks in its portfolio. $10,000 is invested in a stock with a beta of 0.5, and $75,000 is invested in a stock with a beta of 1.5. What is the portfolio's beta? Round your answer to two decimal places.

Required Rate of Return

AA Corporation’s stock has a beta of 1.1. The risk-free rate is 2.5% and the expected return on the market is 11%. What is the required rate of return on AA's stock? Round your answer to two decimal places.

Required Rate of Return

Suppose r_RF = 5%, r_M = 12%, and r_A = 14%.

1. Calculate Stock A's beta. Round your answer to two decimal places.
   
   
2. If Stock A's beta were 1.5, then what would be A's new required rate of return? Round your answer to two decimal places.
   

The possible outcomes for the returns on Stock X and the returns on the market portfolio have been estimated as follows:                                                              
                        Scenario          Stock X             Market portfolio                                 
                        1                      9%                   10%                             
                        2                      21%                 13%                             
                        3                      13%                 11%                   

Each scenario is considered to be equally likely to occur. Calculate the covariance of the returns of Stock X and the market portfolio.

A) 0.03%

B) 0.57%

C) 1.62%                                                         

D) 0.06%

The following data is provided for a market 500 Index:                                                               
                                                                                    
                        Year     Total return     Year     Total return                 
                        2010    9.0%                2020    2.0%                
                        2011    11.0%             2021    3.0%                
                        2012    -3.0%               2022    3.0%                
                        2013    1.0%                2023    -1.0%               
                        2014    5.0%                2024    5.0%                
                        2015    -12.0%             2025    4.0%                
                        2016    3.0%                2026    -3.0%               
                        2017    4.9%                2027    3.5%                
                        2018    -7.0%               2028    7.0%                
                        2019    0.1%                2029    5.8%                
                                                                                    
Calculate the 20-year arithmetic average annual rate of return on the market Index.

A) 2.07%

B) 0.10%

C) 2.59%

D) 5.62%                                                          

3) A British firm has a subsidiary in the U.S., and a U.S. firm, known to the British firm, has a subsidiary in Britain. Define and then provide an example for each of the following management techniques for reducing the firm's operating cash flows. The following are techniques to consider:

a)   matching currency cash flows

b)   risk-sharing agreements        

c)   back-to-back or parallel loans

Quantitative Problem: At the end of last year, Edwin Inc. reported the following income statement (in millions of dollars): Sales $4,150 Operating costs excluding depreciation 3,055 EBITDA $1,095 Depreciation 305 EBIT $790 Interest 160 EBT $630 Taxes (40%) 252 Net income $378 Looking ahead to the following year, the company's CFO has assembled this information: •Year-end sales are expected to be 5% higher than $4.15 billion in sales generated last year. •Year-end operating costs, including depreciation, are expected to increase at the same rates as sales. •Interest costs are expected to remain unchanged. •The tax rate is expected to remain at 40%. On the basis of this information, what will be the forecast for Edwin's year-end net income? Round your answer to the nearest whole million. Do not round intermediate calculations. Enter all values as positive numbers. (in millions of dollars) Sales $ Operating costs including depreciation EBITDA $ Depreciation EBIT $ Interest EBT $ Taxes Net income $

​(Calculating NPV​) Doublemeat Palace is considering a new plant for a temporary​ customer, and its finance department has determined the following characteristics. The company owns much of the plant and equipment to be used for the product. This equipment was originally purchased for​ $90,000; however, if the project is not​ undertaken, this equipment will be sold for $ 30,000 after​ taxes; in​ addition, if the project is not​ accepted, the plant used for the project could be sold for $ 85,000 after taxes-the plant originally cost​ $40,000. The rest of the equipment will need to be purchased at a cost of $ 130,000. This new equipment will be depreciated by the straight line method over the​ project's 3​-year ​life, after which it will have zero salvage value. No change in net operating working capital would be​ required, and management expects revenues resulting from this new project to be $ 222,000 per year for 3 ​years, while increased operating​ expenses, excluding​ depreciation, are expected to be $ 86,000 per year over the​ project's 3​-year life. The average tax rate is 25 percent and the marginal tax rate is 35 percent. The required rate of return for this project is 13 percent. What is the​ project's NPV​?

a. What is the initial outlay associated with this​ project?

b. What are the annual​ after-tax cash flows associated with this project for years 1 and 2​ (note that the cash flows for years 1 and 2 are​ equal)?

c. What is the terminal cash flow in year 3​ (what is the annual​ after-tax cash flow in year 3 plus any additional cash flows associated with the termination of the​ project)?

d. What is the ​project's NPV given a required rate of return of 13 ​percent?

Aerotron Electronics has just bought a used delivery truck for $15,000. The small business paid $1,000 down and financed the rest, with the agreement to pay nothing for the entire first year and then to pay $546.83 at the end of each month over years 2, 3, and 4 (first payment is in 13th month).

a) what nominal interest rate is Aerotron paying the loan? (please try to show me with goal seek and Excel)

b) what effective interest rate are they paying?

c) how much of the 14th month's payment is interest? how much is principal?

d) how much of the 18th month's payment is interest? how much is principal?

e) how much of the 22nd month's payment is interest? how much is principal?

Please Answer Promptly:- How long does it take normally to get a question answered after posting?

The EIA reports the composite refinery acquisition price in the Rocky Mountain region ( PADD 4) for a barrel of crude oil during April 2019 was $59.24. During the same period of time, the composite refinery acquisition price for the East Coast (PADD 1) was $70.01. During the same period, the average wholesale price of a gallon of gasoline (average of all grades, all formulations) in PADD 4 was $2.738 per gallon and the average wholesale price of diesel was $3.089. The PADD 1 average prices were $2.770 and $3.157, respectively. Which of the following are true? The PADD 1 spread is larger than the PADD 4 for April 2019. For either PADD 1 or PADD 4, gasoline contributes just over 63% to the value of the final goods. The PADD 4 spread for April 2019 was $1.44 per gallon. Two of the above None of the above.

A firm is considering a project that requires an initial investment of $180,000. The life of this project is five years. Cash flows for each year are estimated as follows:

The cost of capital of this project is 8%. Calculate the internal rate of return of the project and make a decision.

Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places.

NPV: $   million

IRR: %

Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places.

NPV: $   million

IRR: %