Explain how the debt mechanism can be a leverage in the company?
In: Finance
You have the following information about the yield curve – Term 1 2 3 4 Rate 4% 4.50% 5% 5.50% What should be the price of a bond with a face value of $100 and an annual coupon of 5% that matures in 4 years. Show all calculations.
In the above question if the market price of the bond is $95, can you do arbitrage? Show how and your profit or loss. Show all calculations.
If the market price of the bond is $115, can you do arbitrage? Show how and your profit or loss. Show all calculations.
Estimate the 1-year forward rate 1 year from now. Show all calculations.
Estimate the 1-year forward rate 2 years from now. Show all calculations.
Estimate the 1-year forward rate 3 years from now. Show all calculations.
In: Finance
a). Compute the current value of a share of common stock of a company whose most recent dividend was RM2.50 and is expected to grow 3% per year for the next 5 years, after which the dividend growth rate will increase to 6% per year indefinitely. Assume 10% required rate of return.
b).You are considering to purchase the stock of Tambunan Tea Bhd. You expect it to pay a dividend of RM3 in 1 year, RM4.25 in 2 years and RM6.00 in 3 years. You expect to sell the stock for RM100 in 3 years. If your required of return for the stock is 12%, how much would you pay for the stock today?
c). A firm owns a building with a book value of RM 150,000 and a market value of RM250,000. If the building is utilized for a project, what would be the opportunity cost (ignore the taxes). Explain your answer.
d). The cost of a new machine is RM250,000. The machine has a 3-year life and zero salvage value. If the cash flow each year is equal to 40% of the cost of the machine, calculate the payback period for the project.
e). Luanti Corp. is considering investing in a new project. The project will need an initial investment of RM2,400,000 and will generate RM1,500,000(before tax) cash flows for three years. If the tax rate is 20%, calculate the IRR for the project.
In: Finance
10-4 Suppose that five years ago Cisco Systems sold a 15 years bond issue that had a $1000 par value and a 7 percent coupon rate. Interest is paid semiannually.
a- If the going interest rate has risen to 10 percent, at what price would the bonds be selling today?
b- Suppose that the interest rate remained at 10 percent for the next 10 years. What would happen to the price of Cisco's bonds over time?
In: Finance
|
FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $16 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.6 million with a 0.2 probability, $1.5 million with a 0.5 probability, and $0.6 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations. Debt/Capital ratio is 0.
Debt/Capital ratio is 10%, interest rate is 9%.
Debt/Capital ratio is 50%, interest rate is 11%.
Debt/Capital ratio is 60%, interest rate is 14%.
|
In: Finance
How does a cross-currency swap hedge the equity stake?
In: Finance
Altman’s original Z-score bankruptcy model takes five key ratios into account:
a. working capital / total assets
b. retained earnings / total assets
c. earnings before interest and taxes / total assets
d. market value of equity / total liabilities
e. sales / total assets
Discuss the reasons why these ratios are linked to the probability of going into bankruptcy, and comment on their relative importance.
In: Finance
Compare the financial reports from Disney, Hilton Worldwide, Starwood, Intercontinental, Marriott International, and Marriott Vacations.
Disney Company:
| Report Date | 09/29/2018 | 09/30/2017 | 10/01/2016 | 10/03/2015 | 09/27/2014 |
| Total equity | 52,832,000 | 45,004,000 | 47,323,000 | 48,655,00 | 48,178,000 |
Hilton Worldwide:
| Report Date | 12/31/2018 | 12/31/2017 | 12/31/2016 | 12/31/2015 | 12/31/2014 |
| Total Equity | 558 | 2,075 | 5,849 | 5,951 | 4,714 |
Starwood Hotels:
Key Financials
(In USD as of 06/30/2016)
| Income Statement | |
|---|---|
| Revenue | 5,517m |
| Net Income | 81m |
| EPS from Continuing Operations | 1.84 |
| EPS - Net Income - Diluted | 0.48 |
| Revenue per Share | 32.84 |
| Balance Sheet | |
| Total Assets | 6,922m |
| Total Liabilities | 6,748m |
| Shareholders' Equity | 174m |
| Total Assets per Share | 40.83 |
| Net Assets per Share | 1.03 |
| Cash Flows | |
| Cash from Operations | 740m |
| Cash from Investing | 313m |
| Cash from Financing | -204m |
| Capital Expenditures | 222m |
| Cash Flow per Share | 4.40 |
Marriott International:
| Report Date | 12/31/2018 | 12/31/2017 | 12/31/2016 | 12/31/2015 | 12/31/2014 |
| Total Marriott International, Inc. shareholders' equity (deficit) | 2,225 | 3,731 | 5,357 | (3,590) | (2,200) |
Marriott Vacations:
| Report Date | 12/31/2018 | 12/31/2017 | 12/30/2016 | 01/01/2016 | 01/02/2015 |
| Total Equity | 3,466,000 | 1,045,020 | 907,819 | 976,267 | 1,080,000 |
In: Finance
Bellwood Corp. is comparing two different capital structures. Plan I would result in 12,700 shares of stock and $109,250 in debt. Plan II would result in 9,800 shares of stock and $247,000 in debt. The interest rate on the debt is 10 percent.
a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $79,000. The all-equity plan would result in 15,000 shares of stock outstanding. Which of the three plans has the highest EPS? The lowest?
b. In part (a), what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? Is one higher than the other? Why?
c. Ignoring taxes, when will EPS be identical for Plans I and II?
d. Repeat parts (a), (b), and (c) assuming that the corporate tax rate is 21 percent. Are the break even levels of EBIT different from before? Why or why not?
In: Finance
If the current rate of interest is 8% APR, then the future value of an investment that pays $500 every two years and lasts 20 years is closest to:
$11,000
$10,661
$22,881
$20,000
In: Finance
Problem 5-10 (Yield to Maturity and Required Returns)
|
The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%.
|
In: Finance
71. What information must a corporation put in a registration statement?
72. Dillingham (a resident of Washington)is a commercial debtor who is taking out a loan. Vernon is a loan officer making the loan. The loan closes on September 1 st of 2018. Where must Vernon file the financing statement? How long is it good for? Can it be extended? If so, how does the secured creditor extend the financing statement and when must the extension be submitted?
Business Law class. Please short answer
Yes
In: Finance
Describe in your own words what marketing segmentation is? Why is it important to understand this concept? What are some disadvantages to not understanding it? Why?
In: Finance
1.Find Macy P/E ratio, enter the stock symbol to get to the company's front page. (The P/E ratio is listed on the company's front page).
2.Compare the P/E ratio of your company with the industry average or with major competitors.
3.Is there a difference between these numbers?
4.Is the stock overvalued, undervalued, or properly valued? Why?
5.In accordance with the findings, is it reasonable to buy the stock? explain.
include a paragraph in the initial response reflect on specifically what was learned from the assignment and how this could apply in the workplace.
In: Finance
3. Problem 4-31 (Nonannual Compounding)
|
Nonannual Compounding It is now January 1. You plan to make a total of 5 deposits of $400 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 8% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. Do not round intermediate calculations. Round your answers to the nearest cent.
|
In: Finance