Micheal wants to have $68,000 in 10 years on a savings plan that requires monthly contributions. If he can earn 11 percent APR with monthly compounding on the savings plan, what is the amount that he will have to invest every month for the next 10 years? Round it to two decimal places and do not include the $ sign, e.g., 1234.56.

1.A firm is buying a new machine that has the following cash-flows during its expected life of 4 years: Purchase Price = $250,000, Terminal Value = $100,000, and yearly cash flows of $60,000. The firm has a contract with a buyer who purchases and pays the product that the machine makes at the beginning of each year. What is the expected yield of the machine? a. 28% b. 16% c. 14% d. 11.3% e. -1.61

2.A firm wants to buy a machine that is expected to yield 12%. It plans to finance it with 50% Debt and the rest Equity, so there is no preferred stock. The cost of Debt is 7% and the tax rate is 25%. What is the expected return for the shareholders?

a.   2.63%

b.   12%

c.   17%

d.   18.75%

e.   19.5%

3.Which of the following statements is CORRECT?

a.   Financial Management decisions have to be made taking into account what is available on the Financial Markets.

b.   Only firms in the mature stage have access to the capital market.

c.   If an investor sells shares of stock through a broker, then it would be a primary market transaction.

d.   Capital markets deal only with common stocks and other equity securities.

e.   A six-month bank loan is considered to be a capital market instrument.

When engaging in capital budgeting projects, what types of risk may exist? What are some techniques you could use to evaluate and/or mitigate those risks.

You are negotiating to buy a new car with a car salesman at a local dealer. You have negotiated the price to $31,000. You have $3,000 to put towards the down payment and plan to get a loan for the rest. If you can get an annual interest rate of 5 percent APR (with monthly compounding) over a 5-year period, what would be your monthly payment? Round it to two decimal place (cents)

In February, Cap Inc. announced that it would split into two independent publicly traded companies: one comprised of its Old Navy brand, and the second a yet-to-be-named company that includes its other brands like Banana Republic and Athleta. The planned breakup is an acknowledgment of the two chains' diverging fortunes and how much Gap has lost its once-powerful grip on American consumers. For several years, Old Navy has outperformed its sister brands Gap and Banana Republic with its lower price-points and catchy marketing. Old Navy now exceeds the original brand in sales, making up nearly half of Gap Inc.'s $16.6 billion of sales in 2018.

In your opinion, what are the benefits and downsides to splitting Gap into two firms? How did Gap's stock react to the news in after-market trading? How would you explain this reaction? Will the separation save the company in the long run? Please elaborate on your answers.

Hewlett Packard recently paid a dividend of $2.50 for 2016, and going forward, their dividend is expected to grow at 3 percent per year for the next 5 years, after which the dividend growth rate will increase to 6 percent per year indefinitely. Assuming a 10 percent required rate of return, compute that value of a share of common stock for HP.

(Weighted average cost of capital​) The capital structure for the Carion Corporation is provided​ here:The company plans to maintain its debt structure in the future. If the firm has an​ after-tax cost of debt of 5.3 ​percent, a cost of preferred stock of 13.5 ​percent, and a cost of common stock of 18.6 ​percent, what is the​ firm's weighted average cost of​ capital?

​(Cost of debt​) Sincere Stationery Corporation needs to raise ​$750,000 to improve its manufacturing plant. It has decided to issue a ​$1,000 par value bond with an annual coupon rate of 16 percent and a maturity of 15 years. The investors require a rate of return of 8 percent.

a. Compute the market value of the bonds.

b. What will the net price be if flotation costs are

1111

percent of the market​ price?

c. How many bonds will the firm have to issue to receive the needed​ funds?

d. What is the​ firm's after-tax cost of debt if its average tax rate is 25 percent and its marginal tax rate is

3737

​percent?

Presentation graphics prepare slides and other aids for individuals making presentations. it estimates it can save $42,000 a year in cash operating costs for the next 5 years if it buys a special machine at a cost of $90,000. the workstation qualifies for a capital cost allowance of 25% and will have a zero terminal disposal price at the end of year 5. Presentation and graphics has a 12% after-tax required rate of return. its income tax rate is 40% each year for the next 5 years.

Compute NPV, Payback period, IRR (BA II plus Financial Calculator can be used, if you could just show what numbers were keyed) thank you

1. Assume you will retire at 67. You decide to open a retirement account that earns 8% interest. You will put $125 per month into this account starting now (age of 38 years old). How much money will you have in this account when you retire?

2. Assume you will retire at 67. You decide to open a retirement account that earns 8% interest. You put $125 per month into this account starting now (38 years old), for a 10-year period. After that, you stop contributing to this account, and the account continues to earn 8% interest. How much money will you have at age 67?

3. Assume you do not start saving now (age 38 years old), but wait for 10 years. You will retire at 67, and earn 8% on your monthly deposits of $150. How much will you have at 67?

4. Assume you will retire at 67. (you are currently age 38 years old) You decide to open a retirement account that earns 8% interest. You will put $325 per month into this account starting ten years from now. How much money will you have in this account when you retire?

Scooby Industries just received a patent on a new cancer treatment. The firm must now decide if it is worthwhile to start manufacturing the drug. To do this, the firm must buy new machines for a total of $860,000, which it will depreciate on a straight-line basis (to zero) over the next 7 years (Years 1 and 7 are complete years! Do not use the ½ year convention!). Scooby expects the machine to have no (economic) salvage value in 7 years, so it will be scrapped at that time. In each of the next 7 years, the firm expects to sell 11,000 units of this new treatment at a per unit price of $55. The variable cost of producing, marketing, and distributing this treatment will be $10 per unit, and the firm will have fixed costs (excluding depreciation) of $200,000 each year. The firm's tax rate is 35% (on both income and capital gains), and the discount rate is 10%. A. What is the incremental Net Income and cash flow in each of the next seven years? B. Calculate the NPV and the IRR for this project. Based on this information, should the company start manufacturing the drug? C. Calculate the NPV break-even point (in units) of this project.

The following options prices were observed for calls and puts on Lannister Ltd for the trading day of July 6 2019. Use this information in Questions 3-8. The stock was priced at $163.37. The expirations were July 17, August 21 and October 16. The continuously compounded risk-free rates associated with the three expirations were 0.0517, 0.0542 and 0.0565, respectively. The options have European expiries.

Question: Showing all formula and workings where applicable; Let the standard deviation of the continuously compounded return on the stock be 20 percent. Ignore dividends. Respond to the following:

1. What is the theoretical fair value of the October 165 call? Calculate this answer by hand and then re-calculate it using BlackScholesMertonBinomial10e.xlsm.
2. Based on your answer in part a, recommend a riskless strategy.
3. If the stock price decreases by $1, how will the option position offset the loss on the stock?
4. Use the Black-Scholes-Merton European put option pricing formula for the October 160 put option. Repeat parts a, b and c of Question 3 with respect to the put.
5. Buy 100 shares of Lannister Ltd at $163.37 and short one October 165 call. Hold the position until expiration. Determine the profits and graph the results. Identify the strategy, breakeven stock price at expiration, the maximum profit, and the maximum loss. Discuss any special considerations associated with this strategy. Note: use the OptionStrategyAnalyzer10e.xlsm to obtain the required payoff diagram.
6. Buy 100 shares of Lannister Ltd at $163.37 and go long one October 160 put. Hold the position until expiration. Determine the profits and graph the results. Identify the strategy, breakeven stock price at expiration, the maximum profit, and the maximum loss. Discuss any special considerations associated with this strategy. Note: use the OptionStrategyAnalyzer10e.xlsm to obtain the required payoff diagram.
7. Construct an options strategy by going short one October 160 call and long one October 165 call using Lannister Ltd options. Hold the position until expiration. Determine the profits and graph the results. Identify the strategy, breakeven stock price at expiration, the maximum profit, and the maximum loss. Discuss any special considerations associated with this strategy. Note: use the OptionStrategyAnalyzer10e.xlsm to obtain the required payoff diagram.
8. Construct an options strategy by going long one October 165 put and long one October 165 call using Lannister Ltd options. Hold the position until expiration. Determine the profits and graph the results. Identify the strategy, breakeven stock price at expiration, the maximum profit, and the maximum loss. Discuss any special considerations associated with this strategy. Note: use the OptionStrategyAnalyzer10e.xlsm to obtain the required payoff diagram

NPVs and IRRs for Mutually Exclusive Projects

Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $23,000, whereas the gas-powered truck will cost $17,100. The cost of capital that applies to both investments is 11%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,500 per year and those for the gas-powered truck will be $4,950 per year. Annual net cash flows include depreciation expenses.

a. Calculate the NPV for each type of truck. Do not round intermediate calculations. Round your answers to the nearest dollar.

Electric-powered truck $

Gas-powered truck $

b. Calculate the IRR for each type of truck. Do not round intermediate calculations. Round your answers to two decimal places.

Electric-powered truck %

Gas-powered truck %

Which type of the truck should the firm purchase?

electic-powered

gas-powered