A Pharma company has recently recruited 4 scientists at an average age of 27 and is looking to develop quite a few pharmacological formulations. With a view to retain them the company proposes to offer a housing scheme to them on the following terms and conditions:

1. The number of beneficiaries will be four in number
2. The total cost of purchasing apartments will be Rs.1 crore
3. PNBHFL offers an 18 year term @ 9.00% interest and HDFC offers 15 years term @ 8% interest.
4. The company will pay the housing finance company on an installment basis.
5. A Down payment of 5% of the cost of the apartment has to be made and recoverable from the employee in 24 installments. The upfront payment will be made by the company.
6. In case of availing the loan from HDFC, 50% of the installment will be recovered from the employee on a monthly basis and in case of availing the loan from PNBHFL 45% will be recovered from the employee. The option of choosing the service rests with the company only.
7. Assume that employee deductions happen on the first day of the month and housing loan payments made by the company happens on the last day of the year.
8. The housing loan is offered on a fixed interest basis and EMI will not change.
9. Assume the individual apartments are of equal value.

You are called upon to do the following:

1. Calculate the two EMI options and choose the best one.

34)

The Oklahoma Pipeline Company projects the following pattern of inflows from an investment. The inflows are spread over time to reflect delayed benefits. Each year is independent of the others.
  

The expected value for all three years is $80.

Compute the standard deviation for each of the three years. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
  

Calculate The Following Elements Used to Derive a Cap Rate - Sinking Fund Factor

1. Loan/Holding Period 10 Equity Yield Rate 8%            _____________
2. Loan/Holding Period 10 Equity Yield Rate 9%            _____________
3. Loan/Holding Period 10 Equity Yield Rate 10%          _____________
4. Loan/Holding Period 10 Equity Yield Rate 11%          _____________

On September 1, Vibrant Salon Company issued a 60-day note with a face amount of $51,600 to Delilah Hair Products Company for merchandise inventory. Assume a 360-day year.

a. Determine the proceeds of the note, assuming the note carries an interest rate of 10%.
$

b. Determine the proceeds of the note, assuming the note is discounted at 10%.
$

Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,195. What is the bond's nominal yield to call?

Discuss how factor investing may, or may not, be an improvement on the single factor (beta/CAPM) approach. Which of the factors seem most applicable, also, are there some factors that may not be appropriate in today’s market for some reason?

You are excited to start saving money. You plan to put $20 per week into an investment that you think will pay you 10.4% per year. You plan to make your first deposit today. How much will you have in 10 years? Suppose there are 52 weeks in a year. (Enter only numbers and decimals in your response. Round to 2 decimal places.)

Waste Management, Unlimited (WM) has a $220 million, 9.2% coupon (paid semiannually), outstanding bond issue, which matures in exactly 8 years, and WM is considering refunding the debt. The call price per $1,000-par-value bond is $1,092. The replacement debt would have a 7.76% coupon (paid semiannually). The firm's tax rate is 30%. What is the net advantage to refunding (NA) in this case?

Waste Management, Unlimited (WM) has a $220 million, 9.2% coupon (paid semiannually), outstanding bond issue, which matures in exactly 8 years, and WM is considering refunding the debt. The call price per $1, 000-par-value bond is $1, 092. The replacement debt would have a 7. 76% coupon (paid semiannually). The firm's tax rate is 30%. What is the net advantage to refunding (NA) in this case?

23) Possible outcomes for three investment alternatives and their probabilities of occurrence are given next.      

Using the coefficient of variation, rank the three alternatives in terms of risk from lowest to highest. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

Bacon Company is considering a new assembly line to replace the existing assembly line. The existing assembly line was installed 2 years ago at a cost of $90,000; it was being depreciated under the straight-line method. The existing assembly line is expected to have a usable life of 4 more years. The new assembly line costs $120,000; requires $8,000 in installation costs and $5,000 in training fees; it has a 4-year usable life and would be depreciated under the straight-line method. The new assembly line will increase output and thereby raises sales by $10,000 per year and will reduce production expenses by $5,000 per year. The existing assembly line can currently be sold for $15,000. To support the increased business resulting from installation of the new assembly line, accounts payable would increase by $5,000 and accounts receivable by $12,000. At the end of 4 years, the existing assembly line is expected to have a market value of $4,000; the new assembly line would be sold to net $15,000 before taxes. Finally, to install the new assembly line, the firm would have to borrow $80,000 at 10% interest from its local bank, resulting in additional interest payments of $8,000 per year. The firm pays 21% taxes and its shareholders require 10% return.

What is the initial cash outlay for this replacement project?

What is the operating cash flow of the project?

What is the terminal cash flow of th

Should you replace the existing assembly line? Provide all the details.

Consider an option on a non-dividend paying stock when the stock price is $67, the exercise price is $61, the risk-free rate is 0.5%, the market volatility is 30% and the time to maturity is 6 months. Using the Black-Scholes Model

(i) Compute the price of the option if it is a European Call.

(ii) Compute the price of the option if it is an American Call.

(iii) Compute the price of the option if it is a European Put.

(iv) Assuming two dividend payments $1.75 and $2.75, two months and five months from now, compute the price of the option if it is a European Call.

(v) Refer to the dividend information provided in (iv) above. Compute the price of the option if it is an American Call. Provide a graphical illustration to demonstrate how the price of this American Call and the payoff from the same change with respect to changes in the stock price.