You (US company) imported Earth Moving Equipment (EME) from Australia. You imported EME at US$ 300 (with Cash) on Dec 1, 2018. On Dec 15, 2018, you sold EME to Australia at A$400 (Australian $) in AR. The exchange rate on Dec 15, 2018 was 2 A$/US$. The exchange rate on Dec 31, 2018 was 4 A$/US$. On Feb 1, 2019, your customer paid you in full. The exchange rate on Feb 1 was 1 A$/US$. What were NI in 2018 and 2019, respectively? 100, 200 -100, 300 -200, 200 100, 100

You are UK company, 200,000 US$ payable to US in one year. Answer in terms of BP (British Pound). Round at four decimal places Examples: 1.23487 ---> 1.2349; 1.23533 --> 1.2353 Information for Forward Contract: Forward exchange rate (one yr): 0.7124 BP/$ Information for Money Market Instruments (MMI): Current exchange rate: 0.7173 BP/$ Investment return at JP Morgan (in US): 5% annual Interest rate of borrowing from HSBC (UK): 3% annual Information you need for Currency Options Contract: Exercise options premium at 0.09 BP/$ Interest rate of borrowing from HSBC (UK): 3% annual Allowed to exercise options at 0.7215 BP/$ Under the COC, the break-even exchange rate is .6109 BP/$. If the management team speculates the exchange rate at the time of the payment would be .6223 BP/$, would they sign the COC contract in this case? No Yes

You are trying to determine the total cost for XYZ's monthly cash collection system. Your firm receives an average of 4000 remittances per month with an average face value of 7500. Total float come to 7 days. 6% is your average opportunity cost and your variable cost is 0.35 per check. What is XYZ's cost for its cash collection system?

Jetta production cost in 2002 and 2003 was 14,000 Euro per Jetta. Jetta sold in US at $15,000 in 2002 and 2003. Forward hedge exchange rate was 1 $/Euro in 2003. Rate without hedge (i.e. market exchange rate) was 1.25$/Euro in 2003. If 12,000 Jetta were sold in US, in 2003, by 60% forward hedge and 40% not hedged. What would be profits or loss from sales of 12,000 Jetta in US?  

Loss of 2.4 million Euro.

Profit of 1.8 million Euro.

Loss of 2.8 million Euro

Profit of 1.2 million Euro.

15. Marvin’s Interiors issued 9-year bonds 2 years ago. The bonds have a face value of $1,400, a 9.0 percent, semiannual coupon, and a current market price of $1,189. What is the pre-tax cost of debt? 13.97 percent 13.02 percent 12.27 percent 13.53 percent

16.

3.23 percent

9.52 percent

4.76 percent

6.37 percent

11.45 percent

17.

9.25 percent; 12.61 percent

12.61 percent; 9.25 percent

9.25 percent; 8.73 percent

8.73 percent; 9.25 percent

12.61 percent; 8.73 percent

What are some of the advantages and disadvantages of investing in a mutual fund? Explain why the vast array of mutual funds available may be a partial drawback for investors. How can investors assess mutual fund performance?

Consider a stock with a price of $120 and a standard deviation of 30 percent. The stock will pay a dividend of $5 in 40 days and a second dividend of $5 and 140 days. The current risk-free rate is 6 percent per annum. An American call on this stock has an exercise price of $150 and expires in 100 days.
Price the American call option using the Black-Scholes Model. Show all calculations

You are the budget director of a small school district that has a budget of $10 million and serves 2,500 children in six schools: three elementary schools, two middle schools, and one high school. The school district receives its budget from the state, and state officials have told you that the state is running a deficit and the school budget is being cut by $250,000. The state provides the revenue; however, the school district does have a partnership with a foundation that provides funding for innovative and supportive programs. What part of the budget would you first examine? Why? After that examination, what would you cut? Why?

Using the same scenario from the question above, the budget director must present alternatives to the district superintendent for consideration. Describe the alternatives you would recommend so the superintendent and/or board has choices.

Generally reinvest dividends since they are nominal. Holding stock is generally done for the price fluctuations rather than the dividends. However, dividends are a key measure for stocks. What do dividends tell investors? Is the amount important or the consistency of the dividends important?

Your client is 29 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $13,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 6% in the future. If she follows your advice, how much money will she have at 65? Round your answer to the nearest cent. $ How much will she have at 70? Round your answer to the nearest cent. $ She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $

You plan to make five deposits of $1,000 each, one every 6 months, with the first payment being made in 6 months. You will then make no more deposits. If the bank pays 7% nominal interest, compounded semiannually, how much will be in your account after 3 years? Round your answer to the nearest cent. $ One year from today you must make a payment of $9,000. To prepare for this payment, you plan to make two equal quarterly deposits (at the end of Quarters 1 and 2) in a bank that pays 7% nominal interest compounded quarterly. How large must each of the two payments be? Round your answer to the nearest cent.

Your client is 33 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future. If she follows your advice, how much money will she have at 65? Round your answer to the nearest cent. $ How much will she have at 70? Round your answer to the nearest cent. $ She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $

Jamie Peters invested ​$126,000 to set up the following portfolio one year​ ago:

a. Calculate the portfolio beta on the basis of the original cost figures.

b. Calculate the percentage return of each asset in the portfolio for the year.

c. Calculate the percentage return of the portfolio on the basis of original​ cost, using income and gains during the year.

d. At the time Jamie made his​ investments, investors were estimating that the market return for the coming year would be 11%. The estimate of the​ risk-free rate of return averaged 3% for the coming year. Calculate an expected rate of return for each stock on the basis of its beta and the expectations of market and​ risk-free returns.

e. On the basis of the actual​ results, explain how each stock in the portfolio performed differently relative to those​ CAPM-generated expectations of performance. What factors could explain these​ differences?

A factory costs $860,000. You reckon that it will produce an inflow after operating costs of $176,000 a year for 10 years.

a. If the opportunity cost of capital is 12%, what is the net present value of the factory? Answer: $134,439.25

b. What will the factory be worth at the end of nine years?

No idea

You must evaluate a proposal to buy a new milling machine. The base price is $128,000, and shipping and installation costs would add another $20,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $57,600. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $3,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $42,000 per year. The marginal tax rate is 35%, and the WACC is 11%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.

1. How should the $5,000 spent last year be handled?
   1. Only the tax effect of the research expenses should be included in the analysis.
   2. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.
   3. Last year's expenditure is considered as an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
   4. Last year's expenditure is considered as a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
   5. The cost of research is an incremental cash flow and should be included in the analysis.
   
   -Select-IIIIIIIVV

2. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent.
   $

3. What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent. Do not round your intermediate calculations.

   Year 1 $

   Year 2 $

   Year 3 $

4. Should the machine be purchased?