Burnett Corp. pays a constant $20 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever.If the required return on this stock is 6 percent, what is the current share price?

• $167.68

• $177.74

• $164.32

• $240.00

• $176.06

Darla purchased a new car during a special sales promotion by the manufacturer. She secured a loan from the manufacturer in the amount of $23,000 at a rate of 7%/year compounded monthly. Her bank is now charging 11.3%/year compounded monthly for new car loans. Assuming that each loan would be amortized by 36 equal monthly installments, determine the amount of interest she would have paid at the end of 3 yr for each loan. How much less will she have paid in interest payments over the life of the loan by borrowing from the manufacturer instead of her bank? (Round your answers to the nearest cent.)

The Sandersons are planning to refinance their home. The outstanding principal on their original loan is $100,000 and was to amortized in 240 equal monthly installments at an interest rate of 11%/year compounded monthly. The new loan they expect to secure is to be amortized over the same period at an interest rate of 8%/year compounded monthly. How much less can they expect to pay over the life of the loan in interest payments by refinancing the loan at this time? (Round your answer to the nearest cent.)

After extensive research and development, GoodStone Tires, Inc., has recently developed a new tire, the SuperTread, and must decide whether to make the investment necessary to produce and market it. The tire would be ideal for drivers doing a large amount of wet weather and off-road driving in addition to normal freeway usage. The research and development costs so far have totaled about $10 million.

The SuperTread would be put on the market beginning this year, and GoodStone expects it to stay on the market for a total of four years. Test marketing costing $5 million has shown that there is a significant market for a SuperTread-type tire. As a financial analyst at GoodStone, you have been asked by your CFO, Adam Smith, to evaluate the SuperTread project and provide a recommendation on whether to go ahead with the investment.

Except for the initial investment that will occur immediately, assume all cash flows will occur at year-end.

GoodStone must initially invest $160 million in production equipment to make the SuperTread. This equipment can be sold for $65 million at the end of four years.

GoodStone intends to sell the SuperTread to two distinct markets:

1. The original equipment manufacturer (OEM) market: The OEM market consists primarily of the large automobile companies (like General Motors) that buy tires for new cars. In the OEM market, the SuperTread is expected to sell for $41 per tire. The variable cost to produce each tire is $29.

2. The replacement market: The replacement market consists of all tires purchased after the automobile has left the factory. This market allows higher margins; GoodStone expects to sell the SuperTread for $62 per tire there. Variable costs are the same as in the OEM market.

GoodStone Tires intends to raise prices at 1 percent above the inflation rate; variable costs will also increase at 1 percent above the inflation rate. In addition, the SuperTread project will incur $43 million in marketing and general administration costs the first year. This cost is expected to increase at the inflation rate in the subsequent years.

GoodStone’s corporate tax rate is 25% percent. Annual inflation is expected to remain constant at 2,5 percent. The company uses a 13.4 percent discount rate to evaluate new product decisions. Automotive industry analysts expect automobile manufacturers to produce 6.2 million new cars this year and production to grow at 2.5 percent per year thereafter. Each new car needs four tires (the spare tires are undersized and are in a different category). GoodStone Tires expects the SuperTread to capture 11 percent of the OEM market. Industry analysts estimate that the replacement tire market size will be 32 million tires this year and that it will grow at 2 percent annually. GoodStone expects the SuperTread to capture an 8 percent market share.

The annual depreciation is calculated based on the seven-year linear depreciation schedule. The immediate initial working capital requirement is $9 million. Thereafter, the net working capital requirements will be 15 percent of sales.

What are the NPV, payback period, discounted payback period, IRR, and PI on this project? Please prepare also sensitivity analysis assuming changes of the key figures which can affect the IRR of the project.

DSW is a midsized coal mining company with 20 mines located in Hessen region in central Germany. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess production sold on the spot market.

The coal mining industry, especially high-sulfur coal operations such as DSW, has been hard-hit by environmental regulations and warmer than expected winter 2014/2015 and 2016/2017. Recently, however, a combination of increased demand for coal and new pollution reduction technologies has led to an improved market demand for high-sulfur coal. DSW has just been approached by SudenKraftwerk Company with a request to supply coal for its electric generators for the next four years. DSW does not have enough excess capacity at its existing mines to guarantee the contract. The company is considering opening a strip mine in Broken on 5,000 acres of land purchased 10 years ago for € 5 million. Based on a recent appraisal, the company feels it could receive € 6.2 million on an after-tax basis if it sold the land today.

Strip mining is a process where the layers of topsoil above a coal vein are removed and the exposed coal is removed. Changes in mining regulations now force a company to reclaim the land; that is, when the mining is completed, the land must be restored to near its original condition. The land can then be used for other purposes. Because it is currently operating at full capacity, DWS will need to purchase additional necessary equipment, which will cost € 78 million. The equipment will be depreciated on a seven-year linear basis. The contract runs for only four years. At that time the coal from the site will be entirely mined. The company feels that the equipment can be sold for 60 percent of its initial purchase price in four years. However, DSW plans to open another strip mine at that time and will use the equipment at the new mine.

The contract calls for the delivery of 500,000 tons of coal per year at a price of €85 per ton. DWS feels that coal production will be 620,000 tons, 680,000 tons, 730,000 tons, and 590,000 tons, respectively, over the next four years. The excess production will be sold in the spot market at an average of € 80 per ton but the spot prices are highly volatile. The fact should be taken into consideration in the analysis. Variable costs amount to € 27 per ton, and fixed costs are € 3,700,000 per year. The mine will require net working capital of 5 percent of sales. The NWC will be built up in the year prior to the sales.

DSW will be responsible for reclaiming the land at termination of the mining. This will occur in year 5. The company uses an outside company for reclamation of all the company’s strip mines. It is estimated the cost of reclamation will be € 2.4 million. After the land is reclaimed, the company plans to donate the land to the state for use as a public park and recreation area. This will occur in year 6 and result in a charitable expense deduction of € 6.5 million. DSW faces a 19 percent tax rate. Assume that a loss in any year will result in a tax credit.

You have been approached by the CFO of the company with a request to analyze the project.

Calculate the payback period, profitability index, net present value, internal rate of return for the new strip mine. Please prepare also sensitivity analysis for the project.

To calculate WACC of DSW assume that it is rather illiquid company with capitalization on the level of € 680 million, beta equals 1,25, outstanding interest bearing debt on the level of € 300 million and cash level of € 78 million.[1] The current EBIT of DSW amounts € 80 million and the gross financial costs equals € 28 million.

Should DSW Mining take the contract and open the mine taking into consideration the risk of the project?

what are the main features of maslows hierarchy of needs and herzbergs motivation hygiene theories

Problem 1: You just borrowed a 15-year fixed rate loan of $200,000 to buy a two-bed room apartment. Your annual rate of interest is 4%, and the mortgage will be paid annually at the end of each year.

Set up an amortization schedule

Show your work.

What determines the stock value?

(3 of 10)

A new piece of specialty equipment costs $2,000,000 and will be depreciated to an expected salvage value of $250,000 on a straight-line basis over its 5-year life. Assuming a tax rate of 40%, what is its after-tax salvage value if the equipment is actually sold after 3 years for $1,250,000?

$180,000

$500,000

$500,000

$1,130,000

$1,250,000

You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2016. The bonds have a par value of $1,000.

In the above table, find the Treasury bond that matures in May 2041. What is the asked price of this bond in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Asked price            $

If the bid-ask spread for this bond is .0654, what is the bid price in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Bid price            $

You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016. The bonds have a par value of $2,000. Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Xenon, Inc. (XIC) 6.200 Jan 15, 2028 94.263 ?? 57,370 Kenny Corp. (KCC) 7.200 Jan 15, 2027 ?? 5.30 48,949 Williams Co. (WICO) ?? Jan 15, 2034 94.815 7.00 43,810 What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price $ What is the bond’s current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Current yield %

You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2016. The bonds have a par value of $1,000. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld ?? May 19 103.5371 103.6249 +.3209 2.189 5.901 May 24 104.4861 104.6318 +.4209 ?? 6.128 May 34 ?? ?? +.5314 3.891 In the above table, find the Treasury bond that matures in May 2019. What is the coupon rate for this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Coupon rate %

3. The SSR Co., currently all-equity firm, is planning to build a factory. The beta, systematic risk, of this project alone is 15% less than they currently manage. The beta of the assets currently managed is 1.5. The corporate tax rate the firm faces is 34%. The company has a target debt-to-equity ratio of 3/7. The initial investment cost is $30 million and the expected operating after-tax cash flows are $10 million per year for five years. The risk-free rate is 3% and the historical market risk premium of 8% is a reasonable estimate.

a. What is the all-equity value of this investment?

b. If the company finances it with a five-year non-amortizing loan with 11% interest, should it accept the project (USE APV approach)?

c. If the local government approaches the SSR Co. with an offer to loan the needed amount in b at 8%, should the company accept this offer?

​(Cost of a​ short-term bank loan​) Jimmy Hale is the owner and operator of the grain elevator in​ Brownfield, Texas, where he has lived for most of his 62 years. The rains during the spring have been the best in a​ decade, and Mr. Hale is expecting a bumper wheat crop. This has prompted him to rethink his current financing sources. He now believes he will need an additional $220,000 for the​ 3-month period ending with the close of the harvest season. After meeting with his​ banker, Mr. Hale is puzzling over what the additional financing will actually cost. The banker quoted him a rate of 2 percent over prime​ (which is currently 8 percent) and also requested that the firm increase its current bank balance of $4,000 up to 22 percent of the loan.

a. If interest and principal are all repaid at the end of the​ 3-month loan​ term, what is the annual percentage rate on the loan offer made by Mr.​ Hale's bank?

b. If the bank were to offer to lower the rate to prime if interest is​ discounted, should Mr. Hale accept this​ alternative? Note​: Assume a​ 30-day month and​ 360-day year.

Explain financial strategies that you would advise a mature company to adopt