Bank1. The Saudi Investment Bank
Bank2. Citigroup
Name all the deposit products offered by the bank. Give some brief details as much as possible.
What is similar and different in the two banks? In this point
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Consider a 30-year mortgage for $235,347 at an annual interest rate of 5.1%. After 11 years, the mortgage is refinanced to an annual interest rate of 3.4%. How much interest is paid on this mortgage?
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The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes): Income Statement Sales $ 7,000 Costs (4,200 ) Net income $ 2,800 Balance Sheet Assets $ 20,300 Debt $ 10,800 Equity 9,500 Total $ 20,300 Total $ 20,300 Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $7,700. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.)
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Expanding the number of stores in a foreign market, such as the expansion plan launched by Starbucks in China (announced in 2018), is a major capital budgeting project. A project of this scale requires coordinated planning across all functions of a business that you are studying in your Integrated Core classes. Choose and discuss three items on the income statement and balance sheet (a total of six items) that you think this new undertaking will effect. Explain why you chose those particular items, and how the marketing, management and operations decisions of the company will affect them. 2. Choose and calculate three ratios for Starbucks for the last two years. Make sure to select ratios that you think that expanding into a new market will effect, and explain your reasoning. Identify a competitor of Starbucks and contrast these three ratios for the two companies. Explain why you selected this competitor. Describe how the decisions made by management, marketing and operations functions of the company can impact, and hopefully improve, the components of firm operations that these financial ratios measure. 3. Explain how the financial decisions regarding opening a new store are related to management, marketing or operations decisions that the company must make (or has made)?
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25. please answer all questions round to 4 decimal places
A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,455.00 to install, $5,130.00 to operate per year for 7 years at which time it will be sold for $6,941.00. The second, RayCool 8, costs $41,330.00 to install, $2,082.00 to operate per year for 5 years at which time it will be sold for $8,917.00. The firm’s cost of capital is 6.16%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.
A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,548.00 to install, $5,135.00 to operate per year for 7 years at which time it will be sold for $6,971.00. The second, RayCool 8, costs $41,800.00 to install, $2,115.00 to operate per year for 5 years at which time it will be sold for $9,029.00. The firm’s cost of capital is 5.06%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.
A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,232.00 per year for 8 years and costs $104,695.00. The UGA-3000 produces incremental cash flows of $27,599.00 per year for 9 years and cost $126,254.00. The firm’s WACC is 9.79%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes.
A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,825.00 per year for 8 years and costs $103,756.00. The UGA-3000 produces incremental cash flows of $27,104.00 per year for 9 years and cost $126,558.00. The firm’s WACC is 9.57%. What is the equivalent annual annuity of the UGA-3000? Assume that there are no taxes.
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Suppose the returns on long-term government bonds are normally distributed. Assume long-term government bonds have a mean return of 5.1 percent and a standard deviation of 8.6 percent.
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What is the approximate probability that your return on these bonds will be less than −3.5 percent in a given year? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).) |
| Probability | % |
| Requirement 2: | |
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What range of returns would you expect to see 68 percent of the time? (Do not include the percent signs (%). Negative amount should be indicated by a minus sign. Input your answers from lowest to highest to receive credit for your answers. Round your answers to 2 decimal places (e.g., 32.16).) |
| Expected range of returns | % | to | % |
| Requirement 3: | |
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What range would you expect to see 95 percent of the time? (Do not include the percent signs (%). Negative amount should be indicated by a minus sign. Input your answers from lowest to highest to receive credit for your answers. Round your answers to 2 decimal places (e.g., 32.16).) |
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Use the information below to answer the following questions.
U.S. $ EQUIVALENT CURRENCY PER U.S.
$ Polish Zloty .2979 3.3566
Euro 1.2213 .8188
M Peso .0752 13.2987
Swiss 1.0183 .9820
C Peso .002071 482.80
NZ Dollar .8087 1.2365
Singapore Dollar .8011 1.2483
a. If you have $160, how many Polish zlotys can you get? (Do not include the Polish zlotys sign, Z. Round your answer to 2 decimal places, e.g., 32.16.) b. How much is one euro worth in U.S. dollars? (Round your answer to 4 decimal places, e.g., 32.1616.) c. If you have 5.70 million euros, how many dollars do you have? (Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) d. Which is worth more, a New Zealand dollar or a Singapore dollar? e. Which is worth more, a Mexican peso or a Chilean peso? f-1. How many Swiss francs can you get for a euro? (Round your answer to 4 decimal places, e.g., 32.1616.) f-2. What do you call this rate?
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Carly’s Winery was founded 10 years ago by owner manager Carla. Carly’s Winey is buying wines from wholesalers and sell them to retailers. Carla decided to start producing wine. She thinks that the company can produce wines for the next 7 years. In order to produce wines the company needs a new grape masher. The masher will cost $80,000 and an extra $10,000 will be needed for shipping and installation. This masher will be depreciated as a 5-year MACRS asset. Carla expects to sell the masher at the end of year 7 for $10,000. Carla estimates that the revenues will be $35,000 during year 1 and the revenues will grow by 10 percent per year for the next 7 years. Also she forecasts that annual year 1 operating expenses will be $10,000 and the expenses will grow at an annual rate of 5 percent per annum. For this new production Carla plans to use a factory which has been rented out for $7,500 per year for now. At the time the masher is purchased, Carla will invest $5,000 in net working capital. Additional investments in net working capital are required at the end of year 1 ($3,000) and year 2 ($2,000). The marginal tax rate for Carly’s Winery is 40% and the required rate of return for Carly’s Wineryis 12%.
a) Calculate the relevant cash flows for the evaluation of this project.
b) DecidewhetherCarlashouldinvestinthisproductionlineornot.
c) You think that this new production is riskier that Carly’s Winery’s ongoing operations. Briefly discuss if this new information changes your decision in part (b).
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A borrower gets a fully amortizing constant amortization mortgage (CAM) for $200,000 at 12% annual interest rate for 15 years with monthly repayments.
1. Compute the loan repayments, principal amortizations, and interest payments for the first 6 months.
2. Redo the same calculations assuming the loan is a fully amortizing CPM, all else the same.
3. Which of the two amortization structures (CAM or CPM) would be riskier for the lender?
4. Which the two loan structures would provide a higher effective yield to the lender?
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Precision Machining Corporation has been growing steadily over the past decade. Demand for the company’s products continues to rise, so management has decided to expand the production facility; $2 800 000 has been set aside for this over the next four years.
Management has developed two different plans for expanding over the next four years: Plan A and Plan B. Plan A would require equal amounts of $750 000, one year from now, two years from now, three years from now, and four years from now. Plan B would require $300 000 now, $700 000 one year from now, $900 000 two years from now, and $975 000 four years from now.
The company has decided to fund the expansion with only the $2 800 000 and any interest it can earn on it. Before deciding which plan to use, the company asks its treasurer to predict the rates of interest it can earn on the $2 800 000. The treasurer expects that Precision Machining Corporation can invest the $2 800 000 and earn interest at a rate of 4.5% p.a. compounded semi-annually during Year 1, 5.0% p.a. compounded semi-annually during Years 2 and 3, and 5.5% p.a. compounded semi-annually during Year 4. The company can withdraw part of the money from this investment at any time without penalty.
Questions
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AFN Equation
Broussard Skateboard's sales are expected to increase by 25% from $7.0 million in 2016 to $8.75 million in 2017. Its assets totaled $4 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%. Assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Do not round intermediate calculations. Round your answer to the nearest dollar.
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Aaron's Rentals has 50,000 shares of common stock outstanding at a market price of $38 a share. The company has a beta of 1.2 and the market risk premium is 8%, with risk free rate of 3.5%. The outstanding bonds mature in 10 years, have a total face value of $800,000, a face value per bond of $1,000, and a market price of $987.60 each. The bonds pay 6% coupon. The tax rate is 30 percent. What is the firm's weighted average cost of capital?
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You're considering a project with initial investment of $120,000. The project is expected to generate $65,000 in cash flow for 3 years and then the company has to pay $50,000 to shut down the operation in year 4. If your cost of capital is 12%, would you carry out the project?
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We are examining a new project. We expect to sell 5,500 units per year at $69 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $69 × 5,500 = $379,500. The relevant discount rate is 19 percent, and the initial investment required is $1,540,000. After the first year, the project can be dismantled and sold for $1,260,000. Suppose you think it is likely that expected sales will be revised upward to 8,500 units if the first year is a success and revised downward to 4,100 units if the first year is not a success. |
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a. |
If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering. (Do not round intermediate calculations and round your answer to 2 decimal places. e.g., 32.16.) |
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b. |
What is the value of the option to abandon? (Do not round intermediate calculations and round your answer to 2 decimal places. e.g., 32.16.) |
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| Click here to read the eBook: Forecasted Financial Statements
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of dollars):
For the coming year, the company is forecasting a 35% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 65% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant.
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