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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $925 per set and have a variable cost of $480 per set. The company has spent $150,000 for a marketing study that determined the company will sell 75,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,800 sets per year of its high-priced clubs. The high-priced clubs sell at $1,325 and have variable costs of $640. The company also will increase sales of its cheap clubs by 11,000 sets per year. The cheap clubs sell for $385 and have variable costs of $160 per set. The fixed costs each year will be $14.65 million. The company also has spent $1 million on research and development for the new clubs. The plant and equipment required will cost $30.1 million and will be depreciated on a straight-line basis. The new clubs also will require an increase in net working capital of $3.5 million that will be returned at the end of the project. The tax rate is 23 percent, and the cost of capital is 14 percent. Calculate the payback period, the NPV, and the IRR. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Enter the IRR as a percent.) |
In: Finance
XYZ stock price and dividend history are as follows:
| Year | Beginning-of-Year Price | Dividend Paid at Year-End | ||||||
| 2015 | $ | 124 | $ | 4 | ||||
| 2016 | 135 | 4 | ||||||
| 2017 | 115 | 4 | ||||||
| 2018 | 120 | 4 | ||||||
An investor buys six shares of XYZ at the beginning of 2015, buys another two shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all seven remaining shares at the beginning of 2018.
b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2015, to January 1, 2018. (Negative amounts should be indicated by a minus sign.)
b-2. What is the dollar-weighted rate of return?
(Hint: If your calculator cannot calculate internal rate
of return, you will have to use a spreadsheet or trial and error.)
(Negative value should be indicated by a minus sign. Round
your answer to 4 decimal places.)
In: Finance
Barandon wants to borrow $10000 to purchase a motor bikes.He's going to repay the loan by making equal annual payments for five years with 14% interest per year on the loan.you need to prepare an amortiation schedule for the loan and how much total ionterest will brandon have to pay over the life of the loan?
In: Finance
Barandon wants to borrow $10000 to purchase a motor bikes.He's going to repay the loan by making equal annual payments for five years with 14% interest per year on the loan.you need to prepare an amortiation schedule for the loan and how much total ionterest will brandon have to pay over the life of the loan?
step by step with formula please.....
In: Finance
For this week think of any example where time value of money is relevant, you can talk about mortgages, car loan, interest rates term structure, leases, retirement planning or any related topic. minimum 200 words
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You paid $100 dollars to participate in a bet. If you win you will get $200 back. If you lose, you will get nothing. If the odds are 50-50, what is the mean and standard deviation of this bet (investment)?
A) 100% and 100% B) 0 % and 50% C) 100% and 50 % D) 0 % and 0 %
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Why is it important to consider corporate tax rates and financial structure to derive the weighted average cost of capital (WACC) of a company? Explain.
In: Finance
You have joined a team in an ICT department located in a large bank. After the recent Royal Commission into banking, your employer wants to upgrade many aspects of governance. Your team has been asked about APM. In particular, the bank wants to know how APM might influence benefits management. What should the team say?
The Bank wants to know about what research tells us about the realities of implementing and using APM. What are the success rates? What impediments have been experienced? How is it effectively deployed? Does it assist due diligence?
In: Finance
XYZ company is considering a new machine that costs $250,000 and
would reduce pre-tax manufacturing costs by $90,000 annually. XYZ
would use the 3-year MACRS method to depreciate the machine, and
management thinks the machine would have a value of $23,000 at the
end of its 5-year operating life. The applicable depreciation rates
are 33%, 45%, 15%, and 7%. The net operating Working capital would
increase by $25,000 initially, but it would be recovered at the end
of the project's 5-year life. XYZ’s marginal tax rate is
40-percent, and a 10 percent WACC is appropriate for the project.
(Please do not use excel)
a) Calculate the projects NPV, IRR, and Payback.
b) Assume management is unsure about the $90,000 cost-savings-this figure could deviate by as much as plus or minus 20%. What would have the NPV be under each of these situations?
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You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $9.3 million face value of 10-year debt. You have the following data for each:
A public issue: The interest rate on the debt would be 8.15%, and the debt would be issued at face value. The underwriting spread would be 1.67%, and other expenses would be $73,000.
A private placement: The interest rate on the private placement would be 8.9%, but the total issuing expenses would be only $23,000.
a-1. Calculate the net proceeds from public issue.
a-2. Calculate the net proceeds from private placement.
b-1. Calculate the Present Value of the extra interest on the private placement.
b-2. Other things being equal, which is the better deal?
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Abbott Corporation has 40,000 shares outstanding at a market price per share of $24. Baxter Corporation has 130,000 shares outstanding at a market price of $38 a share. Neither firm has any debt. Baxter is acquiring Abbott for $1,200,000 in cash. What is the merger premium per share?
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$5.80 |
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$6.00 |
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$6.20 |
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$6.40 |
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$6.60 |
In: Finance
Calculate the approximate modified duration of a 4-year, 5%
coupon, semi-annual bond if yields change by 50bps. Assume the bond
currently sells at 5% yield to maturity (YTM).
a) 1.79
b) 3.59
c) 7.17
d) 11.95
e) None of the above
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Describe the close relationship between finance and economics and explain why the finance manager should possess a basic knowledge of economics . What is the primary economic principle used in managerial finance ? (250-300 words)
No handwriting, please
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Consider the following cash flows on two mutually exclusive projects:
| Year | Project A | Project B |
|
0 |
67000 | 82000 |
| 1 | 47000 | 46000 |
| 2 | 42000 | 55000 |
| 3 | 37000 | 58000 |
The cash flows of Project A are expressed in real terms while
those of Project B are expressed in nominal terms. The appropriate
nominal discount rate is 10 percent and the inflation rate is 2
percent.
Calculate the NPV for each project. (Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)
| NPV | |
| Project A | $ |
| Project B | $ |
In: Finance
How is informatics affecting banking and financial institutions?
In: Finance