The most likely outcomes for a particular project are estimated as follows:

However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $2.2 million, which will be depreciated straight-line over the project life to a final value of zero. The firm’s tax rate is 21% and the required rate of return is 12%.

(For all the requirements, a negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

a. What is project NPV in the best-case scenario, that is, assuming all variables take on the best possible value?

b. What is project NPV in the worst-case scenario?

Suppose that under the Plan of Repayment one should pay off the debt in a number of equal​ end-of-month installments​ (principal and​ interest). This is the customary way to pay off loans on​ automobiles, house​ mortgages, etc.A friend of yours has financed ​$24,000 on the purchase of a new​ automobile,and the annual interest rate is 12% ​(1​%per​ month).

a)Monthly payments over a 60-month loan period will be how​ much?

b) How much interest and principal will be paid within three month of this​ loan?

Firm A plans to acquire Firm B. The acquisition would result in incremental cash flows for Firm A of $10 million in each of the first five years. Firm A expects to divest Firm B at the end of the fifth year for $100 million. The beta for Firm A is 1.1, which is expected to remain unchanged after the acquisition. The risk-free rate, Rf, is 7%, and the expected market rate of return, Rm is 15%. Firm A is financed by 80% equity and 20% debt, and this leverage will remain unchanged after the acquisition. Firm A pays interest of 10% on its debt, which will also remain unchanged after the acquisition.
i) Disregarding taxes, what is the maximum price that Firm A should pay for Firm B?



ii) Firm A has a stock price of $30 per share and 10 million shares outstanding. If Firm B shareholders are to be paid the maximum price determined in part (a) via a new stock issue, then how many new shares will be issued and what will be the postmerger stock price?

4. Suppose that the price of an asset at close of trading yesterday was $300 and its volatility was estimated as 1.3% per day. The price at the close of trading today is $298. Update the volatility estimate using
(i) The EWMA model with λ = 0.94
(ii) The GARCH(1,1) model with ω = 0.000002, α = 0.04, and β = 0.94.

Problem 1
a) On June 11, 2008, Anheuser-Busch received a $46.4 billion ($65 a share) takeover offer from Belgium’s InBev. Anheuser-Busch lacks some common defenses against takeover offers. Its board is no longer staggered, meaning all its directors are up for re-election in any given year. And the Busch family does not control the company through supervoting shares, as is the case with some other family businesses that are publicly held. A deal would probably remove Anheuser-Busch from the hands of the Anheuser and Busch families. Still, the family doesn't own enough shares to sway a shareholder vote on the board. Directors and executives hold only 4.5 percent of the company's shares, according to a regulatory filing earlier this year.
After the rejection of InBev’s offer by Anheuser-Busch’s board on June 26, 2008,   InBev, said it would launch a hostile bid . InBev, meanwhile, asked the court earlier in the day, for a declaratory ruling that would confirm the shareholders’ right to remove all 13 of Anheuser’s board members, without giving cause. The brewer is asking for clarification of the legal status of five of the directors appointed in 2006, before changes were made that allow the removal of board directors by written consent.
Anheuser-Busch may announce plans to lower costs and sell off divisions to increase its stock price so it doesn't need to be acquired. One of Anheuser-Busch’s potential countermoves would involve buying the 50 percent of Mexico’s Grupo Modelo that it does not already own. That would raise Anheuser-Busch’s price tag, potentially deterring a suitor.
i. Identify the takeover tactics employed by InBev and explain why each was used.

ii. Identify the takeover defenses employed by Anheuser and explain why each was used.

- for the purpose of analysing a bank's performance, what is the meaning of "net loans&leases/core deposits ratio" and "net noncore funding dependence?".

- what is the reasonable ratio number (for a commercial bank) for each ratio previously mentioned?

Orchard Biotech Company is considering two mutually exclusive projects (see operational CF estimates below). OBC’s cost of capital is 10%. Calculate NPV and IRR for both projects. A) Which project would you recommend to choose? Why? B) How your NPV and IRR may change if we incorporate leverage into these CF estimates? Explain briefly.

1. (a) If management requires projects to have a 3-year payback, would it accept either of the following two independent projects? Explain.

Year 0 1 2 3 4

Cash flows (A) -$55,000 19,000 19,000 19,000 19,000

Cash flows (B) -$95,000 18,000 18,000 18,000 230,013

(b) What is the NPV of project B assuming the discount rate is 14%.

(c) Sketch the NPV profile for project B. Also indicate the point when the discount rate is 37.01%.

2. A company is evaluating the following two mutually exclusive projects. The company mandates a three-year project payback. The required return is 10%.

Year Project F

0. 0 -$150,000

1. 1 44,000

2. 2 68,000

3. 3 40,000

4. 4 60,000

5. 5 54,000

Project G -$235,000 77,000 77,000 77,000 77,000 77,000

(a) Calculate the payback period for both projects.
(b) Calculate the NPV for both projects.
(c) Calculate the PI for both projects.
(d) Which project, if any, should the company accept? (e) What can we infer about the IRRs for these projects?

3. Evaluate each of the following statements to determine if they are ‘True’ or ‘False’. (a) A one-year project costing $1,000 and with an IRR of 15% should be accepted.

(b) The PV of the cash flows of an eight-year project equals $580. If the discount rate is 8%, and the project costs $500 then it should be rejected.

(c) The payback period is most appropriate for projects with a long life.

What is the current usefulness as an analytic tool. Porter 5 forces and PESTLE Analysis

This concept/definition question. No other information is possible. IF you are still needing "more info" please put this question back in Que for another expert to help.  

The summarized Statement of Financial Position of Dedak Berhad at 30 June 2017 was as follows.

The current price of the ordinary shares is RM1.35 ex dividend. The dividend of RM0.10 is payable during the next few days. The expected rate of growth of the dividend is 9% per annum. The current price of the preference shares is RM0.77 and the dividend has recently been paid. The debenture interest has also been paid recently and the debentures are currently trading at RM80 per RM100 nominal. Corporate tax is at the rate of 30%.

Required

1. Calculate the company’s weighted average cost of capital (WACC), using the respective market values as weighting factors.
2. Assume that Dedak Berhad issued the debentures one year ago to refinance a new investment.

Discuss the reasons why Dedak Berhad may have issued debentures rather than preference shares to raise the required finance.

3. Explain what services a merchant bank may have provided to Dedak Berhad in connection with the raising of this finance.

1. As an option approaches the expiration date, what should happen to the price of the option?

2. Suppose we have two stocks and the price of stock A is much more volatile than the price of stock B. Which stock should have a higher premium?

You are offered a note that pays $1,000 in 15 months (or 456 days) for $850. You have $850 in a bank that pays a 6.76649% nominal rate, with 365 daily compounding, which is a daily rate of 0.018538% and an EAR of 7.0%. You plan to leave the money in the bank if you don’t buy the note. The note is riskless. Should you buy it?

A stock is currently priced at $37.00. The risk free rate is 5% per annum with continuous compounding. In 7 months, its price will be either $42.18 or $31.82. Using the binomial tree model, compute the price of a 7 month bear spread made of European puts with strike prices $41.00 and $45.00.