How are emerging markets shaping globalization?

Is it better for a firm's actual stock price in the market to be under, over, or equal to its intrinsic value? Would your answer be the same from the standpoint of stockholders in general and a CEO who is about to exercise a million dollars in options and then retire? Explain.

Stock A and Stock B prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.

1. Use the data given to calculate annual returns for Stock A, Stock B, and the Market Index, and then calculate average annual returns for the two stocks and the index. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and then dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2011 because you do not have 2010 data.)
2. What dividends do you expect for Stock A over the next three years if you expect the dividend to grow at the rate of 3% per year for the next three years? In other words, calculate D1, D2, and D3. Note that D0 = $1.50.
3. Assume that Stock A has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for three years, and then sell it for $27.05, what is the most you should pay for it?

Genetic Insights Co. purchases an asset for $10,522. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $3,906

Your company is looking at updating its production process by adding a new piece of equipment. The company uses a 9% cost of capital in its capital budgeting decisions. The new equipment will cost $350,000 and the company expects the following annual cash flows for 5 years as a result of the purchase (note that year 1 is negative): Year 1 (10,000) Year 2 45,000 Year 3 127,000 Year 4 168,000 Year 5 145,000 A) Calculate the Net Present Value (NPV) of the acquisition project. B) Calculate the Internal Rate of Return (IRR) of the acquisition project. C) Should the company purchase the new equipment? Explain.

Dave and Sharon are a professional couple in their late 30s. They have managed to save a $200,000 deposit for a house worth $1million. They can take out a mortgage for 4.9% per annum for 30 years. Rent growth rate is 2.5% per annum, inflation rate is 2% per annum, and return on investment is 4% per annum. Cost of selling a home is 2.5% of its value, maintenance and insurance is 1.5% per annum. Ignore other costs.

They can rent a similar property for $650 per month.

Dave believes house prices will grow at 4.5% per annum. If he is correct, are they better off buying or renting?

Sharon is less optimistic than Dave, and thinks that house prices will only grow at 1.6% per annum. If she is correct, are they better off buying or renting?

Justify your answer.

Asset management ratios

Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio.

Consider the following case:

Franklin Aerospace has a quick ratio of 2.00x, $36,225 in cash, $20,125 in accounts receivable, some inventory, total current assets of $80,500, and total current liabilities of $28,175. The company reported annual sales of $200,000 in the most recent annual report.

Over the past year, how often did Franklin Aerospace sell and replace its inventory?

9.11x

8.28x

2.86x

8.01x

The inventory turnover ratio across companies in the aerospace industry is 9.108x. Based on this information, which of the following statements is true for Franklin Aerospace?

Franklin Aerospace is holding more inventory per dollar of sales compared with the industry average.

Franklin Aerospace is holding less inventory per dollar of sales compared with the industry average.

You are analyzing two companies that manufacture electronic toys—Like Games Inc. and Our Play Inc. Like Games was launched eight years ago, whereas Our Play is a relatively new company that has been in operation for only the past two years. However, both companies have an equal market share with sales of $200,000 each. You’ve collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $510,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming year. You’ve collected data from the companies’ financial statements. This information is listed as follows: (Note: Assume there are 365 days in a year.)

Data Collected (in dollars)

Using this information, complete the following statements to include in your analysis.

Answer choices

1A. High or Low

1B. Like Games or Our Play

1C. Our play Or Likes Games

2A. Lower or Higher

2B. Higher or Lower

3A. 1.05X or 0.80X

3B Lower or Higher

What is the NPV for the car selection example below?

Example: Buy an Electric Vehicle?

Chevy Malibu: $30,000 cost  12K miles/yr  30 mph  Maintenance: $1K in year 1; 5% CAGR  Resale of $5K in ten years  Gas: $3.50/g; 10% CAGR  D = 7% 

Nissan Leaf: $40,000 cost  12K miles/yr  5 miles per kWh  Maintenance: $700 in year 1; 5% CAGR  New battery in year 5: $5,000  Resale of $3K in ten years  $0.11/kWh; 10% CAGR  D = 7%

Suppose there is a 3-year bond with a $1000 face value, 12% coupon payments and a 6% yield to maturity.

a) Without any calculation, briefly explain whether this bond will be selling a premium or a discount

b) Calculate the price of this bond.

c) Calculate the duration of this bond. d) If someone buys this bond and holds it for three years, what is their rate of return? e) Suppose after one year, interest rates in the economy fall by 2%. If the person that bought this bond sells it at that time, what would be their rate of return? (Hint: First think about what the fall in interest rates will do to the bond’s price and then think about the rate of return.)

Suppose that the average waiting time for a patient at a physician's office is just over 29 minutes. In order to address the issue of long patient wait times, some physicians' offices are using wait-tracking systems to notify patients of expected wait times. Patients can adjust their arrival times based on this information and spend less time in waiting rooms. The following data show wait times (minutes) for a sample of patients at offices that do not have a wait-tracking system and wait times for a sample of patients at offices with a wait-tracking system.

You plan to purchase a $180,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 5.5 percent. You will make a down payment of 10 percent of the purchase price.

a. Calculate your monthly payments on this mortgage.
b. Calculate the amount of interest and, separately, principal paid in the 20th payment.
c. Calculate the amount of interest and, separately, principal paid in the 110th payment.
d. Calculate the amount of interest paid over the life of this mortgage.

(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

The Baldwin Company is considering investing in a machine that produces bowling balls. The cost of the machine is $100,000 and production is expected to be 8,000 units per year during the five-year life of the machine. The expected resale value is $5,000 (in real terms).
Since the interest in bowling is declining, the management believes that the nominal price of bowling balls will increase at only 2% per year. The nominal price of bowling balls in the first year will be $20. On the other hand, plastic used to produce bowling balls is rapidly becoming more expensive. Because of this, production costs are expected to grow at 10% (nominally) per year. First-year nominal production costs will be $10 per unit.
The company's nominal cost of capital is 15%. The rate of inflation is 5%. Ignore taxes. Should the project be undertaken?

Please give me a answer with equations and step by step solutions so that I can understand.