Today’s price of Delta is $150 per share. You are neither bullish nor bearish about Delta, but you believe that the share price will not move by a lot in the near future. To implement your view, you decide to sell a straddle with one month until maturity. An option dealer provides you quotes on one-month Delta options. For a call option with a strike of $150, the dealer quotes you a price of $4.32. For a put option with a strike of $150, the dealer quotes you a price of $4.32. The c.c. risk-free rate is zero. What is the profit to the short straddle if Delta trades at $200 per share in one month?

There are 2 breakevens, what is the high and what is the low? (There should be two answers, one for high and one for low)

2. Mansfield Company makes wiring harnesses for the automotive industry. Its standard costs for each harness are 2 direct labor hours per unit at $23 of labor cost per hour, and one pound of plastic harness material at $1.25 per pound. Actual manufacturing data for the period are as follows: Number of Units Manufactured 40,000 Number of Direct Labor Hours Used 79,400 Actual Direct Labor Cost $1,746,800 Number of Pounds of Direct Material Used 40,800 Number of Pounds of Direct Material Purchased 41,000 Actual Direct Material Cost $51,000 Calculate Direct Labor Rate Variance __________ Calculate Direct Labor Quantity Variance __________ Calculate Direct Material Price Variance __________ Calculate Direct Material Quantity Variance __________

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 8,100 in the first year, with growth of 5 percent each year for the following four years (Years 2 through 5). Production of these lamps will require $46,000 in networking capital to start. Total fixed costs are $106,000 per year, variable production costs are $12 per unit, and the units are priced at $40 each. The equipment needed to begin production will cost $186,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 40 percent, and the required rate of return is 20 percent. What is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What could a financial manager look at to determine whether his company is successful or in distress? Give an example of a success or distress in today's business world.

A borrower takes out a 30-year price level adjusted mortgage loan for $200,000 with monthly payments. The initial interest rate is 4% with 4 points. Assuming that inflation is expected to increase at the rate of 3% for the next 5 years, and a fully amortizing loan is made.

What is the inflation adjusted loan balance at the end of year 2? (Choose the nearest number)

What is the expected effective yield to the lender if the loan is repaid in 2 years? (Choose the nearest number)

The Robinson Corporation has $43 million of bonds outstanding that were issued at a coupon rate of 12.550 percent seven years ago. Interest rates have fallen to 11.750 percent. Mr. Brooks, the Vice-President of Finance, does not expect rates to fall any further. The bonds have 17 years left to maturity, and Mr. Brooks would like to refund the bonds with a new issue of equal amount also having 17 years to maturity. The Robinson Corporation has a tax rate of 30 percent. The underwriting cost on the old issue was 4.30 percent of the total bond value. The underwriting cost on the new issue will be 2.60 percent of the total bond value. The original bond indenture contained a five-year protection against a call, with a call premium of 6 percent starting in the sixth year and scheduled to decline by one-half percent each year thereafter. (Consider the bond to be seven years old for purposes of computing the premium.) Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Assume the discount rate is equal to the aftertax cost of new debt rounded up to the nearest whole percent (e.g. 4.06 percent should be rounded up to 5 percent)

SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The company paid its direct labor workers a total of $19,200 for this work, or $20.00 per hour.

According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $19.75 per hour.

Required:

1. What is the standard labor-hours allowed (SH) to prepare 4,000 meals?

2. What is the standard labor cost allowed (SH × SR) to prepare 4,000 meals?

3. What is the labor spending variance?

4. What is the labor rate variance and the labor efficiency variance?

(For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do no round intermediate calculations.)

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 5.40 percent. What is the PI of a project if the initial costs are $1,449,850 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $634,623 per year at the end of the year.

Round the answer to two decimal places.

On Monday morning, your buy one CME British Pound futures contract (i.e., you buy BP) containing BP 62,500 at a price of $1.4118.  Suppose the broker requires an initial margin of $1,925 and a maintenance margin of $1,750.  The settlement prices for Monday through Friday are $1.4108, $1.4118, $1.4085, $1.4076, and $1.4072, respectively.   Assume that you begin with an initial balance of $2,000 (not $1,925).  Fill out the following tables.  Make sure you show your calculation. (To get exact answers, show 4 digits after the decimal point.  If your calculation can’t show 4 digits after the decimal point, use excel spread sheet for the calculation) (9 points)

INPUT DATA: KEY OUTPUT: Amount needed by the firm: $170,000 Issue amount ($): $200,000 Flotation costs (in decimal form): 10.00% # of shares: 8,000 Other issuing expenses: $10,000 Stock price per share: $25.00 Underwriting fees $20,000 Other expenses $10,000 Total issuing costs $30,000 Amt of usable funds $170,000

Diction Publishing estimates that it needs $500,000 to support its expected growth. The underwriting fees charged by the investment banking firm for which you work are 6.5% for such issue sizes. In addition, it is estimated that Diction will incur $4,900 in other expenses related to the IPO. c. Suppose that Diction’s investment banker charges 8.2% rather than 6.5%. Assuming that all other information given earlier is the same, how many shares must Diction issue in this situation to net the company the $500,000 it needs? d. Suppose everything is the same as originally presented, except Diction will incur $5,835 in other expenses rather than $4,900. In this situation, how many shares must Diction issue to net the company the $500,000 it needs?

Elixir Corporation has just filed for bankruptcy. Elixir is a holding company whose assets consist of real estate worth $240 million and 100% of the equity of its two operating subsidiaries. It is financed partly by equity and partly by an issue of $560 million of senior collateral trust bonds that are just about to mature. Subsidiary A has issued directly $480 million of debentures and $31 million of preferred stock. Subsidiary B has issued $260 million of senior debentures and $140 million of subordinated debentures. A’s assets have a market value of $580 million and B’s have a value of $316 million. How much will each security holder receive if the assets are sold and distributed strictly according to precedence?

Payoff: (I can't seem to figure out the correct amount for the trust bond)

a. Debenture = 480 million

b. Senior debenture = 260 million

c. Subordinated debenture = 56 millio

d. Trust bond= ?

e. Preferred stock = 31 million

For the last 7 years, Joseph has made deposits of ​$150.00 at the end of every year earning interest at 6 % compounded annually. If he leaves the accumulated balance for another 8 years at 5 % compounded semi dash annually comma what will the balance be in the​ account?

The balance will be $________.

Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $75 million, has a 8 percent coupon, and sells for 98 percent of par. The second issue has a face value of $55 million, has a 9 percent coupon, and sells for 107 percent of par. The first issue matures in 23 years, the second in 7 years.

The most recent dividend was $4.5 and the dividend growth rate is 8 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 30 percent.

Required: What is the company's WACC? (Do not round your intermediate calculations.)

A 12.79%

B 8.19%

C 7.69%

D 15.88%

E 7.94%

Please show work

A forklift will last for only 4 more years. It costs $6,100 a year to maintain. For $16,000 you can buy a new lift that can last for 9 years and should require maintenance costs of only $3,100 a year. a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 6% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) a-2. Should you replace the forklift? b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 14% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-2. Should you replace the forklift?