suppose you purchase a 7-year AAA-rated Swiss bond for par that is paying an annual coupon of 7 percent and has a face value of 1,300 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 9 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1.

a. What is the loss or gain to a Swiss investor who holds this bond for a year?
b. What is the loss or gain to a U.S. investor who holds this bond for a year?

Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $450,000. The company expect cash inflows from this project as detailed below:

Year One Year Two Year Three Year Four

$200,000 $225,000 $275,000 $200,000

The appropriate discount rate for this project is 12%.

The discounted payback period for this project is closest to:

Answer

2.1 years

3 years

2.0 years

2.5 years

National Corporation has semiannual bonds outstanding with nine years to maturity and the bonds are currently priced at $754.08. If the bonds have a coupon rate of 7.25 percent, then what is t

he after-tax cost of debt for Beckham if its marginal tax rate is 30 percent? Solution

• Number of periods = 9 * 2 = 18

  Coupon = (0.0725 * 1000) / 2 = 36.25

  Yield to maturity = 11.7499%

  Keys to use in a financial calculator: 2nd I/Y 2, FV 1000, PMT 36.25, PV -754.08, N 18, CPT I/Y

  After tax cost of debt = YTM (1 - tax)

  After tax cost of debt = 0.117499 (1 - 0.3)

  After tax cost of debt = 0.0822 or 8.22%

HOW DID THEY FIND THE  Yield to maturity = 11.7499%

HOW CAN I DO THIS PROBLEM BY HAND STEP BY STEP OR BY FINANCE CALCULATOR STEP BY STEP ?? PLEASE HELP

Assume that today is December 31,2018 and that the following information applies to Vermeil Airlines:

• After-tax operating income [EBIT(1 – T)] for 2019 is expected to be $518 million.
• The depreciation expense is expected to be $122 million.
• The capital expenditures are expected to be $241 million.
• No change is expected in net operating working capital.
• The free cash flow is expected to grow at a constant rate of 2.0% per year.
• The required return on equity is 12.4%.
• The WACC is 10.3%.
• The market value of the company’s debt is $2.4 billion.
• 207 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the company’s stock price today?

Please extend answer to 4 decimal places.

You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 11 percent and 14 percent. The standard deviations of the assets are 35 percent and 43 percent. The correlation between the two assets is .53 and the risk-free rate is 3.8 percent. What is the optimal Sharpe ratio in a portfolio of the two assets? What is the smallest expected loss for this portfolio over the coming year with a probability of 1 percent? ( do not round intermediate calculations. (Round Sharpes ratio answer to 4 decimal places and the s-score value to 3 decimal places when calculating answer. Enter your smallest expected loss as a percent rounded to 2 decimal places).

You've just borrowed $30,000 with an annual interest rate of 8.5% and must repay it in 5 equal installments at the end of each of the next 5 years. How much would you still owe after you have made the first payment?

$23,034.13

$19,118.33

$22,343.11

$22,112.76

for a clearer understanding can someone please answer this questions.

1. How should the economic concept of Opportunity Costs be utilized in the financial analysis of HCO’s? can someone What is the meaning of Sunk Costs and how does that concept impact the financial analysis of the HCO’s proposed projects?

2. describe the key concepts and characteristics of the following financial statements: balance sheet, statement of net income or profit and loss and the statement of cash flows. how do these financial statements interrelate? why are they important?

You've collected the following forecasts of working capital needs for next year:

-1- What are the permanent working capital needs (in $$ million)?

-2- What are the temporary working capital needs in Q4 (in $$ million)?

-3-

According to the matching principle, how much of your working capital needs should you finance with long-term sources of funds (in $$ million)?

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $759 per set and have a variable cost of $358 per set. The company has spent $111,270 for a marketing study that determined the company will sell 5,580 sets per year for seven years. The marketing study also determined that the company will lose sales of 947 sets of its high-priced clubs. The high-priced clubs sell at $1,015 and have variable costs of $666. The company will also increase sales of its cheap clubs by 1,129 sets. The cheap clubs sell for $406 and have variable costs of $233 per set. The fixed costs each year will be $910,308. The company has also spent $112,995 on research and development for the new clubs. The plant and equipment required will cost $2,870,069 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $131,511 that will be returned at the end of the project. The tax rate is 35 percent, and the cost of capital is 8 percent. What is the sensitivity of the NPV to changes in the quantity of the new clubs sold?

McGilla Golf has decided to sell a new line of golf clubs. The length of this project is seven years. The company has spent $106,059 on research and development for the new clubs. The plant and equipment required will cost $2,885,114 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $134,309 that will be returned at the end of the project. The OCF of the project will be $890,588. The tax rate is 28 percent, and the cost of capital is 12 percent. What is the NPV for this project?

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $778 per set and have a variable cost of $378 per set. The company has spent $13,244 for a marketing study that determined the company will sell 5,528 sets per year for seven years. The marketing study also determined that the company will lose sales of 940 sets of its high-priced clubs. The high-priced clubs sell at $1,099 and have variable costs of $737. The company will also increase sales of its cheap clubs by 1,024 sets. The cheap clubs sell for $432 and have variable costs of $223 per set. The fixed costs each year will be $932,721. The company has also spent $111,810 on research and development for the new clubs. The plant and equipment required will cost $2,825,600 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $125,048 that will be returned at the end of the project. The tax rate is 28 percent, and the cost of capital is 7 percent. What is the annual OCF for this project?

McGilla Golf has decided to sell a new line of golf clubs. The length of this project is seven years. The company has spent $135,255 on research and development for the new clubs. The plant and equipment required will cost $2,843,972 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $125,670 that will be returned at the end of the project. The annual OCF of the project will be $888,623. The tax rate is 28 percent, and the cost of capital is 7 percent. What is the payback period for this project?

Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply:

1. The machinery falls into the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.)
2. Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance.
3. The firm's tax rate is 25%.
4. The loan would have an interest rate of 12%. It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year 4.
5. The lease terms call for $420,000 payments at the end of each of the next 4 years.
6. Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $300,000 at the end of the 4th year.

1. What is the cost of owning? Enter your answer as a positive value. Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.
2. What is the cost of leasing? Enter your answer as a positive value. Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.
3. What is the NAL of the lease? Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.

McGilla Golf has decided to sell a new line of golf clubs. The length of this project is seven years. The company has spent $1110000 on research and development for the new clubs. The plant and equipment required will cost $28010336 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1286424 that will be returned at the end of the project. The OCF of the project will be $8020979. The tax rate is 32 percent. What is the IRR for this project?

New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,050,000, and it would cost another $23,500 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $545,000. The machine would require an increase in net working capital (inventory) of $10,000. The sprayer would not change revenues, but it is expected to save the firm $491,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%.

1. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

   Year 1	$
   Year 2	$
   Year 3	$

2. 
   
3. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.
   $
4. 
   
5. 
   
6. 
   
7. If the project's cost of capital is 11 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.