2) Company A is based in UK and has a subsidiary in the US that requires funding in USD. It decides to enter into a currency swap agreement with company B in US. Company A will pay 5% on a Sterling principal of £10,000,000 and receive 6% on a US$ principal of $15,000,000 every year for the next 3 years. The current exchange rate is $1.5 USD per UK Sterling. Question: a) Explain and calculate the cash flow exchanges at the beginning, interim periods and at maturity.b) What are the potential advantages for company A in this swap?

2) Company A is based in UK and has a subsidiary in the US that requires funding in USD.    It decides to enter into a currency swap agreement with company B in US. Company A will pay 5% on a Sterling principal of £10,000,000 and receive 6% on a US$ principal of $15,000,000 every year for the next 3 years. The current exchange rate is $1.5 USD per UK Sterling.

Question:  

1. Explain and calculate the cash flow exchanges at the beginning, interim periods and at maturity.
2. What are the potential advantages for company A in this swap?

General Electric (GE) appliances come with a traditional warranty, but the company also offers extended coverage with a Service Protection Advantage plan from Assurant, GE's authorized provider of extended warranties. The plan covers parts and labor for appliance repairs for an extended period. According to data compiled by Assurant, thirty percent of consumers who purchase a new GE appliance also buy the Service Protection Advantage plan.

Assume that a random sample of fourteen consumers who purchased a new GE appliance is drawn. Let us define X to be a binomial random variable representing whether or not a consumer purchased the Service Protection Advantage plan with their new GE appliance purchase this year.

a) What is the probability that no more than six of the sampled consumers purchased the Service Protection Advantage plan with their new GE appliance?

b) What is the probability that at least seven, but less than ten, of the sampled consumers purchased the Service Protection Advantage plan with their new GE appliance?

c) If you were to take repeated random samples of fourteen consumers who purchased a new GE appliance, what is the average number of them you would expect to also purchase the Service Protection Advantage plan?

31. A Treasury bond paid $100 in interest income to an individual whose federal tax rate

      is 25% and whose state tax rate is 5%. What dollar amount of taxes is owed by this

      person?

32. Calculate the maximum price an investor should pay for a common stock assuming:

      last period’s dividend was $4, the growth rate is 5%, the required rate of return is

      9%.

33. A company postponed paying a preferred stock dividend this quarter. What dividend

      may be paid to common stockholders?

34. Suppose a zero-coupon bond is not owned within a tax-sheltered account. How often

      must earned income be reported for tax purposes?

35. The market price of a common stock is $75 but an investor estimates its value as $90.

      Calculate the net present value.

36. A corporation has taxable income of $100,000, its tax rate is 25%, and it paid a

      dividend of $25,000. There is no preferred stock financing. Calculate the increase in

      retained earnings.

37. A preferred stock pays a dividend of $4 per share. The market price of the preferred

      stock is $70. What value of k_p would cause NPV = 0?

38. When a company issues common stock does this imply a contractual obligation to

       pay dividends?

39. Consider a preferred stock whose market price is $20 and whose NPV = 0. What is

      the exact value of this preferred stock from the perspective of an investor?

Think about these three major ideas of the Enlightenment: 1) Political - Locke and Rousseau -Government by contract between the people and the rulers and popular sovereignty – i.e. inviolable constitutions are contracts and 2) Economic - Adam Smith – freedom to pursue individual economic self-interests benefits all of society – i.e. free-market capitalism.  3) Social - Jefferson - All people created equal and freedom is a natural right. Remember that these ideas (three key premises of 19^th century liberalism dating to the Enlightenment) share the stage with nationalism, imperialism, and industrialization.

Remember that LIBERALISM is the most direct descendant of the ideas of the Enlightenment.

Answer the following questions for the 1800s: (If you have examined and completed the notes, you will not have a problem answering these questions.)

Generally, considering the liberal reform efforts of 1) western Europe, 2) the US, 3) Canada, 4) Latin America, 5) the Ottoman Empire, 6) Russia, 7) China, 8) Japan, and 9) Africa, think about which nations/regions were able to implement real and long-lasting political, social, and economic reform during the1800s based on the ideas of Locke, Rousseau, and Smith as described above?

Answer the following:

1) Name one country/region (from the list above) that successfully established REAL and LASTING liberal reforms (not just on paper). ______________________ (Think results) 10pts.

2) In one sentence, provide one example OF THIS SUCCESS to justify your answer. Be specific. (They did good things for the people is not a specific answer..... Who did? What people? What good did they do politically, socially, or economically...?) 40pts.

3) Name one country/region (from the list above) that failed to implement REAL and LASTING liberal reforms. _______________________ (Think results) 10pts.

4) In one sentence, provide one example to justify your answer. Be specific. (It caused an economic or political crisis is not a specific answer..... What or who caused? What happen to the economy? What happened politically? Who suffered? ) 40pts.

Explain the alternatives available to individual taxpayers in accounting for foreign taxes paid or accrued on their taxable income.

A. A taxpayer who uses the accrual method of accounting claims the foreign tax credit in the year in which the tax is? paid, no exceptions. A taxpayer who uses the cash method of accounting claims the foreign tax credit in the year in which the tax? occurs, no exceptions.

B. The U.S. Government taxes foreign source income but allows a credit for foreign income taxes paid or accrued that can exceed the amount of U.S. taxes owed on all? foreign-source income. The credit system requires that a taxpayer report the? income, file a tax?return, and apply the total credit to reduce his or her U.S. tax liability.

C. An annual election is available to individual? taxpayers, allowing them to deduct or credit any foreign income taxes that have been?paid, no exceptions. The credit system requires that a taxpayer report the? income, file a tax? return, and apply the credit to reduce his or her U.S. tax liability.

D. An annual election is available to individual? taxpayers, allowing them to deduct or credit any foreign income taxes that have been paid or accrued. Simplified reporting rules apply to taxpayers with small foreign tax credit amounts from passive income sources.?However, almost all taxpayers elect to claim the foreign tax credit.

QUESTION 1
a) In order to improve health care delivery in Ghana, among other things, the Government of Ghana in 2012
signed a contract with an Israeli construction company - Messrs Engineering and Development Consultant
to build a 650-bed medical facility. Construction began in April 2013 as a turnkey project. In 2015, the
University of Ghana, which had provided a 400-acre land for the construction of the hospital, established a
Special Purpose Vehicle (SPV) that will operate the facility. The name of the company is the University of
Ghana Medical Centre (UGMC) Limited. UGMC was completed in August 2017 and requires about 800
personnel when it is fully operational. The first phase of the project is priced at $217 million. The second
phase of the project requires about $50 million.
i. According to the typical features of project finance, does the project described above fit the
description of project finance? [4 marks]
ii. What is a turnkey contract and who does a Project company sign one with?
[3 marks]
iii. Under what conditions can the procurement of funds for the second phase of the project be termed
as mezzanine debt? [3 marks]
iv. Using probable scenarios, describe how the project may be affected by political and commercial
risks. [5 marks]
b) Assume that during the second phase of UGMC, an equipment that currently costs $950,000 is required. An
alternative will be to lease the equipment for a rental of $320,000 for 5 years. The interest rate is the last
two digits of your Students ID. Which is a better option for UGMC, lease or buy?
[5 marks]
[Total = 20 mark

QUESTION 1
a) In order to improve health care delivery in Ghana, among other things, the Government of Ghana in 2012
signed a contract with an Israeli construction company - Messrs Engineering and Development Consultant
to build a 650-bed medical facility. Construction began in April 2013 as a turnkey project. In 2015, the
University of Ghana, which had provided a 400-acre land for the construction of the hospital, established a
Special Purpose Vehicle (SPV) that will operate the facility. The name of the company is the University of
Ghana Medical Centre (UGMC) Limited. UGMC was completed in August 2017 and requires about 800
personnel when it is fully operational. The first phase of the project is priced at $217 million. The second
phase of the project requires about $50 million.
i. According to the typical features of project finance, does the project described above fit the
description of project finance? [4 marks]
ii. What is a turnkey contract and who does a Project company sign one with?
[3 marks]
iii. Under what conditions can the procurement of funds for the second phase of the project be termed
as mezzanine debt? [3 marks]
iv. Using probable scenarios, describe how the project may be affected by political and commercial
risks. [5 marks]
b) Assume that during the second phase of UGMC, an equipment that currently costs $950,000 is required. An
alternative will be to lease the equipment for a rental of $320,000 for 5 years. The interest rate is the last
two digits of your Students ID. Which is a better option for UGMC, lease or buy?
[5 marks]
[Total = 20 mark

1. Venture capitalist X invests in 20% (1,000,000 shares of common stock) of a company for $10 million dollars and in the next round of financing the company issues an additional 5 million shares of common stock to venture capitalist Z for $5 million dollars. The stake of Venture capitalist X in the company is reduced to 10%. This is an example of dilution. (True or False)

2. One way for individuals who are not accredited investors to gain exposure to venture capital investments is to invest in public companies that are actively involved in funding startups (True or False)

3.

Investors who bought the series D convertible preferred stock issued by Zoom in 2016 and then sold the shares in the IPO earned an annual rate of return of between 105% and 110%. (assume the purchase was on January 1^st, 2016 and the sale was on December 31^st, 2019). (True or False)

4. Preferred shares that are sold to venture capitalists give the venture capitalists preferred rights to residual economic value relative to the rights of common shares. (True or False)

1. Post the transactions to the T-accounts.
2. Use the amounts from the T-accounts in Requirement (1) to prepare an August 31 trial balance for Pose-for-Pics.