A 10%, 10-year bond is sold to yield 8%. One year passes, and the yield remains unchanged at 8%. Holding all other factors constant, the bond's price during this period will have:
a. Increased
b. Decreased
c. Remained constant
In: Finance
What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $3,750 at the end of Year 4 if the interest rate is 5%?
In: Finance
Trend Analysis - The following data pertain to Company B:
| (in thousands) | Year 2 | Year 1 |
| Revenue | $1,285,876 | $1,364,550 |
| Net income | 56,644 | 42,906 |
| Accounts receivable | 149,178 | 168,666 |
| Inventory | 158,541 | 179,688 |
| Total current assets | 670,337 | 649,903 |
| Total asset | 859,907 | 849,399 |
| Total current liabilities | 227,807 | 232,074 |
| Total long-term liabilities | 36,483 | 40,787 |
| Total stockholder equity | 595,617 | 576,538 |
Common-Size Income Statements - Company B reported the following income statements:
| COMPANY B | ||
| INCOME STATEMENT | ||
| FOR THE YEARS ENDED DECEMBER YEAR 2 AND YEAR 1 | ||
| (in thousands) | Year 2 | Year 1 |
| Sales revenue | $1,285,876 | $1,364,550 |
| Costs of goods sold | 682,954 | 743,817 |
| Gross profit | 602,922 | 620,733 |
| Selling and administrative expenses | 525,448 | 551,097 |
| Income from operations | 77,474 | 69,636 |
| Interest expense | (498) | (652) |
| Interest income | 903 | 2,371 |
| Other income | 3,506 | 5,455 |
| Income before income taxes | 81,385 | 76,810 |
| Income tax expense | 24,741 | 33,904 |
| Net income | 56,644 | 42,906 |
Using the data provided above, compute the following ratios for Company B for Years 1 and Years 2.
(a) Gross profit margin ratio
(b) Return on sales
(c) Asset turnover
(d) Return on assets
(e) Working capital
(f) Current ratio
(g) Accounts receivable turnover
(h) Inventory-on-hand period
(i) Long-term debt to assets
(j) Long-term debt to equity
(k) Times-interest-earned
(l) Return on equity
Please explain the formulas utilized to answer the financial ratios.
In: Finance
Volunteer Corporation reported taxable income of $435,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land’s fair market value was $87,000 and its tax and E&P basis to Volunteer was $62,000. Rocky assumed a mortgage attached to the land of $17,400. The company had accumulated E&P of $792,000 at the beginning of the year.
A) Compute Volunteer’s total taxable income and federal income tax.
B) Compute Volunteer's current E&P.
C) Compute Volunteer’s accumulated E&P at the beginning of next year.
D) What amount of dividend income does Rocky report as a result of the distribution?
E) What is Rocky’s income tax basis in the land received from Volunteer?
In: Accounting
The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations:
| Jan. 20 | Purchased | 400 | units | @ | $ | 8 | = | $ | 3,200 | |
| Apr. 21 | Purchased | 150 | units | @ | $ | 10 | = | 1,500 | ||
| July 25 | Purchased | 200 | units | @ | $ | 12 | = | 2,400 | ||
| Sept. 19 | Purchased | 100 | units | @ | $ | 14 | = | 1,400 | ||
During the year, The Shirt Shop sold 650 T-shirts for $19 each.
Required
In: Accounting
A fund will need to pay out $2 million next year, $3 million the following year, and then $5 million in the fifth year . If the discount rate is 7%, what is the Macaulay duration of this set of payments?
| A. |
3.10 |
|
| B. |
2.98 |
|
| C. |
3.15 |
|
| D. |
3.20 |
In: Finance
A baseball player is offered a 5-year contract that pays him the following amounts:
Year 1: $1.41 million
Year 2: $1.67 million
Year 3: $2.12 million
Year 4: $2.79 million
Year 5: $3.46 million
Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.70 million more than that which has been offered. Moreover, the player wants to receive his payments in the form of a 5-year ANNUITY DUE. All cash flows are discounted at 11.00 percent. If the team were to agree to the player's terms, what would be the player's annual salary (in millions of dollars)? (Express answer in millions. $1,000,000 would be 1.00)
In: Finance
A light year is the distance light travels in 1 year.
Light travels at 3*108 meters* sec-1.
Write a program that calculates and displays the number of meters light travels in a year.
In: Computer Science
An asset used in a 4-year project falls in the 5-year MACRS class (refer to MACRS table on page 277), for tax purposes. The asset has an acquisition cost of $16,517,578 and will be sold for $7,378,085 at the end of the project. If the tax rate is 0.28, what is the aftertax salvage value of the asset ?
In: Finance
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for
$ 296 comma 000$296,000.
a. What is the book value of the equipment?
b. If Jones sells the equipment today for
$ 182 comma 000$182,000
and its tax rate is
35 %35%,
what is the after-tax cash flow from selling it?
c. Just before it is about to sell the equipment, Jones receives a new order. It can take the new order if it keeps the old equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consume the remainder of the machine's useful life.)
Note:
Assume that the equipment is put into use in year 1.
2.
ou are considering the following two projects and can take only one. Your cost of capital is
11.0 %11.0%.
The cash flows for the two projects are as follows ($ million):
|
Project |
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
|
A |
negative $ 100−$100 |
$ 25$25 |
$ 30$30 |
$ 40$40 |
$ 50$50 |
|
B |
negative $ 100−$100 |
$ 50$50 |
$ 40$40 |
$ 30$30 |
$ 20$20 |
a. What is the IRR of each project?
b. What is the NPV of each project at your cost of capital?
c. At what cost of capital are you indifferent between the two projects?
d. What should you do?
In: Accounting