Interest rates on 4-year Treasury securities are currently 7%, while 6-year Treasury securities yield 7.4%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.
In: Finance
a)
XYZ Inc entered in a 4 year contract with a client. XYZ will receive following cash flows at the end of each year. If they can earn 6% annual interest, what is the future value of this contract?
0 1 2 3 4
|------------|--------------|---------------|----------------|
0 $800 $1,500 $3,800 $420
Choose the correct answer:
$7,086.21
7,232.87
$6,911.20
$4,521.34
$5,612.94
b)
Bank A is offering a loan of $4,000 at 8% interest rate compounded monthly while Bank B is offering $4,000 loan at 7.98% interest rate compounded daily. Which bank should you take the loan from?
Choose the correct answer:
Bank B as it has a lower effective rate of 8.51%
Bank B as it has a lower effective rte of 8.306099%
Both banks have same effective rate so it does not matter which bank you borrow from
Bank A since it has a lower effective rate of 8.299951%
Bank A as the effective rate is lower at 8.51%
c)
Jake bought an old car from the used car dealer “reliable autos Inc.” for a price of $8,000. Jake paid $2,000 down payment and financed the remaining amount with loan for seven years and monthly payments of $158.04 at the end of each month. what is the rate of this financing (APR)?
Choose the correct answer:
2.22%
17.39%
15.69%
13.59%
26.59%
d)
You need to start making monthly withdrawals of $8,500 at the beginning of each month starting today, for 25 years from your personal account. This account pays 6.5% return compounded monthly, how much money do you need in your account today?
Choose the correct answer:
$1,265,691.80
$2,550,000
$1,258.872.90
1,984,310.92
2,365,124.98
In: Finance
In: Finance
| Calculating Average Payables Period For the past year, Coach, Inc., had a cost of goods sold of $87,386. At the end of the year, the accounts payable balance was $19,472. How long on average did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply? | ||||||
| Cost of Goods Sold | $ 87,386.00 | |||||
| Accounts Payable | $ 19,472.00 | |||||
| Average Payable Period | ||||||
03.27 Using the DuPont Identity Y3K, Inc., has sales of $10,570, total assets of $4,670, and a debt–equity ratio of .25. If its return on equity is 15 percent, what is its net income? | ||||||
| Sales | $ 10,570.00 | |||||
| Total Assets | $ 4,670.00 | |||||
| Debt-Equity Ratio | 0.25 | |||||
| Return on Equity | 15.00% | |||||
| Net Income | ||||||
In: Finance
Interest rates on 4-year Treasury securities are currently 5.6%, while 6-year Treasury securities yield 7.15%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.
In: Finance
You have the following information about the current one-year spot rate and the expected one-year T-note rates during the next three years. The one year spot rate is 1.66%. The expected rate in year 2 is 2.45%, the expected rate in year 3 is 2.86%, and the expected rate in year 4 is 3.64%. What are current rates for the 1, 2, 3, and 4 year maturities for these treasury securities
In: Finance
Assume i=8% year. How much money do I have to deposit today(year 0) in an account that will generate $25000 from year 12 to infinity.
In: Economics
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below.
| Year | 1 | 2 | 3 | 4 | 5 |
| FCF | -$22.31 | $38.4 | $43.5 | $51.4 | $56.5 |
The weighted average cost of capital is 10%, and the FCFs are
expected to continue growing at a 4% rate after Year 5. The firm
has $25 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 20 million shares
outstanding. Also, the firm has zero non-operating assets. What is
the value of the stock price today (Year 0)? Round your answer to
the nearest cent. Do not round intermediate calculations.
$ per share
In: Finance
Burns Corporation's net income last year was $97,400. Changes in the company's balance sheet accounts for the year appear below:
| Increases (Decreases) | |||
| Asset and Contra-Asset Accounts: | |||
| Cash and cash equivalents | $ | 19,300 | |
| Accounts receivable | $ | 13,500 | |
| Inventory | $ | (16,800 | ) |
| Prepaid expenses | $ | 4,400 | |
| Long-term investments | $ | 10,500 | |
| Property, plant, and equipment | $ | 75,600 | |
| Accumulated depreciation | $ | 32,200 | |
| Liability and Equity Accounts: | |||
| Accounts payable | $ | (19,600 | ) |
| Accrued liabilities | $ | 16,800 | |
| Income taxes payable | $ | 4,300 | |
| Bonds payable | $ | (61,200 | ) |
| Common stock | $ | 40,800 | |
| Retained earnings | $ | 93,200 | |
The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,200.
Required:
a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)
b. Prepare the investing activities section of the company's statement of cash flows for the year.
c. Prepare the financing activities section of the company's statement of cash flows for the year.
| Operating activities: | ||
| Adjustments: | ||
| Investing Activities: | |
| Financing Activities: | |
In: Accounting
Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a
23-year-old female for $190. The probability that the female survives the year is
0.999594. Compute and interpret the expected value of this policy to the insurance company.
In: Statistics and Probability