Suppose that the market demand for expensive steak dinners is given by:
Q = 1,000−10P,
so that the marginal revenue is:
MR = 100−0.2Q,
where Q is the number of steak dinners per day and P is the price of a dinner. The marginal cost and average total cost are both constant and equal to $40 per dinner.
Suppose that there is only one firm in the market.
Suppose that a second firm that produces identical steaks and has identical costs enters the market and acts according to the Cournot oligopoly model.
The equilibrium price is?
The total equilibrium quantity is how many dinners?
Each firm's economic profit is?
In: Economics
Given the following information:
Year 1 Free cash flow: 40 million
Year 2 Free cash flow 90 m
Year 3 Free cash flow 100 m
After year 3, expected FCF growth is expected to be 4%
The cost of capital is 9%
Short term investments = 50 million
Debt is currently 25 million
Preferred stock = 5 million
There are 20 million outstanding stock shares.
1. Calculate the intrinsic stock price.
2. If the current stock price was $100.00, would you buy the stock? Why/WHY NOT:
In: Finance
In: Finance
A 9.17% semiannual-pay corporate bond matures 15 August 2028 and makes coupon payments on 15 February and 15 August. The bond uses the 30/360 day-count convention for accrued interest. The bond is priced for sale on June 5, 2020 (that is, 110 days since the Feb. 15 coupon). What is its flat price (or clean price) per $ 100 of par value on June 5, 2020 if its yield to maturity is 4.6%? Carry intermediate calcs. to four decimals. Answer to two decimals. Assume 1,000 par value and semi annual compounding
In: Finance
On January 1, 2018, Instaform, Inc., issued 14% bonds with a
face amount of $50 million, dated January 1. The bonds mature in
2037 (20 years). The market yield for bonds of similar risk and
maturity is 16%. Interest is paid semiannually. (FV of $1, PV of
$1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate factor(s) from the tables provided.)
Required:
1-a. Determine the price of the bonds at January 1,
2018.
1-b. Prepare the journal entry to record their
issuance by Instaform.
2-a. Assume the market rate was 12%. Determine the
price of the bonds at January 1, 2018.
2-b. Assume the market rate was 12%. Prepare the
journal entry to record their issuance by Instaform.
3. Assume Broadcourt Electronics purchased the
entire issue in a private placement of the bonds. Using the data in
requirement 2, prepare the journal entry to record the purchase by
Broadcourt.
Determine the price of the bonds at January 1, 2018. (Enter your answer in whole dollars.)
| 1A |
|
2B
repare the journal entry to record their issuance by Instaform. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
2A
Assume the market rate was 12%. Determine the price of the bonds at January 1, 2018. (Enter your answer in whole dollars.)
|
2B
ransaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
3
Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
In: Accounting
You are a new associate at the law firm of Dewey, Cheatum, and Howe, a high powered law firm in the State of Maryland. On your first day, your boss comes in to discuss the firms newest client with you. Her name is Ellen Green, the parent of Sammy Green, age 11. Ellen is a single mother, but her ex-husband, Joe, shares custody of and has visitation with Sammy on alternate weekends.
Sammy played soccer for a recreational team located in Columbia, MD, the Eagles, which were coached by Ken Russell. Sammy was incurred during a regularly scheduled Saturday afternoon game against the Vultures, another recreational team. The Vultures were coached by Leonard Smith. The game was referred by Jim James. Both teams are part of a league run by the nationally recognized "Soccer Comes First, Inc" company, who's offices are located in New York, NY. The games were played on fields owned by the organization in the state of Maryland. All coaches and referees are employees of the organization. Ellen was not present for the game as it was a weekend when Joe had Visitation.
The league has rules for the conduct of games. One rule gives the referee the authority to decide whether a game should be cancelled for weather conditions. It had rained and sleeted steadily on the day of the game and several parents of players from both teams asked James to cancel the game. Neither of the coaches nor Joe Green expressed any objections to playing the game. This was the last game of the season and would decide who would be in first place. James did not postpone the game, although a referee for an earlier game on the same field had canceled a game between two other teams in the same league.
The two teams were evenly matched, and the game was a close one. In the second half, there were two incidents were the players slipped and fell on a wet and icy patch of ground near the Vultures' goal. One player was not hurt, the other twisted his ankle. In the last minute of the game, Sammy slipped and fell in the same area. Before he could get up, Andy Olsen, a player for the Vultures, also fell and slid into Sammy, kicking him in the head. Sammy suffered a severe injury to his skull and upper spine which required extensive surgery and rehabilitation.
Ms. Green would like for the firm to look at the following issues:
1. Who, if anyone, can be sued, for what, and how could these claims be proven?
2. Is the fact that Ellen owns 10% of "Soccer Comes First, Inc" matter in any way?
The senior partner reminds you that Ms. Green is a very particular individual and expects the firm to provide support for their recommendations.
In: Operations Management
PRICING BONDS AT A DISCOUNT -
(a) Calculate the price of a 3 percent coupon (annual coupons), $1,000 face value 30-year bond if the appropriate discount rate is 6 percent. Show your return if you hold this bond for two years and discount rates don't change. (INCLUDE FORMULAS USED TO SOLVE PROBLEM IN EXCEL).
PRICING BONDS WITH SEMI-ANNUAL COUPON PAYMENTS -
(b) Calculate the price of a 4 percent coupon, $100 face value, 3-year bond if the coupon is paid semi-annually and the (correct) annual discount rate is 10 percent. Calculate your actual return if you hold this bond for one year and the discount rate does not change. (INCLUDE FORMULAS USED TO SOLVE PROBLEM IN EXCEL).
PRICING ZERO COUPON BONDS -
(c) Calculate the price of a zero coupon, $1,000 face value, 20-year bond if the appropriate annual discount rate is 8 percent. Calculate your total return if you hold this bond for five years and the discount rate does not change. (INCLUDE FORMULAS USED TO SOLVE PROBLEM IN EXCEL).
CURRENT YIELD -
(d) Calculate the price of a 4 percent coupon (annual coupons), $100 face value, 3-year bond if the appropriate discount rate is 10 percent each year. What is the bond's current yield? What return do you actually expect to make if you hold this bond for one year? (INCLUDE FORMULAS USED TO SOLVE PROBLEM IN EXCEL).
In: Finance
Downward demand spiral. Network Company is a large manufacturer of optical storage systems based in Arizona. Its practical annual capacity is 7,500 units, and, for the past few years, its budgeted and actual sales and production volume have been 7,500 units per year. Network’s budgeted and actual variable manufacturing costs are $100 per unit, and budgeted and actual total fixed manufacturing costs are $2,250,000 per year. Network calculates full manufacturing cost per unit as the sum of the variable manufacturing cost per unit and the fixed manufacturing costs allocated to the budgeted units produced. Selling price is set at a 100% markup to full manufacturing cost per unit.
1. Compute Network’s selling price.
2. Recent competition from abroad has caused a drop in budgeted production and sales volume to 6,000 units per year, and analysts are predicting further declines. If Network continues to use budgeted production as the denominator level, calculate its new selling price.
3. Comment on the effect that changes in budgeted production have on selling price. Suggest another denominator level that Network might use for its pricing decision. Justify your choice.
4. Network has received an offer to buy identical storage units for $400 each instead of manufacturing r units in-house. Shutting down the manufacturing plant would reduce fixed costs to $450,000 per year. At what level of expected annual sales (in units) should Network accept this offer? Explain your answer.
In: Statistics and Probability
Below you can find order information received by the Exchange for stock ABC from 9am to 10am. Please construct the limit order book for these orders. The format of limit order book is provided below and feel free to insert more rows if needed. For the orders which can be executed or partially executed, please list the price executed and how many shares being executed. Please show the final limit order book and final market bid and ask price. (7 points)
|
Order number |
order detail |
received time |
|
1 |
Limit sell order $475, 200 shares |
9:05am |
|
2 |
Limit buy order $425, 200 shares |
9:08am |
|
3 |
Limit buy order $445, 200 shares |
9:15am |
|
4 |
Limit sell order $450, 100 shares |
9:20am |
|
5 |
Limit buy order $430, 10 shares |
9:21am |
|
6 |
Market buy order, 100 shares |
9:30am |
|
7 |
Market sell order, 10 shares |
9:40am |
|
8 |
Limit sell order $445, 200 shares |
9:42am |
|
9 |
Limit buy order $428, 30 shares |
9:44am |
|
10 |
Limit buy order $420, 20 shares |
9:50am |
|
11 |
Limit buy order $420, 50 shares |
9:59am |
|
limit Buy Orders |
limit Sell Orders |
||||
|
Order number |
Size |
Bid Price |
Ask price |
size |
Order number |
In: Finance
Five Measures of Solvency or Profitability
The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:
| Bonds payable, 6% | $1,600,000 |
| Preferred $5 stock, $100 par | 206,000 |
| Common stock, $9 par | 166,860.00 |
Income before income tax was $230,400, and income taxes were $34,700 for the current year. Cash dividends paid on common stock during the current year totaled $45,423. The common stock was selling for $70 per share at the end of the year.
Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required.
| a. Times interest earned ratio | times | |||||||||||||||||
| b. Earnings per share on common stock | $ | |||||||||||||||||
| c. Price-earnings ratio | ||||||||||||||||||
| d. Dividends per share of common stock | $ | |||||||||||||||||
PART 2
The net income was $692,000 and the declared dividends on the common stock were $47,500 for the current year. The market price of the common stock is $23.80 per share. For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places.
|
% |
In: Accounting