Assume annual compounding. Given only yields on one-, two-, and three-year zero-coupon government bonds, which of the following interest rates cannot be computed? Assume all loans are risk-free. Group of answer choices
The rate on a one-year loan that begins at the end of Year 1
The rate on a two-year loan that begins at the end of Year 2
The rate on a two-year loan that begins at the end of Year 1
The rate on a one-year loan that starts at the end of Year 2
In: Finance
Consider a $5,000,000, 9%, CPM with monthly payments. What is the regular monthly payment and the balloon payment amounts in each of the following cases:
(a) Fully-amortizing, 30-year loan
(b) 30-year amortization, 10-year balloon
(c) 15-year amortization, 10-year balloon
(d) What is the major disadvantage, and advantage, of the 15-year amortization-rate 10-year loan in (c) as compared to the 30-year amortization-rate 10-year loan in (b)?
Please answer only if sure.
In: Accounting
Patterson Corp. is considering the purchase of a new piece of
equipment, which would have an initial cost of $528,000, a 7-year
life, and $150,000 salvage value. The increase in net income each
year of the equipment's life would be as follows:
| Year 1 | $ |
105,000 |
| Year 2 | $ |
97,000 |
| Year 3 | $ |
95,000 |
| Year 4 | $ |
84,000 |
| Year 5 | $ |
81,000 |
| Year 6 | $ |
76,000 |
| Year 7 | $ |
70,000 |
What is the payback period?
Multiple Choice
5.92 years
6.13 years
3.77 years
3.50 years
In: Accounting
Accounts Receivable Turnover and Days' Sales in Receivables
Quasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years:
| Year 2 | Year 1 | |||
| Sales | $3,798,190 | $3,843,450 | ||
| Accounts receivable | 321,200 | 306,600 | ||
Assume that accounts receivable were $350,400 at the beginning of Year 1.
a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.
| Year 2: | |
| Year 1: |
b. Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations.
| Year 2: | days |
| Year 1: | days |
c. c. The change in accounts receivable turnover from year 1 to year 2 indicates a(n) --------------- in the efficiency of collecting accounts receivable and is a(n) ---------- change. The change in the days' sales in receivables indicates a(n) ------------------- change.
In: Accounting
Dakota Inc. and Jersey & Company are two large companies that manufacture and sell equipment used in the construction, mining, agricultural, and forestry industries. The companies reported the following data (in millions) for two recent years:
| Dakota | Jersey | ||||||
| Year 2 | Year 1 | Year 2 | Year 1 | ||||
| Net income | $2,142 | $3,715 | $1,905 | $3,252 | |||
| Average number of common shares outstanding | 594 | 599 | 334 | 363 | |||
a. Determine the earnings per share in Year 2 and Year 1 for each company. Round your answers to two decimal places.
| Year 2 | Year 1 | |
| Dakota | $ per share | $ per share |
| Jersey | $ per share | $ per share |
b. Evaluate the relative profitability of the two companies.
earnings per share for Year 1 and Year 2 are higher than . However, from Year 1 to Year 2, the earnings per share for both companies . The slowing world economy contributed to the from Year 1 to Year 2. Overall, appears to be the more profitable company.
In: Accounting
Dakota Inc. and Jersey & Company are two large companies that manufacture and sell equipment used in the construction, mining, agricultural, and forestry industries. The companies reported the following data (in millions) for two recent years:
| Dakota | Jersey | ||||||
| Year 2 | Year 1 | Year 2 | Year 1 | ||||
| Net income | $2,107 | $3,725 | $1,905 | $3,237 | |||
| Average number of common shares outstanding | 594 | 599 | 334 | 363 | |||
a. Determine the earnings per share in Year 2 and Year 1 for each company. Round your answers to two decimal places.
| Year 2 | Year 1 | |
| Dakota | $ per share | $ per share |
| Jersey | $ per share | $ per share |
b. Evaluate the relative profitability of the two companies.
earnings per share for Year 1 and Year 2 are higher than . However, from Year 1 to Year 2, the earnings per share for both companies . The slowing world economy contributed to the from Year 1 to Year 2. Overall, appears to be the more profitable company.
In: Accounting
5.Jeremy is a calendar-year taxpayer who sometimes leases his business equipment to local organizations. He recorded the following receipts this year: $840 from the Ladies’ Club for leasing the trailer from December of this year through March of next year ($210 per month). How much of this payment is taxable income to Jeremy this year if Jeremy is a cash-method taxpayer?
6.Jeremy is a calendar-year taxpayer who sometimes leases his business equipment to local organizations. He recorded the following receipts this year: $500 lease payment received from the Men’s Club this year for renting Jeremy’s trailer last year. Jeremy billed them last year. How much of this payment is taxable income to Jeremy this year if Jeremy is an accrual-method taxpayer?
7.In January of year 0, Justin paid $6,800 for an insurance policy that covers his business property for accidents and casualties. Justin is a calendar-year taxpayer who uses the cash method of accounting. The policy covers the business property from April 1 of year 0 through March 31 of year 1. What amount of the insurance premium may Justin deduct in year 0?
8.In January of year 0, Justin paid $6,800 for an insurance policy that covers his business property for accidents and casualties. Justin is a calendar-year taxpayer who uses the cash method of accounting. The policy begins on February 1 of year 1 and extends through January 31 of year 2. What amount of the insurance premium may Justin deduct in year 0?
In: Accounting
3. Pure expectations theory: Two-year bonds
Which of the following is consistent with the pure expectations theory of the yield curve? Check all that apply.
A flat yield curve suggests that the market thinks interest rates in the future will be the same as they are today.
A downward-sloping yield curve suggests that the market thinks interest rates in the future will be lower than they are today.
A flat yield curve suggests that the market thinks interest rates in the future will be higher than they are today.
A downward-sloping yield curve suggests that the market thinks interest rates in the future will be higher than they are today.
Brian would like to invest a certain amount of money for two years and considers investing in a one-year bond that pays 3 percent and a two-year bond that pays 7 percent. Brian is considering the following investment strategies:
| Strategy A: Buy a one-year bond that pays 3 percent and in year one, buy another one-year bond that pays the forward rate in year two. | |
| Strategy B: Buy a two-year bond, in year one, that pays 7 percent in the first year and 7 percent in the second year. |
If the one-year bond purchased in year two pays 7 percent, Brian will choose (STRATEGY A OR B)
.
Which of the following describes conditions under which Brian would be indifferent between Strategy A and Strategy B?
The rate on the one-year bond purchased in year two pays 11.155 percent.
The rate on the one-year bond purchased in year two pays 11.601 percent.
The rate on the one-year bond purchased in year two pays 12.047 percent.
The rate on the one-year bond purchased in year two pays 9.482 percent.
In: Finance
What is the value of a stock which pays a $4 dividend/year (first dividend in one year), not growing until year 10, then growing at 5% per year from year 10 to 11 and every year thereafter, if the discount rate is 10%?
In: Finance
What is the NPV of a project that has an initial investment of $7,300, with end of year cash flows as follows: year 1: $1,500 year 2: $2,500 year 3: $3,000 year 4: $2,500 year 5: $1,500 The interest rate is 8%
In: Finance