Rate of Return for Stocks and Bonds

Purpose of Assignment

The purpose of this assignment is to allow the student an opportunity to calculate the rate of return of equity and debt instruments. It allows the student to understand the effects of dividends; capital gains; inflation rates; and how the nominal rate of return affects valuation and pricing. The assignment also allows the student to apply concepts related to CAPM, WACC, and Flotation Costs to understand the influence of debt and equity on the company's capital structure.

Assignment Steps

Resources: Corporate Finance

Calculate the following problems using Excel or a Word document:

Stock Valuation: A stock has an initial price of $100 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $125. Compute the percentage total return, capital gains yield, and dividend yield.

Total Return: You bought a share of 4% preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year?

CAPM: A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?

WACC: The Corporation has a targeted capital structure of 80% common stock and 20% debt. The cost of equity is 12% and the cost of debt is 7%. The tax rate is 30%. What is the company's weighted average cost of capital (WACC)?

Flotation Costs: Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%. What is the initial cost of the plant if the company raises all equity externally?

Submit your summary and all calculations. Please show all of your work.

Click the Assignment Files tab to submit your assignment.

Normative changes in cognitive function are expected with increasing age. Research on the relationship between normative cognitive decline and moderate-to-vigorous physical activity (MVPA) and sedentary behavior (SED) needs further investigation in Hispanic/Latinos adults. We assessed the association between accelerometer assessed MVPA and SED with cognitive function in 7,478 adults aged 45-74years from the Hispanic Community Health Study/Study of Latinos. At baseline, cognitive tests included two executive function tests (Digit Symbol Substitution Test (DSST), a test of language (Word Fluency), and a test of memory (Spanish English Verbal Learning Test). Multiple regression models were used to examine associations of time spent in MVPA and SED with cognitive function by age groups, adjusted for age, education, sex, acculturation, and field center. Mean time spent in sedentary behaviors was 12.3 hours/day in females and 11.9 hours/day in males. Higher SED, but not MVPA, was associated with lower DSST raw scores (β -0.03 with each 10-min increment in SED; P<0.05), indicating lower performance in executive function in all age groups. No associations were observed for MVPA and SED with tests of language or memory tests. Our findings suggest a distinct association of SED but not MVPA on executive functioning in middle-aged and older Latino adults. Further studies are needed to more conclusively determine causal links.

Question 11:

What type of study design was this? (2 points)

Question 12:

What was the exposure(s) of interest? How was it measured? (4 points)

Question 13:

What was the outcome(s) of interest? How was it measured? (4 points)

Question 14:

Which measure of disease frequency is most often reported for this type of study design? Why? (4 points)

Question 15:

What type of study design would better address the same research question? Briefly explain your reasoning in 1-2 sentences maximum. (4 points)

Question 2: Porter, a public limited company, is the parent of a listed group of companies which have a year end of 30 April 2020. Porter’s functional currency is the pound (£) and presents its individual and consolidated financial statements in £. The statements of financial position for two entities as at 30 April 2020 are presented below:

Additional information

1. Porter acquired 75% of Belobe on 1 May 2019 for £9,150,000 when the retained reserves of Belobe were 3,155,000 Crowns. The functional currency of Belobe is Crowns.

2. The group policy is to value non-controlling interest at the proportionate share of the fair value of the net assets at acquisition.

3. Belobe made a profit of 3,575,000 Crowns for the year ended 30 April 2020.

4. The exchange rates between the £ and Crowns are as follows:

1 May 2019 £1: 0.69 Crowns

30 April 2020 £1: 0.62 Crowns

Average rate for the year ended 30 April 2020: £1: 0.64 Crowns

YOU ARE REQUIRED TO:

(a) Prepare the consolidated statement of financial position for the Porter group as at 30 April 2020.

(b) Prepare a reconciliation of the consolidated retained reserves figure showing the exchange gains and losses.

(c) Explain your calculation of goodwill and the treatment of exchange differences on goodwill for the year ended 30 April 2020. Your answer should refer to the relevant International Financial Reporting Standards (IAS/IFRS).(maximum word count 200 words) TOTAL 50 MARKS

ECM:

What are the advantages and disadvantages of an IPO?

A company makes a $140 cash purchase of equipment on January 1. How does this impact the three statements this year and next year?

How would you explain the difference between the debt capital markets and leveraged finance teams in investment banking?

Tell me how would you value a company? Which tools are most effective in this area?

Tell me a company you would invest in and why.

A company with high P/E acquires a rival with low P/E. Is this accretive or dilutive?

When would you use a PEG multiple?

What two companies are you bullish on, and what two companies are you bearish on? Why?

DCM:

Explain to me what an FX forward is.

How would you describe the difference between the DCM team of an investment bank and a leveraged finance team?

A UK company decides to issue a bond in USD. What are the reasons for doing this? What risks are they exposing themselves to? How would you mitigate against this risk?

Let’s say this company issues $xx of senior notes – what will its credit statistics look like after that debt issuance, over the next 5 years?

Explain a yield curve as you would to your grandma.

What's your opinion on the Bank of England's monetary policy? How do you see it changing next year?

What is a convertible bond? When would a company use one?

Both:

What does the capital markets division of an investment bank do?

How would you rate us against our competitors?

Wouldn’t you be better suited to working for another organization?

What exactly does the word ‘success’ mean to you?

Tell me about a challenging situation you have faced. What was this situation? How did you handle it?

What’s 567 x 4?

Balancing School and Life - My Quality of Life Self-Care Plan. The purpose of developing this Plan is to set a framework and a plan to maintain wellness and to stay motivated and engaged throughout your Program. Doing this will help you achieve success during your coursework and as a professional nurse.

The goal of the Project is to help you become self-aware and reflective as a means of identifying personal self-care strategies that will increase your energy and help you manage your stress. The Project will give you a chance to learn how this is accomplished as you will be doing similar work with clients during the Program and as a professional nurse to assist them in the same way.

Use the Quality of Life Self-Care Wheel to assess your current state. After you determine your scores, in a 2-3 page paper complete the following:

• Discuss those areas that are strengths (higher scores) and those areas that need further development (lower scores).
• Identify two strategies you can use to maintain or maximize each identified strength.
• Identify two strategies you can use to strengthen each area needing development. Explain how you will put these strategies into action. Be specific. For example, instead of stating, "I need to exercise," your action should state "I will begin to walk 20 minutes a day, 3 days a week." The action should be SMART- Specific, Measurable, Attainable, Realistic, Timeframe
• Also attach your completed form
• Minimum length 2-3 pages not including cover or referencing. APA formatting

Submit your completed assignment by following the directions linked below. Please check the Course Calendar for specific due dates.

Save your assignment as a Microsoft Word document. (Mac users, please remember to append the '.docx' extension to the filename.) The name of the file should be your first initial and last name, followed by an underscore and the name of the assignment, and an underscore and the date. An example is shown below:

Patient Profile

J.K. is a 57-yr-old white woman who was is referred to the neurosurgery service for management of her temporal-parietal glioblastoma. She was diagnosed after presenting with persistent headaches, a seizure in her HCP's office, and left side upper visual field loss and neglect. Her MRI/MRA demonstrated a temporal-parietal glioblastoma that extends into the occipital lobes. She is scheduled for surgery to debulk the tumor. J.K. lives alone and holds a management position. She is concerned about her ability to return to work after her surgery.

J.K. returns from surgery to the neurosurgery unit drowsy but following commands. During the night J.K. is noted to have a pronator drift of the left arm, her pupils are equal and respond to light, but she has also developed left-sided weakness of both arm and leg and difficulty with answering questions.

Medications: dexamethasone 4 mg q6hr, famotidine, metoclopramide, ondansetron (Zofran), codeine, and levetiracetam (Keppra) since her admitting seizure.

Subjective Data

• Left arm and leg are weak and feel numb
• She is trying to answer questions but looks confused and cannot follow commands.

Objective Data

• BP 150/90 mm Hg
• right gaze preference
• Left homonymous hemianopsia
• Left arm weakness (3/5) greater than leg weakness (4/5)
• Decreased sensation on both left arm and leg
• Has speech but not clear. Difficulty with word finding and following commands
• A diagnostic CT scan demonstrates a hemorrhagic stroke into the site of the tumor bed, and temporal-parietal and anterior occipital areas extending into the thalamus.

Questions:

#1. What are the priority nursing interventions and decisions that have to be made regarding safety and self-care related to the left neglect and visual field cut?

#2. Based on the assessment data provided, what are the priority nursing diagnoses?

#3. How can you work together with the interprofessional team to develop and implement strategies to improve communication for J.K.?

**Review the following passages for sentence fragments, comma splices, and run on sentences.

**Correct all errors where necessary, and bold each correction.

• “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of the noisiest authorities insisted on its being received, for good or evil, in the superlative degree of comparison only.”

• “I believe that today more than ever a book should be sought after even if it has only one great page in it. We must search for fragments, splinters, toenails, anything that has ore in it, anything that is capable of resuscitating the body and the soul.”

• “I went to sleep with gum in my mouth and now there's gum in my hair and when I got out of bed this morning I tripped on the skateboard and by mistake I dropped my sweater in the sink while the water was running and I could tell it was going to be a terrible, horrible, no good, very bad day.”

• “We are such stuff as dreams are made on; and our little life is rounded with a sleep.”

• “For in a swift radiance of illumination he saw a glimpse of human struggle and of valor. Of the endless fluid passage of humanity through endless time. And of those who labor and of those who--one word--love. His soul expanded. But for a moment only.”

• “The lamp on the rocks on the side of the hill was little more than a mote of light and after a while they walked back. Everything too wet to make a fire.”

• “Then, slowly, the shining dwindled until it, too, was gone, and there was nothing but stars and starlight. No shadows. No fear. Only the stars and the clear darkness of space, quite different from the fearful darkness of the Thing.”

A farmer has 360 acres of land on which to plant corn and wheat. She has $24,000 in resources to use for planting and tending the fields and storage facility sufficient to hold 18,000 bushels of the grain (in any combination). From past experience, she knows that it costs $120 / acre to grow corn and $60 / acre to grow wheat; also, the yield for the grain is 100 bushels / acre for corn and 40 bushels / acre for wheat. If the market price is $225 per acre for corn and $100 per acre for wheat, how many acres of each crop should she plant in order to maximize her revenue?

A.

1. Set up a linear programming problem, choosing variables, finding a formula for your objective function, and inequalities to represent the constraints.

2. You will need to decide a reasonable range for your variables, and then put in a column of values within that range for the x-variable in column A. Then you want to solve each constraint equation for y, and use that formula to get values in the "y for C1", etc., columns (B, C, D). Then graph the three constraint lines on one graph (as you did in Lab 1: open its Word document if you need refreshing on how to do this).

3. Shade in the feasible region.

4. Find the corners of the feasible region using goal seek to find intersections of lines, as you did in Lab 1.

5. Find in column H the values of f at the corners of the feasible region.

6. Determine the maximum revenue.

7. Finally, using new objective functions for when the prices of corn are at their highs and lows, answer the final question. This only involves computing new values of the objective function, not any new graphing or constraints.

x represents:

y represents:

Formula for objective function: f =

Constraint 1:

Constraint 2:

Constraint 3:

Corners of feasible region           f at corners

So how many acres of each crop should she plant?

For our final assignment, please apply MS-Excel spreadsheets to solve the (A) WACC, (B) Internal Rate of Return, and (C) Net Present Value of a miniature golf course project under consideration.

You may discuss key concepts with your team member, but you should work on this assignment on an individual basis

For submission, please prepare two files to upload.

The first file is an MS-Excel file with functions applied to solve the problems, as we introduced in class. The second file is an MS-Word (or text/PDF) file to provide your answers and discussion of this question.

 ~~~ ~~~

Outdoor Sports is considering adding a miniature golf course to its facility. Given the following information for Outdoor Sports, please find the (A) WACC, (B) Internal Rate of Return, and (C) Net Present Value of this project. Assume the company's tax rate is 34 percent.

[Project]

The miniature golf course would cost $138,000, would be depreciated on a straight-line basis over its five-year life, and would have a zero salvage value. The estimated income from the golfing fees would be $72,000 a year with $24,000 of that amount being variable cost. The fixed cost would be $11,600. In addition, the firm anticipates an additional $14,000 in revenue from its existing facilities if the golf course is added. The project will require $3,000 of net working capital, which is recoverable at the end of the project.

[Financial data]

Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 103 percent of par, the bonds make semiannual payments.

Common stock: 195,000 shares outstanding, selling for $78 per share, beta is 1.21.

Preferred stock: 11,000 shares of 6.35 percent preferred stock outstanding, currently selling for $76 per share.

Market: 8 percent market risk premium and 5.1 percent risk-free rate.

Complete a thorough financial analysis of Goldman Sachs, a publicly traded corporation. The project deliverables should be a structured Word document and accompanying Excel spreadsheets. Requirements must include the following analysis: a. One page description of the Goldman Sachs: it’s products, markets, subsidiaries, risks b. Overall trend assessment of the company’s balance sheet and income statement for the last three to five years. c. Selected ratio trend analysis. The following ratio categories must be included, with three ratios (minimum) from each category: i. Short-term solvency ratios, also known as liquidity ratios ii. Long-term solvency ratios, also known as financial leverage ratios iii. Asset management ratios, also known as turnover ratios iv. Profitability ratios v. Market value ratios. A three-year ratio trend analysis is the minimum expectation. d. Analysis of the company’s stock price, PE (Price-Earnings Ratio) and EPS (Earnings per Share Ratio) trends for the last three to five years. Analysis must include comparison to key market competitors. e. Evaluation of the firm’s current Beta (trend not required) with comparison to key market competitors. f. Assessment of the firm’s capital structure (Debt to Equity Ratio) including any significant changes in the firm’s capital structure over the last three to five years. g. Calculate the WACC (weighted average cost of capital) using both the Security Market Line Approach and the Dividend Growth Model Approach. Compare the WACC for each approach, discussing the advantages and disadvantages of each. h. Assessment of the firm’s statement of cash flows for the last three to five years, including an assessment of the firm’s free cash flow over the last three to five years. i. Closing summary of the firm’s financial health in relation to the overall economy and within its industry, using analyst recommendations as a guide.