Let the following equations characterize an economy:
C = 400 + 0.8*(Y-T)
G = 300
T = 250
I = 200
a. Draw a graph of planned expenditures for this economy and calculate the equilibrium level of output.
b. Suppose output this year was 3000. Is the economy in equilibrum?
c. If the government wanted to use fiscal policy to move the economy to equilibrium, by how much would it have to increase government spending? What is the government spending multiplier?
d. If the government decided not to change fiscal policy, describe the process by which the economy would move toward equilibrium.
In: Economics
2. Peppermint Corporation has just paid a cash dividend of $0.8 per share on its common stock. The dividend is expected to grow by 10 percent per year.
Suppose that investors require a 16 percent return from investments similar to that. Find the current value of a share of Peppermint Corporation.
3. ATA Corporation has just issued a 10-years, with a face value of $1,000, 6% semi-annual coupon bond. The yield-to-maturity (YTM) on this bond is 10% compounded semi-annually.
3a. Determine if this bond is currently valued at par, discount or premium. Explain your answers by applying the concept of bond properties.
3b. Find the current price of this bond.
3c. If the YTM of the bond remains same, what will be the bond price in two years.
4. UFO Company has issued a perpetual bond paying $50 coupon interests each year indefinitely. This perpetual bond, with a face value of $1000, is currently trading at a price of 1,500. Calculate the current interest rate of UFO’s perpetual bond.
6. EGGO Corporation is choosing between the following two capital investments projects:
| Year | Project A Cast Flow | Project B Cash Flow |
| 0 | -$53,000 | -$16,000 |
| 1 | $27,000 | $9,100 |
| 2 | $27,000 | $9,100 |
| 3 | $27,000 | $9,100 |
Suppose the company requires a 10 percent on its capital investments projects.
6a Using the Net Present Value (NPV) criterion, which project(s) should EGGO Corporation choose if Project A and Project B are independent?
6b If Project A and Project B are mutually exclusive, based on the Net Present Value (NPV) criterion, which project should EGGO choose with reference to your calculations in (a).
6c Using the Profitability Index (PI) criterion, which project(s) should EGGO Corporation choose if Project A and Project B are independent?
6d If Project A and Project B are mutually exclusive, based on the Profitability Index (PI) criterion, which project should EGGO choose with reference to your calculations in (c).
6e Briefly discuss the problems of using Profitability Index
(PI) as a capital budgeting technique to decide the project
choice.
In: Finance
Ohio Inc. has a beta of 1.6 and its debt-to-equity ratio is 0.8. The risk-free rate is 3.2% and the market risk premium is 9%. Although Ohio is a U.S. firm, it issued Swiss Franc (SF) denominated bond and converted SF to US dollar. The semi-annual interest payment is made in SF. The coupon rate is 8%, the price of the bond is SF1,040, the face value is SF1,000 and the bond matures in 10 years. The exchange rate is expected to move from SF0.9800/$ to SF0.9600/$. Ohio's tax rate is 40%.
a. What's Ohio's SF cost of debt?
b. What's your best estimate of Ohio's US dollar cost of debt?
c. What's Ohio's cost of equity?
d. What's Ohio's WACC?
In: Finance
Consider the following closed Keynesian economy:
Desired consumption and investment are given by:
Cd = 200+0.8(Y −T)−500r
Id = 200 − 500r. Taxes and government expenditures are given by
The real money demand is
T = 20+0.25Y G = G=196.
Md
P = 0.5Y − 250(r + πe).
The money supply M = 9890 and the expected inflation πe =
0.10.
(a) Derive the equations for the IS and LM curves and show them on
a (Y, r) graph.
(b) If the full-employment output is Y = 1000, what are the equilibrium values of r, P, C and I?
(c) Suppose there is a surprise increase in money supply, M to 12,650, what will be the short-run equilibrium values of Y, r, C and I? What will happen in the long-run? [Hint: Prices are sticky in the short–run (Keynesian)]
(d) If, after the increase in M the government increases its expenditure, what will be your predictions for Y,r,P,C and I? Be specific. [Do not solve for any variable.] Illustrate this on a diagram.
In: Economics
1- water at 100 degree and quality X=0.8 % has mass
0.1 kg find volume =?
2- R-410 at -10 degree and 100kpa find enthalpy h and energy
u
3- water at 200kpa , v = 0.08 m^3/kg find pressure p and Quality
x
4- water at 200 kpa , T= 270 degree find specific volume
5- water at p= 1200 kpa , V= 0.18m^3/kg find T,u
In: Mechanical Engineering
Abacus Co. wishes to maintain a growth rate of 14 percent a year, a debt–equity ratio of 1.4, and a dividend payout ratio of 26 percent. The ratio of total assets to sales is constant at 0.8.
What profit margin must the firm achieve? (in %) (round 2 decimal places)
In: Finance
Use the improved Euler's method to obtain a four-decimal approximation of the indicated value. First use h = 0.1 and then use h = 0.05. y' = y − y^2, y(0) = 0.8; y(0.5) y(0.5) ≈________ (h = 0.1)
y(0.5) ≈ _________(h = 0.05)
In: Advanced Math
If the concentration of glucose inside an E. coli cell is 5.1 mM, how many glucose molecules are in the cell? Assume an E. coli cell to be a cylinder 1.9 micrometers long and 0.8 micrometers in diameter. Enter your answer to the nearest ones.
I thought it was 3.0*106 but it was wrong.
In: Chemistry
Use a numerical solver and Euler's method to obtain a four-decimal approximation of the indicated value. First use
h = 0.1
and then use
h = 0.05
y' = y − y2, y(0) = 0.8; y(0.5)
| y(0.5) | ≈ | ? (h = 0.1) |
| y(0.5) | ≈ | ? (h = 0.05) |
In: Advanced Math
| The interest rate on a 1-year Canadian security is | 12% | ||||
| current exchange rate is C$ = US | 0.8 | ||||
| 1-year forward rate is C$ = US | 0.82 | ||||
| The return (denominated in U.S. $) that a U.S. investor can earn by investing in the Canadian security is | |||||
|
12.00% |
||
|
13.24% |
||
|
14.18% |
||
|
14.80% |
In: Finance