You are the consumer staples analyst for a large corporate and investment bank. The bank’s management has committed to shareholders to lift the bank ROE from the current 5% to 8% within a year and to 10% within 2 years.

Your institution can borrow money at the following maturity and cost:

Overnight 0.10% . 1-month 0.20% 3-month 0.25% 6-month 0.50%

1-year 0.75% . 3-year 1.50% . 5-year 2.00% . 7-year 2.50% 10-year 3.0%

You are looking at 2 loan applications for $200M each from Foodco and Safeco, two companies you know and cover for years, both of which have an established relationship with your bank. Foodco’s cost of borrowing in the market is UST +250 while Safeco’s UST+400. As Safeco is considered the riskier of the two, any loan towards Safeco will have to generate more loss reserves. Both loans will be senior secured and thus collateralized. Safeco pledges as collateral real estate holdings plus business receivables (50/50) while Foodco pledges delivery trucks plus $20M of cash deposits. The appraised value of the collateral covers the loan fully. For Foodco the loan reserve (based on its implied probability of default) is 30 basis points per annum while for Safeco is 60 basis points per annum. Both companies “leak” to you that they already have received bids from competitors in the neighborhood of 5.5% and 6.0% respectively for a 10yr loan. What do you do and why?

A company has the opportunity to do any, none, or all of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 14%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.

(TCO E) A company has the opportunity to do any, none, or all of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 14%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.

A company has the opportunity to do any, none, or all of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 14%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.

8. Determining the optimal capital structure Understanding the optimal capital structure Review this situation: Universal Exports Inc. is trying to identify its optimal capital structure. Universal Exports Inc. has gathered the following financial information to help with the analysis. Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.55 0.34 22.35 40% 60% 1.67 0.45 24.56 50% 50% 1.72 0.51 25.78 60% 40% 1.78 0.57 27.75 70% 30% 1.84 0.62 26.42 Which capital structure shown in the preceding table is Universal Exports Inc.’s optimal capital structure? Debt ratio = 50%; equity ratio = 50% Debt ratio = 30%; equity ratio = 70% Debt ratio = 70%; equity ratio = 30% Debt ratio = 60%; equity ratio = 40% Debt ratio = 40%; equity ratio = 60% Consider this case: Globex Corp. currently has a capital structure consisting of 40% debt and 60% equity. However, Globex Corp.’s CFO has suggested that the firm increase its debt ratio to 50%. The current risk-free rate is 3%, the market risk premium is 7.5%, and Globex Corp.’s beta is 1.15. If the firm’s tax rate is 35%, what will be the beta of an all-equity firm if its operations were exactly the same? Now consider the case of another company: U.S. Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 10%, and its tax rate is 35%. It currently has a levered beta of 1.15. The risk-free rate is 3%, and the risk premium on the market is 7.5%. U.S. Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm’s level of debt will cause its before-tax cost of debt to increase to 12%. Use the Hamada equation to unlever and relever the beta for the new level of debt. What will the firm’s weighted average cost of capital (WACC) be if it makes this change in its capital structure? (Hint: Do not round intermediate calculations.) The optimal capital structure is the one that the WACC and the firm’s stock price. Higher debt levels the firm’s risk. Consequently, higher levels of debt cause the firm’s cost of equity to .

1) The one-sample t statistic for testing

H₀: μ = 10

H_a: μ > 10

from a sample of n = 18 observations has the value t = 1.99.

(a) What are the degrees of freedom for this statistic?

(b) Give the two critical values t* from the t distribution critical values table that bracket t.
< t <  

(c) If you have software available, find the exact P-value. (Round your answer to four decimal places.)

2)

The one-sample t statistic for testing

H₀: μ = 40

H_a: μ ≠ 40

from a sample of n = 14 observations has the value t = 2.75.

(a) What are the degrees of freedom for t?

(b) Locate the two critical values t* from the Table D that bracket t.

< t <

(c) If you have software available, find the exact P-value. (Round your answer to four decimal places.)

1. Your statistics professor is involved in an educational outreach program designed to increase women’s participation in science, technology, engineering, and mathematics (STEM). The two-week educational program involved fieldtrips and activities designed to increase participants’ knowledge toward STEM.

On the first day of the education program, a pre-test is administered to all students. On the final day of the educational program, an identical post-test is administered. After the educational program ends, your professor asks you to help her analyze the results. Your professor predicts that pre- and post-test scores will differ significantly and wants to use an alpha level of 0.01.

1. Are you running a one-tailed or two-tailed test?

2. Write your alternative and null hypotheses.

3. Which statistical analysis will you use to run your test (e.g. one-sampled t-test, an independent-samples t-test, a paired t-test, or chi-square test)?

4. Run your statistical analysis using SPSS. Write your conclusion.

(Remember, if you are running a one-tailed test, your alpha value is located in one-tail, meaning your p-value needs to be less than 0.01 to reject the null hypothesis.

If you are running a two-tailed test, your alpha value is divided in half, meaning your p-value needs to be less than 0.005 to reject the null hypothesis)

in Java

A: Write a divide-and-conquer program to solve the following problem:

    1. Let A[1..n] and B[1..n] be two arrays of distinct integers, each sorted in an increasing order.

     2. Find the nth smallest of the 2n combined elements. Your program must run in O(log n) time.

For example:

n = 4
If A[1..n] = {2, 5, 8, 9} and B[1..n] = {1, 4, 6, 7}
The n^th (i.e. 4^th) smallest integer is 5.
If A[1..n] = {2, 5, 8, 13} and B[1..n] = {1, 9, 10, 15}
Then n^th smallest integer is 8.

B: Modify your program in A to find the k^th smallest number with k < n. Your program must run in O(log n) time.

For example:

n = 4 and k=3
If A[1..n] = {2, 5, 8, 9} and B[1..n] = {1, 4, 6, 7}
The k^th (i.e. 3rd) smallest integer is 4.
If A[1..n] = {2, 5, 8, 13} and B[1..n] = {1, 9, 10, 15}
Then k^th smallest integer is 5.

C: Modify your program in A to find the k^th smallest number when k > n by finding the j^th largest number in the 2n combined elements where j=2n-k+1. Your program must run in O(log n) time.

For example:

n = 4 and k=6

If A[1..n] = {2, 5, 8, 9} and B[1..n] = {1, 4, 6, 7}
The k^th (i.e. 6^th) smallest integer is also the jth (2*4-6+1=3rd) largest integer in the two combined arrays, which is 7.

Let x be a random variable that represents the percentage of successful free throws a professional basketball player makes in a season. Let y be a random variable that represents the percentage of successful field goals a professional basketball player makes in a season. A random sample of n = 6 professional basketball players gave the following information.

(A) Find a 90% confidence interval for y when x = 80. (Round your answers to one decimal place.)

(B) Use a 5% level of significance to test the claim that β > 0. (Round your answers to two decimal places.)

C. Conclusion

A. Reject the null hypothesis, there is sufficient evidence that β > 0.

B. Reject the null hypothesis, there is insufficient evidence that β > 0.    

C. Fail to reject the null hypothesis, there is insufficient evidence that β > 0.

D. Fail to reject the null hypothesis, there is sufficient evidence that β > 0.