In: Mechanical Engineering
Monica Dubois, an ABC investment advisor, has a new client, Mr. Jack Klein. Mr. Klein is a conservative investor who is interested in a required rate of return of 10% on his stock investments while assuming lower market risk. You are asked to help Monica make a suitable portfolio recommendation backed by risk-return calculations. The 3 possible stock choices for Mr. Klein and their respective betas are as follows: Stock Expected Return Beta ABC 10% 0.75 XYZ 11% 1.0 WHY 12% 1.25 Part I Determine the expected returns and beta for a portfolio consisting of one third of Mr. Klein's funds in each stock. Part II Assume the following: Each ABC stock pays current dividends of $1.50 annually with 6% expected annual increases. The current market stock price for ABC is $30 per share. Each XYZ stock pays current dividends of $1.75 annually with 6% expected annual increases. The current market stock price for XYZ is $27 per share. Each WHY stock pays current dividends of $2.25 annually with 7% expected annual increases. Current market stock price for WHY is $35 per share. Complete the following for this assignment: Using the constant dividend growth model, determine whether ABC and WHY are over- or undervalued. For what types of companies is the constant growth model an appropriate analysis tool? What are the limitations of the constant growth model?
In: Finance
9.) As mentioned below, you are required to design your own procedure for determining the heat of dissolution of your chosen salt with a coffee cup calorimeter. Answer the following questions and consider them in designing this procedure:
a.) When you find your initial temperature Ti, should you take one measurement from the thermometer as soon as you place it in the water in the calorimeter? Why or why not? If not, what should you do instead?
b.) Do you expect the temperature of the water in the calorimeter to rise, fall, or stay the same after you add your salt? If the temperature will change, will it continue to change indefinitely or not?
c.) How will you know your dissolved salt solution has reached it's maximum or minimum temperature, i.e. what will you observe in your data to indicate this has happened?
d.) Should you repeat your experiment? Why or why not? If so, what could you change from trial to trial? Give two possible suggestions, and determine which one you should change (as well as which one you should not!) in any subsequent trials you decide to perform.
*Information previously calculated is below*
1. Calculate the amount of heat (q) produced by the combustion of 4.05 g CH4 (ΔHcomb = -890.4 kJ).
225.38 kj
2. Consider that the 4.05 g methane is burned and all of the heat from this combustion is absorbed by 1.0 kg of 20 °C water (use 4.18 g-1 ºC-1 for the specific heat of the water). What would be the final temperature of the water?
73.8°C
In: Chemistry
In: Civil Engineering
Pineapple Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Pineapple:
|
1 |
Assembly Department |
$240,000.00 |
|
2 |
Testing Department |
750,000.00 |
|
3 |
Total |
$990,000.00 |
Direct machine hours were estimated as follows:
| Assembly Department | 3,000 | hours |
| Testing Department | 6,000 | |
| Total | 9,000 | hours |
In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows:
| Commercial | Residential | |
| Assembly Department | 1.5 dmh | 1.0 dmh |
| Testing Department | 3.0 | 2.0 |
| Total machine hours per unit | 4.5 dmh | 3.0 dmh |
| Required: | |
| a. | Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. |
| b. | Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. |
| c. | (1) Recommend to management a product costing approach, based on your analyses in (a) and (b). (2) Give a reason for your answer. |
In: Accounting
Assume you have just been hired as a business manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. The firm is currently financed with all equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms’ owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained from the firm’s investment banker the following estimated costs of debt for the firm at different capital structures:
Percent Financed with Debt, 0% — 20 8.0% 30 8.5 40 10.0 50 12.0 If the company were to recapitalize, then debt would be issued and the funds received would be used to repurchase stock. PizzaPalace is in the 40% state-plus-federal corporate tax bracket, its beta is 1.0, the risk-free rate is 6%, and the market risk premium is 6%.
a.Using the free cash flow valuation model, show the only avenues by which capital structure can affect value
b. 1.What is business risk? What factors influence a firm’s business risk? 2.What is operating leverage, and how does it affect a firm’s business risk? Show the operating break-even point if a company has fixed costs of $200, a sales price of $15, and variable costs of $10.
In: Finance
A measure of the strength of the linear relationship that exists between two variables is called: Slope/Intercept/Correlation coefficient/Regression equation. If both variables X and Y increase simultaneously, then the coefficient of correlation will be: Positive/Negative/Zero/One. If the points on the scatter diagram indicate that as one variable increases the other variable tends to decrease the value of r will be: Perfect positive/Perfect negative/Negative/Zero. The range of correlation coefficient is: -1 to +1/0 to 1/-∞ to +∞/0 to ∞. Which of the following values could NOT represent a correlation coefficient? r = 0.99/r = 1.09/r = -0.73/r = -1.0. The correlation coefficient is used to determine: A specific value of the y-variable given a specific value of the x-variable/A specific value of the x-variable given a specific value of the y-variable/The strength of the relationship between the x and y variables/None of these. If two variables, x and y, have a very strong linear relationship, then: There is evidence that x causes a change in y/There is evidence that y causes a change in x/There might not be any causal relationship between x and y/None of these alternatives is correct. If the Pearson correlation coefficient R is equal to 1 (r=1) then: There is a negative relationship between the two variables. /There is no relationship between the two variables. /There is a perfect positive relationship between the two variables. /There is a positive relationship between the two variables. If the correlation between 2 variables is -.77, which of the following is true? There is a fairly strong negative linear relationship/An increase in one variable will cause the other variable to decline by 75%
In: Math
The following table, contains annual returns for the stocks of
ABC Corp. (ABC ) and XYZ Corp. (XYZ ). The returns are
calculated using end-of-year prices (adjusted for dividends and
stock splits). Use the information for ABC Corp. (ABC ) and XYZ
Corp. (XYZ ) to create an Excel spreadsheet that calculates the
average returns over the 10-year period for portfolios comprised
of ABC and XYZ using the following, respective, weightings:
(1.0, 0.0), (0.9, 0.1). The average annual returns over the
10-year period for ABC and XYZ are 15.33 % and 13.04 %
respectively. Also, calculate the portfolio standard deviation
over the 10-year period associated with each portfolio
composition. The standard deviation over the 10-year period for
ABC Corp. and XYZ Corp. and their correlation coefficient are 25.33
%, 23.42 %, and 0.84285 respectively. (Hint: Review Table
5.2.) Enter the average return and standard deviation for a
portfolio with 100% ABC Corp. and 0% XYZ Corp. in the table
below.
Year ABC Returns XYZ Returns
2005 -3.5% 17.3%
2006 1.9% -8.1%
2007 -31.6% -26.7%
2008 -10.3% -3.2%
2009 30.2% 9.9%
2010 26.5% 10.1%
2011 22.8% 4.8%
2012 52.4% 43.8%
2013 35.6% 42.3%
2014 29.3% 40.2%
Enter the average return and standard deviation for a portfolio
with 100% ABC Corp. and 0% XYZ Corp. in the table below. (Round
to two decimal places.)
Enter the average return and standard deviation for a portfolio
with 90% ABC Corp. and 10% XYZ Corp. in the table below. (Round
to two decimal places.)
In: Finance
|
Minion, Inc., has no debt outstanding and a total market value of $356,900. Earnings before interest and taxes, EBIT, are projected to be $50,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher. If there is a recession, then EBIT will be 25 percent lower. The company is considering a $180,000 debt issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 8,300 shares outstanding. The company has a tax rate of 23 percent, a market-to-book ratio of 1.0, and the stock price remains constant. |
| a-1. |
Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| a-2. | Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b-1. | Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| b-2. | Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
Minion, Inc., has no debt outstanding and a total market value of $308,100. Earnings before interest and taxes, EBIT, are projected to be $46,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20 percent higher. If there is a recession, then EBIT will be 31 percent lower. The company is considering a $160,000 debt issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,900 shares outstanding. The company has a tax rate of 24 percent, a market-to-book ratio of 1.0, and the stock price remains constant.
a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
In: Finance