Consider a one year American put option on 100 ounces of gold with a strike of $2300 per ounce. The spot price per ounce of gold is $2300 and the annual financing rate is 7% on a continuously compounded basis. Finally, gold annual volatility is 15%. U= 1.112, D=0.8994, U= 0.6411. In answering the questions below use a binomial tree with two steps.

A. Value the option at time 0 using the binomial tree.

B. How would you hedge a long position in the put option at time 0 with a portfolio composed of a position in gold, and a cash borrowing or lending position?

A bank makes a 10-year loan of $100,000 at an interest rate of 12%. What are the monthly payments. What is the balance at the end of year 4?

An investor expects to receive $2,000 each year for the next five years, with the first payment beginning at the end of the year. What is the present value of the these payments if the interest rate is expected to be 5% for years 1-3 and 8% thereafter?

Presented below are the balance sheets of Trout Corporation as of December 31, Year 1 and Year 2, and the income statement for the year ended December 31, Year 2. The statement of retained earnings for the year ended December 31, Year 2 is on the next page. All dollars are in thousands.

Trout Corporation

Balance Sheets

December 31, Year 1 and Year 2

                          Assets                                            Year 1                  Year 2

Cash                                                                                       $   85                        $ 127

Accounts receivable                                                                          245                           253

Less: Allowance for doubtful accounts                                (9)                             (11)

Prepaid insurance                                                                    15                              9

Inventory                                                                              225                          234

Long-term investment                                                            65                              42

Land                                                                                          160                            160

Buildings and equipment                                                     250                              300

Less: Accumulated depreciation                                         (75)                          (100)

Trademark                                                                                 25                              22

Total Assets                                                                      $ 986                          $1,036

Liabilities & Stockholders’ Equity

Accounts payable                                                                $ 50                           $   36

Salaries payable                                                                          9                                    6

Deferred tax liability                                                               15                                18

Lease liability                                                                          --                                  75

Bonds Payable                                                                        275                              125

Less: Discount                                                                       (26)                               (24)

Common Stock                                                                       250                              280

Paid-In Capital –in excess of par                                          75                                  70

Preferred Stock                                                                          -                                    105

Retained Earnings                                                               338                                345

Total Liabilities & Stockholders’ Equity                 $   986                         $ 1,036

Trout Corporation

Income Statement

For the Year Ended December 31, Year 2

Net sales revenue                                                                                                   $ 380

Investment revenue                                                                                                     12

Operating Expenses:

Cost of Goods                                                          $ 150

Salaries expense                                                            58

Depreciation expense                                                   35

Trademark amortization                                                 3

Bad debts expense                                                          8

Insurance expense                                                          20

Bond interest expense                                                 45             319

Operating Income                                                                                                    $ 73

Other Income (Expense):

Loss on building fir                                                  $(27)

Gain on sale of investments                                          4                (23)

Pre-Tax Income from Continuing Operations                                                    $ 50

Less: Income Tax Expense:                                                                                     25

Net Income                                                                                                               $ 25

Additional Information:

Shareholders were paid cash dividends of $18 million.

A building that originally cost $40 million, and which was one-fourth depreciated, was destroyed by fire. Some undamaged parts were sold for $3 million.

Investment revenue includes Trout Corporation's $7 million share of the net income of Bass Corporation, an equity method investee.

$30 million par value of common stock was sold for $60 million, and $70 million of preferred stock was sold at par.

A long-term investment in bonds, originally purchased for $30 million, was sold for $34 million.

Pretax accounting income exceeded taxable income causing the deferred income tax liability to increase by $3 million.

The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $90 million. Annual lease payments of $15 million are paid at January 1^st of each year starting in Year 2.

$150 million of bonds were retired at maturity.

Required:

Use the EXCEL worksheet template provided. There are three tabs-

Direct Method Statement of Cash Flows (SCF)

Show your work

Cash flows from Operating Activities – CFOs Indirect Method

The mean number of sick days an employee takes per year is believed to be about 10. Members of a personnel department do not believe this figure. They randomly survey 8 employees. The number of sick days they took for the past year are as follows: 10; 6; 14; 4; 10; 9; 8; 9. Let X = the number of sick days they took for the past year. Should the personnel team believe that the mean number is about 10? Conduct a hypothesis test at the 5% level.

Construct a 95% confidence interval for the true mean. Sketch the graph of the situation. Label the point estimate and the lower and upper bounds of the confidence interval. (Round your answers to three decimal places.)

The net income reported on the income statement for the current year was $437,000. Depreciation recorded on store equipment for the year amounted to $17,400. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

Required:

1. Consider a 10-year 6 percent coupon bond.
   1. What is the price of this bond if the market yield is 6%?
   2. What is the price of this bond if the market yield is 7%?
   3. What is the price of this bond if the market yield is 5%?

Following are the income statement and balance sheet for Texas Roadhouse for the year ended December 29, 2015.

a. Assume the following forecasts for TXRH’s sales, NOPAT, and NOA for 2016 through 2019. Forecast the terminal period values assuming a 1% terminal period growth rate for all three model inputs: Sales, NOPAT, and NOA.

Round your answers to the nearest dollar.

b. Estimate the value of a share of TXRH common stock using the discounted cash flow (DCF) model as of December 29, 2015; assume a discount rate (WACC) of 7%, common shares outstanding of 70,091 thousand, net nonoperating obligations (NNO) of $(14,680) thousand, and noncontrolling interest (NCI) from the balance sheet of $7,520 thousand. Note that NNO is negative because the company’s cash exceeds its nonoperating liabilities.

Rounding instructions:

• Use rounded answers for subsequent computations.

• Round answers to the nearest whole number unless otherwise noted.
• Round discount factor to 5 decimal places and stock price per share to two decimal places.

Do not use negative signs with any of your answers below.

Question: What is the stock price per share?

The following information relates to a Corporation for the year ended 2014: Prepare the cash flow statement in proper form

Purchase of Treasury Stock $32,000

Depletion Expense $15,000

Cash from issuance of bonds payable $30,000

Net loss $25,000

Beginning short-term investments $12,000

Ending short-term investments $18,000

Purchase of a patent $33,000

Beginning accounts payable $103,000

Ending account payable $76,000

Beginning accounts receiavble $15,000

Ending accounts receivable $10,000

Beginning inventory $20,000

Ending inventory $11,000

Loss on sale of stock $12,000

Issued preferred stock for land $72,000

Beginning notes payable-11 months $83,000

Ending balance notes payable- 11 month $75,000

Bad debt expense $17,000

Issued common stock for cash $105,000

Amortization expense $23,000

Sale of equipment at cost $14,000

Depreciation Expense $50,000

A stock is expected to pay the following dividends: $1.1 in 1 year, $1.6 in 2 years, and $1.9 in 3 years, followed by growth in the dividend of 6% per year forever after that point. The stock's required return is 14%. The stock's current price (Price at year 0) should be $____________.