Mordecai bought a 3-year 15% Treasury bond on 8 May 2020 at a yield of j2 = 18.6% p.a. Coupons can be reinvested at j2 = 14.0% p.a. The bond will be redeemed at par on the maturity date (face value $100).

a. Calculate the total accumulated value at maturity generated by this bond if Mordecai holds it to maturity and reinvests all coupon payments received at the available rate.

b. Calculate the total realised compound yield (TRCY) of this bond.

c. Decompose the total accumulated value generated by this bond into: original purchase price, coupons, interest on coupons, and capital gain/loss.

d. If Mordecai holds the bond for 2 years and sells it for a yield of j2 = 18.8% p.a., calculate the holding period yield (HPY).

e. Calculate duration of this bond if it is held to maturity.

f.Use the concept of modified duration to estimate the price of the bond if the yield to maturity increases to j2 = 18.7% p.a. im- mediately after Mordecai buys the bond.

g. ]What fixed liability could Mordecai be reasonably confident of paying off in 2 1/2 years’ time? Why? I don't really know how to do part E,F and G, other parts are done

Pinkerton Steelworks manufactures high quality bearings for large construction equipment. An
analysis reveals that sales for one of the company’s main products, the super bearing, is
declining due to aggressive pricing by competitors. Pinkerton's product sells for $525 whereas
the competition's comparable part is selling for close to $425. Consultants have determined that a
price drop to $400 is necessary to regain market share and annual sales of 1,000 units.
Cost data based on sales of 1,000 super bearings:

1. Calculate the current cost and profit per unit.
2. How much of the current cost per unit is attributable to non-value added activities?
3. Calculate the new target cost per unit for a sales price of $400 if the profit per unit is
maintained.
4. What strategy do you suggest for Pinkerton to attain the target cost per unit?

Estimating & Forecasting. Assume you believe that the biggest factor affecting the selling price of a house is its size. To test your hypothesis, you randomly sample fifteen houses on sale in your neighborhood and collect the following data:

1. What are the components of a regression line? Hint: there are a total of 5 in this case.
2. How would you specify this linear model? In other words, what would the regression equation look like. Hint: at this moment do not calculate anything. I am not interested in the actual coefficients, but how you would write out the equation using names of variables.
3. What are the estimates for the intercept and independent variable? Interpret them.
4. Plot sample data and estimated regression line in one graph.

Mordecai bought a 3-year 15% Treasury bond on 8 May 2020 at a yield of
j2 = 18.6% p.a. Coupons can be reinvested at j2 = 14.0% p.a. The bond
will be redeemed at par on the maturity date (face value $100).
a. Calculate the total accumulated value at maturity generated
by this bond if Mordecai holds it to maturity and reinvests all coupon
payments received at the available rate.
b. Calculate the total realised compound yield (TRCY) of this
bond.
c. Decompose the total accumulated value generated by this
bond into: original purchase price, coupons, interest on coupons, and
capital gain/loss.
d. If Mordecai holds the bond for 2 years and sells it for a yield
of j2 = 18.8% p.a., calculate the holding period yield (HPY).
e. Calculate duration of this bond if it is held to maturity.

f.Use the concept of modified duration to estimate the price

of the bond if the yield to maturity increases to j2 = 18.7% p.a. im-
mediately after Mordecai buys the bond.

g. ]What fixed liability could Mordecai be reasonably confident
of paying off in 2 1/2 years’ time? Why?

I don't really know how to do part E,F and G, other parts are done

On December 31, 2020, Berclair Inc. had 600 million shares of common stock and 16 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 30 million shares of its common stock as treasury stock. Berclair issued a 4% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $800 million.

Also outstanding at December 31 were 63 million incentive stock options granted to key executives on September 13, 2016. The options were exercisable as of September 13, 2020, for 63 million common shares at an exercise price of $60 per share. During 2021, the market price of the common shares averaged $70 per share.

The options were exercised on September 1, 2021.

Required:

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Do not round intermediate calculations.)

SHOW ALL WORK PLEASE

Use the following information to answer questions 31 to 36:

CDE Ltd has provided you with the following data relating to the product manufactured by his factory:

What is the contribution margin per unit? Show your workings.

Calculate quantity to produce to break even in both units and sales dollars. Show your workings.

CDE Ltd expects to sell 15,000 units in the coming year. What is the margin of safety at this level of activity?

How much profit will the business make for the year if its estimated level of activity of 15,000 units is accurate? Show your workings.

CDE Ltd has spare capacity and receives a special order from an interstate retailer for 1,000 units at a price of $80 per unit. Briefly explain why CDE Ltd should accept or reject the order based on financial analysis.

List two qualitative factors CDE Ltd ought to take into consideration in a special order decision.

Problem

The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a 8% coupon rate, pay interest annually, mature in 10 years, and have a face value of $1,000. There are 500,000 shares of 9% preferred stock outstanding with a current market price of $91 a share and a par value of $100. In addition, there are 1.25 million shares of common stock outstanding with a market price of $64 a share and a beta of .95. The most recent dividend paid by the company on the common stock was of $1.10 and it expects to increase those dividends by 3% annually forever. The firm's marginal tax rate is 35%. The overall stock market is yielding 12% and the Treasury bill rate is 3.5%.

1. What is the cost of equity based on the dividend growth model?
2. What is the cost of equity based on the security market line?
3. What market weights should be given to the various capital components in the weighted average cost of capital computation?

4. What is the weighted average cost of capital using the cost equity calculated based on CAPM?

(Please provide all the equation and step by step or Excel.xml in google drive )

(Please don't copy from another places, the answer will upload to Turnitin)

1. You have been given the job of evaluating the following merger candidate. You have collected the following cash flow for the acquisition candidate for the proposed merger (in millions):

Year                                                                1                              2                               3                               4                               5__

Cash flows now for canidate 90                            85                               205                            165                            180

Additional cash flows with merger 60                            90                               100                            225                            250

Total cash flows with synergy 150                            175                            305                            390                            430

Risk free rate of return                                                                                                                 3.0%

Beta for this project (the company after merging)                                                         1.5           

Market risk premium                                                                                                                     5.5%      

Pre-tax cost of debt                                                                                                                         3.8%

Marginal tax rate                                                                                                                              25%

Number of shares outstanding for the target company (millions)                         85            

Current market price per share for the target company                                              $48         

Percentage of the acquisition financed with debt                                                           50%

Percentage of the acquisition financed with common equity                                                      50%       

What is the after tax cost of debt?

What is the after tax cost of common equity

What is the weighted average cost of capital for this acquisition candidate?

What is the maximum price per share you are willing to pay for this candidate?

Based on the numbers above, would you pursue this candidate?

Replacement Question 1

Green Acres is growing Green Beans in Green Land, Georgia. Assuming that Green Acres is buying and selling in both the input and output markets in perfect competition, answer the following questions:

1. Complete Table 2 (see attached Excel Sheet)
2. At what point will Green Acres will be at the most efficient point of production? Why?
3. What is the optimum point of production? How do you prove it? What are the net revenues at which profits are maximized?
4. If costs of production goes up, what choices does Green Acres have? Why?  
5. At what point will Green Acres will have to should shut down its business? Why (hint: use the shutdown rule for which you will have to derive the average fixed and average variable cost from the information provided)

Consider the following linear programming problem

if A and B are the two binding constraints.

(Round to ONLY two digits after decimal points)

a) What is the range of optimality of the objective function?

  Answer ≤ C1/C2  ≤  Answer

b) Suppose that the unit revenues for X1 and X2 are changed to $100 and $18, respectively. Will the current optimum remain the same?

AnswerYesNO that because the new C1/C2 is Answer which is Answerwithinnot within the range of optimality

c) Suppose that the unit revenue of X1 is fixed $4. What is the associated range for the unit revenue for X2 that will keep the optimum unchanged?

   Answer  ≤ C2 ≤  Answer

d) The Shadow Price for Constraint A is Answer.

e) The Shadow Price for Constraint B is Answer

f) If only the capacity of Constraint A is increased from the present 40 hours to 45 hours, The increase in revenue will be = $Answer

g) A suggestion is made to increase the capacities of Constraint A and B by an hour at the additional cost of $1/hr. Is this advisable?

This is advisable for AnswerConstraint AConstraint BBoth Constraints and the total additional net revenue per hour would be $Answer