2. Understanding what maturity risk means for bonds is very important. Complete the following table by calculating the new bond prices and then the % price change that results for the two bonds given. For example, in the table if interest rates go up 1% on the short term bond, that means that the YTM would go from 4% to 5%. Then calculate the new price at a YTM of 5% and then calculate the % change in price from today's price of $1,000 to the new price.
Short term bond: Face value of $1,000 with an annual coupon rate of 4% with semi-annual payments, and a maturity in 2 years. Assume that today's YTM on a 2 year bond is 4% so therefore today's price is $1,000.
Long term bond: Face value of $1,000 with an annual coupon rate of 5% with semi-annual payments, and a maturity in 30 years. Assume that today's YTM on a 30 year bond is 5% so therefore today's price is $1,000.
|
Interest Rates go down by 2% |
Interest Rates go down by 1% |
Today's Price |
Interest Rates go up by 1% |
Interest Rates go up by 2% |
|||||
|
New $ Price |
% change from Today |
New $ Price |
% change from Today |
New $ Price |
% change from Today |
New $ Price |
% change from Today |
||
|
Short Term Bond |
$1,000 |
||||||||
|
Long Term Bond |
$1,000 |
||||||||
In: Finance
The critical care nurse is mentoring a new nurse on
hemodynamic mentoring at the bedside of a critical ill patient. the
patient has a right radial intra arterial line and a right sub
clavian pulmonary artery pressure monitoring system with a
thermodilution catheter. the critical care nurse meet with new
nurse demonstrates proper management of the invasive hemodynamic
monitoring lines to the new nurse and obtains the order paramiter
(mean arterial pressure (map) central venous pressure (cvp)
oulmonary artery systolic (pas) pulmonary artery diastolic (pad)
pulmonary artery wedge pressure (pawp) cardiac output (co) and
cardiac index (ci) measurement) the critical care nurse
the critical care nurse meet with the new nurse afterwards at the
nurses station and encourage the new nurse to share what the new
nurse understand in eegards to the invasive hemodynamic monetering
.the new nurse is currently taking critical care classes on hemody
namic
monitering
A. what are the indications for the carious homodynamic monitering
methods ( intra artirial line) and the pulmonary arteryd pressure
monitoring
system.
B. what are the various ordered perameters
use for in the case study
C. what are the nursing responsibilities when caring for the
patient with hemodynamic monitoring.
of what potential complication
should the nurse be aware when caring for thre patient with
hemodynamic monitoring
In: Nursing
Factor Company is planning to add a new product to its line. To
manufacture this product, the company needs to buy a new machine at
a $487,000 cost with an expected four-year life and a $19,000
salvage value. All sales are for cash, and all costs are
out-of-pocket, except for depreciation on the new machine.
Additional information includes the following. (PV of $1, FV of $1,
PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided.)
| Expected annual sales of new product | $ | 1,930,000 | |
| Expected annual costs of new product | |||
| Direct materials | 480,000 | ||
| Direct labor | 670,000 | ||
| Overhead (excluding straight-line depreciation on new machine) | 338,000 | ||
| Selling and administrative expenses | 154,000 | ||
| Income taxes | 30 | % | |
Required:
1. Compute straight-line depreciation for each year of this
new machine’s life.
2. Determine expected net income and net cash flow for each year of
this machine’s life.
3. Compute this machine’s payback period, assuming that cash flows
occur evenly throughout each year.
4. Compute this machine’s accounting rate of return, assuming that
income is earned evenly throughout each year.
5. Compute the net present value for this machine using a discount
rate of 7% and assuming that cash flows occur at each year-end.
(Hint: Salvage value is a cash inflow at the end of the
asset’s life.)
In: Accounting
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $820,000 cost with an expected four-year life and a $54,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 decimal places.) Expected annual sales of new product $ 2,690,000 Expected annual costs of new product Direct materials 514,000 Direct labor 706,000 Overhead (excluding straight-line depreciation on new machine) 676,000 Selling and administrative expenses 194,000 Income taxes 30 % Required: 1. Compute straight-line depreciation for each year of this new machine’s life. 2. Determine expected net income and net cash flow for each year of this machine’s life. 3. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year. 4. Compute this machine’s accounting rate of return, assuming that income is earned evenly throughout each year. 5. Compute the net present value for this machine using a discount rate of 4% and assuming that cash flows occur at each year-end. (Hint: Salvage value is a cash inflow at the end of the asset’s life.)
In: Finance
|
Eaton, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $40 per share, but the book value per share is $10. Net income is currently $3.2 million. The new facility will cost $50 million, and it will increase net income by $760,000. Assume a constant price-earnings ratio. |
| a-1 |
Calculate the new book value per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Book value | $ |
| a-2 |
Calculate the new total earnings. |
| Total earnings | $ |
| a-3 |
Calculate the new EPS. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) |
| EPS | $ per share |
| a-4 |
Calculate the new stock price. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Stock price | $ |
| a-5 |
Calculate the new market-to-book ratio. (Do not round intermediate calculations and round your final answer to 4 decimal places, e.g., 32.1616.) |
| Market-to-book ratio |
| b. |
What would the new net income for the company have to be for the stock price to remain unchanged? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to nearest whole dollar amount, e.g., 32.) |
In: Finance
Factor Company is planning to add a new product to its line. To
manufacture this product, the company needs to buy a new machine at
a $515,000 cost with an expected four-year life and a $15,000
salvage value. All sales are for cash, and all costs are
out-of-pocket, except for depreciation on the new machine.
Additional information includes the following. (PV of $1, FV of $1,
PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided.)
| Expected annual sales of new product | $ | 1,950,000 | |
| Expected annual costs of new product | |||
| Direct materials | 460,000 | ||
| Direct labor | 678,000 | ||
| Overhead (excluding straight-line depreciation on new machine) | 337,000 | ||
| Selling and administrative expenses | 158,000 | ||
| Income taxes | 38 | % | |
Required:
1. Compute straight-line depreciation for each
year of this new machine’s life.
2. Determine expected net income and net cash flow
for each year of this machine’s life.
3. Compute this machine’s payback period, assuming
that cash flows occur evenly throughout each year.
4. Compute this machine’s accounting rate of
return, assuming that income is earned evenly throughout each
year.
5. Compute the net present value for this machine
using a discount rate of 7% and assuming that cash flows occur at
each year-end. (Hint: Salvage value is a cash inflow at
the end of the asset’s life.)
In: Accounting
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:
| Present Truck |
New Truck |
|||||
| Purchase cost new | $ | 36,000 | $ | 48,000 | ||
| Remaining book value | $ | 23,000 | - | |||
| Overhaul needed now | $ | 22,000 | - | |||
| Annual cash operating costs | $ | 17,500 | $ | 16,000 | ||
| Salvage value-now | $ | 12,000 | - | |||
| Salvage value-five years from now | $ | 15,000 | $ | 6,000 | ||
If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.
The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. What is the net present value of the “keep the old truck” alternative?
2. What is the net present value of the “purchase the new truck” alternative?
3. Should Bilboa Freightlines keep the old truck or purchase the new one?
In: Accounting
A method currently used by doctors to screen women for possible breast cancer fails to detect cancer in 20% of the women who actually have the disease. A new method has been developed that researchers hope will be able to detect cancer more accurately. A random sample of 81 women known to have breast cancer were screened using the new method. Of these, the new method failed to detect cancer in 14. Let p be the true proportion of women for which the new method fails to detect cancer. The investigator wants to conduct an appropriate test to see if the new method is more accurate using α = 0.05. Assume that the sample size is large.
Answer the following four parts
Part 1) What is the research hypothesis?
(a)Ha : p ≠ 0.20
(b)Ha : p > 0.20
(c)Ha : p < 14/81
(d)Ha : p < 0.20
Part 2) Report the value of the appropriate test statistic formula.
Part 3) What is the approximate p-value of your test?
(a)0.7291
(b)0.2291
(c)0.2709
(d)0.39
Part 4) What is the conclusion?
(a) Sufficient evidence to say that the new method is more accurate than the method currently used by the doctors
(b) Insufficient evidence to say that the new method is more accurate than the method currently used by the doctors
(c) Reject H0 at α = 0.05
In: Statistics and Probability
Factor Company is planning to add a new product to its line. To
manufacture this product, the company needs to buy a new machine at
a $499,000 cost with an expected four-year life and a $15,000
salvage value. All sales are for cash, and all costs are
out-of-pocket, except for depreciation on the new machine.
Additional information includes the following. (PV of $1, FV of $1,
PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided.)
| Expected annual sales of new product | $ | 1,990,000 | |
| Expected annual costs of new product | |||
| Direct materials | 500,000 | ||
| Direct labor | 675,000 | ||
| Overhead (excluding straight-line depreciation on new machine) | 336,000 | ||
| Selling and administrative expenses | 151,000 | ||
| Income taxes | 30 | % | |
Required:
1. Compute straight-line depreciation for each
year of this new machine’s life.
2. Determine expected net income and net cash flow
for each year of this machine’s life.
3. Compute this machine’s payback period, assuming
that cash flows occur evenly throughout each year.
4. Compute this machine’s accounting rate of
return, assuming that income is earned evenly throughout each
year.
5. Compute the net present value for this machine
using a discount rate of 6% and assuming that cash flows occur at
each year-end. (Hint: Salvage value is a cash inflow at
the end of the asset’s life.) Please show how to solve PV
Value.
In: Accounting
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:
|
Present Truck |
New Truck |
|||||
| Purchase cost new | $ | 36,000 | $ | 48,000 | ||
| Remaining book value | $ | 23,000 | - | |||
| Overhaul needed now | $ | 22,000 | - | |||
| Annual cash operating costs | $ | 17,500 | $ | 16,000 | ||
| Salvage value-now | $ | 12,000 | - | |||
| Salvage value-five years from now | $ | 15,000 | $ | 6,000 | ||
If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.
The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. What is the net present value of the “keep the old truck” alternative?
2. What is the net present value of the “purchase the new truck” alternative?
3. Should Bilboa Freightlines keep the old truck or purchase the new one?
In: Accounting