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Comparing borrowing costs

Stephens Security has two financing alternatives: (1) A publicly placed $50 million bond issue. Issuance costs are $1 million, the bond has a 9% coupon paid semiannually, and the bond has a 20-year life. (2) A $50 million private placement with a large pension fund. Issuance costs are $500,000, the bond has a 9.25% annual coupon

Finance: Use of cash; price movements in markets; sunk cost

51 Which of the following would be classified as a use of cash? a. An increase in accounts payable. b. A decrease in inventories. c. A decrease in accounts receivable. d. An increase in retained earnings. e. An increase in inventories. 53 Empirical evidence shows that financial market price movements are essentially rand

Decomposition equation

18 Which of the following would least likely be considered as signaling a potential problem regarding the "quality of earnings" for a firm? a. the firm has experienced a significant increase in earnings relative to the industry overall b. the firm's accounts receivable account is increasing at a rate faster than the firm's inc

Risky Investments

4. Which of the following would generally be considered the most risky (with respect to volatility of returns)? a. An investment in a portfolio of common stocks b. An investment in a single common stock randomly selected c. An investment in a single corporate bond randomly selected d. an investment in a portfolio of co

Assume wealth

2 If market interest rates are currently 15% and your investment provides you this 15% return, does that imply that you are 15% more wealthy (after vs before this investment return)? Assume wealth is defined as the ability to consume (purchase) goods or services. a. Yes, because with inflation you do indeed have 15% more money


Need help with attached problems. FIN 450 Week 7 Chapter 21 Questions 11. What do 12b-1 fees pay and what is the maximum amount that these fees can be? 15. What regulatory changes have been adopted or are being considered to deal with abuses in the mutual fund industry? Quantitative Problems On January 1, a mut

Investment Fund

For questions 67-68, consider the following information for the BU Scholarship Investment Fund. The total investment in the fund is $1 million. STOCK INVESTMENT BETA EXPECTED RETURN A $200,000 1.5 25% B $300,000 -0.5 4% C $500,

Stock's expected price today

43 Regardless of your work above, assume that D0, which was just paid, = $1.00, D1= $1.20, D2 = = $1.40, D3 = $1.55, D4 = $2.00, D5 = $2.13, D6 = $2.27, and P3 = $80.00. What should be the stock's expected price today, (i.e.. P0)? I encourage you to draw a time line clearly indicating the situation. Again, assume the require

Contingent payoff

31 The simple corporation has an outstanding debt obligation (total of principle and interest due) to the Complex Corporation of $250 (Assume this is Simple's only debt.). It is year end and the total cash flow of Simple from all sources is $325. The contingent payoff to the debt and equity holders of Simple Corporation is: a

Disney's Financial Components

I am looking for a description of where key components of the basic accounting equation are illustrated in the Walt Disney Corporation's financial statements.

Rate of Return on a Bond: Coupon Rate and Par Value

What is the rate of return on a bond that pays a coupon rate of 9%, has a par value of $1,000, matures in five years and is currently selling for $714? (Round to the nearest whole % and assume annual coupon payments). a. 18% b. 13% c. 16% d. 17%.

Share prices

Apex Inc., is a biotechnology firm that is about to announce the results of its clinical trials of a potential new cancer drug. If the trials were successful, apnex stock will be worth $70 per share. If the trials were unsuccessful, Apnex stock will be worth $18 per share. Suppose that the morning before the announcement is s

APA Format and In-Text Citations

I have to cite sources for my references. If I have three or four articles written by the same person in the same year, how would prepare the in-text citations and the reference at the end?

I need help preparing a cash budget

Prepare a cash budget for XYZ Company for the first three months of 2004 based on the following information: Month Estimated Sales Estimated Factory Overhead Estimated Selling, General and Admin Expenses (SG&A) December $ 2,800,000 $ 320,000 $ 625,000 January 4,000,000 325,000 637,500 February 5,600,000 335,000 642,50

Learning Team Analysis of Business Specialties

I need help in these questions today if i could please; ? Analyze the need for the following consulting firms. (300-400 words) Financial Management firm Management Consultant firm Training /Development Specialist firm Please write a description of the services the Training/Development Specialist firm will be offering (

Financial leverage benefits and harms

Discuss the conditions under which financial leverage is beneficial vs. when it is harmful. Is there a point at which it is beneficial from some stakeholders' point of view but not beneficial from other stakeholders view point?

Creditors prefer low debt ratios

On the one hand, creditors prefer low debt ratios because the lower the ratio, the greater the cushion against creditor's losses in the event of a liquidation. Stockholders however may want more leverage because it can magnify expected earnings. Explain this thought process by stockholders.

Contribution of listed stock to Black, Blue and Titus Partnership

In August 2007, John Titus bought 200 shares of a listed stock for $25,000. In September 2007, Titus sold this stock for its fair market value of $28,000 to the partnership of Black, Blue, and Titus. Titus had a one-third interest in this partnership. In Titus' 2007 tax return, what amount should be reported as short-term capita

Taxable Event for Linda Anderson's Investment

On July 1, 2008, Linda Anderson received a 10% interest in the capital of Doty Associates, a partnership, for services rendered. Doty's net assets at July 1 had a basis of $70,000 and a fair market value of $100,000. What income must Anderson include in her 2008 tax return for the partnership interest transferred to her by the o

Cost of GCC Stock and Percent growth

Gentry Can Company's (GCC) latest annual dividend of $1.25 a share was paid yesterday and maintained its historic 7 percent annual rate of growth. You plan to purchase the stock today because you believe that the dividend growth rate will increase to 8 percent for the next three years and the selling price of the stock will be $

Ratios for three companies using recent five year averages

Compute a recent five-years average of the following ratios for three companies of your choice (attempt to select diverse firms) : A-Retention rate. B-Net profit margin C-Equity turnover D-Total asset turnover E-Total assets/equity Based on these rations, explain which firm should have the highest growth rate of earnin

Finance MCQ: Common, preferred stock, equity capital, cumulative dividend

1.Key differences between common stock and bonds include all of the following EXCEPT 1. bonds have a stated maturity but stock does not. 2. common stockholders have a junior claim on assets and income relative to bondholders. 3. common stockholders have a voice in management; bondholders do not. 4. dividends paid to bondho

Loan amortization schedule

Joan Messineo borrowed $15,000 at a 14% annual rate of interest to be repaid over 3 years. The loan is amortized into three equal, annual, end-of-year payments. a. Calculate the annual, end-of-year loan payment. b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan paym

Sensitivity Analysis and Scenario Analysis Evaluation

If you were the CFO of a company that had to decide on hundreds of potential projects every year, would you want to use sensitivity analysis and scenario analysis as described in the chapter, or would the amount of arithmetic required take too much time and thus not be cost effective? What involvement would nonfinancial people

Expected Return and Standard Deviation of a Stock

Stock A has expected return of 12% and standard deviation of 40%. Stock B has an expected return of 18% and standard deviation of 60%. The correlation coeffecient between stocks A and B is 0.2. What are the expected return and standard deviation of a portofolio invested 30% in stock A and 70% in stock B?

Google Finance Beta Coefficient

Using Google Finance, find the monthly rates of return for General Electric (calculate the ending month returns on the the last day of each month from October 31, 2007 to September 30, 2008 for both GE and the S&P500 - i.e. 10/31/07 GE at 28.92 and 09/30/08 at 22.14 to get return for 10/31/07). Compute the beta coeffi

Excpected rate of inflation

You are given the following long-run annual rates of return for alternative investments: U.S. Gov't T-bills 3.75% Large-cap common stock 12.45% Long-term corporate bonds 6.15% Long-term Gov't bonds 5.15% Small-capitalization common stock 14.20% The annual rate of inflation is 3.5%. What is the real rate of