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
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
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
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
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
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,
You currently earn $35,000 per year. If your salary grows at an assumed 3.5% average inflation rate, how much will your annual salary be in 25 years? a. $82,713
You currently earn $35,000 per year. If your salary grows at an assumed 3.5% average inflation rate, how much will your annual salary be in 25 years? a. $82,713 b. $79,916 c. $1,363,245 d. $1,445,960 e. Insufficient information to compute
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
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
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.
Prepare journal entries to record the following transactions relating to long-term bonds of XYZ, Inc. (Show computations.) (a) On June 1, 2006, XYZ, Inc. issued $600,000, 6% bonds for $587,640, which includes accrued interest. Interest is payable semiannually on February 1 and August 1 with the bonds maturing on February 1,
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%.
A strong dollar is very important; however, the taxation issued raised by the professor is potentially harmful. Why would a foreign investor invest money in the U.S. if every dollar earned is subjected to a high tax rate?
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
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?
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
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 (
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?
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.
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
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
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 $
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
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
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
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
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?
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
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