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Value of a perpetual stream of payments

Given an interest rate of 10% per year, what is the value at the end of 5 years of a perpetual stream of 120$ annual payments starting at the end of year 9? I dont understand the time fator in this question - i.e how do you encorporate year 9 and year 5 into the appropriate formula Please provide the formula, solution and

Calculating ROA and ROE for finance.

Lily Cosmetics has annual sales of $500,000,000 $5,000,000 maintains a net after tax profit margin of 5% and has a sales-to-assets ratio of 4 a. What is its return on assets? b. If its debt/equity ratio is 0.5, what is the return on equity?


Why can taking a riskier route be more effective than taking a conservative route when investing? (Example: A company looking to expand)

Finance - three different $1,000 maturity corporate bonds to buy

You are evaluating three different $1,000 maturity corporate bonds to buy. The ABC Company bond has a 7 percent annual coupon with 7 years remaining while the XYZ Company bond has a 10 percent annual coupon with 5 years remaining. You could also buy a newly issued 10-year bond from Widget Company of America that has a 12 perc

Finance - three different capital projects

A company is considering three different capital projects. Each project will require the same amount of capital outflow. As the CFO you instruct your financial analyst to discount project A's cash stream at 14 percent, project B's cash stream at 12 percent, and project C's cash stream at 17 percent. In doing so, which project

Mortgage Lenders

On a very general and high level view what are some of the strengths and weaknesses that a bank's mortgage loan area can have? What are some of the changes that can be made to improve a bank's position as a mortgage lender? What recommendations can be made?

Federal Deposit Insurance Corporation

Go to this sponsored by the Federal Deposit Insurance Corporation. You will see that this site offers summary data on financial institutions. Click on the link that says "Quarterly Banking Profile." From the dropdown menu that says "Report Date," select the most recent date. Then click on "Complete Q

Allowance for Doubtful Accounts; Finance Charges; Sales of Receivables

E1-2 The ledger of Salizer Company at the end of the current year shows Accounts Receivable 110,000 , Sales 840,000, and sales Returns and Allowances 40,000. Instructions : A) If Allowances for Doubtful Accounts has a credit balance of 2,500 in the trial balance, journalize the adjusting entry at December 31, assuming bad

Financial Services Industry Report

I need help with the questions below to get me started. Thank you. ----------------------------------- 1. Explain the roles of financial institutions in the global economy. 2. Discuss how the financial services industry is likely to change over the next decade. 3. Discuss how these changes might impact stakeholder

Finance scenarios; stock prices

10.) A firm pays a $3.80 dividend at the end of year one (D1), has a stock price of $50, and a constant growth rate (g) of 4 percent. Compute the required rate of return (Ke). 11.) Tom Busby owes $20,000 now. A lender will carry the debt for four more years at 8 percent interest. That is, in this particular case, the amoun

American Stock Exchange, NASDAQ and WorldCom

How are AMEX and NASDAQ similar, if at all? How are the two exchanges different from one another, if at all? How has the Former WorldCom Inc. Chief Executive Bernard Ebber's case affected WorldCom Inc., and the Telecommunication industry? Explain. After submitting your report, one of the new brokers asks the three question

Federal Reserve Economic Database Research Questions

1. Using a Microsoft Word document, provide your responses to these steps required for this task, as detailed below. 2. Read the following scenario for this task - As a junior financial analyst in a brokerage firm, you have been asked by your boss to demonstrate the usefulness of the World Wide Web as a convenient resource f

Financial Management

Problem 1 The XYZ Company manufactures clocks. The company's income statement for 2004 is as follows: XYZ Company Income Statement For the Year Ended December 31, 2004 Sales (10,000 clocks @ $40 each) $400,000 Less: Variable costs (10,000 clocks at $20) 200,000 Fixed costs 150,000 Earnings before in

Price elasticity of demand problem

I work in hotel management. How can I increase the company's revenue, how would can I use price elasticity of demand to determine whether to increase or decrease the price? I would like examples and details.

Expected return of a portfolio; variance and standard deviation

See attached spreadsheet. Problem 1 a. Your portfolio is invested 28 percent each in A and C, and 44 percent in B. The expected return of the portfolio is_______% (Input answer as a percent rounded to 2 decimal places). b. The variance of this portfolio is________ (Round answer to 6 decimal places) and standard dev

Leverage buyout -- TPG buys Ducati: pros and cons of the deal on both sides.

See attached files. Mergers & Acquisitions --- the case is about a leverage buyout of Ducati (motorcycles) by Texas Pacific Group (a private equity firm). Attached is: 1) scanned copy of the text of the case 2) plus a scanned copy of: a summary of TPG + several financial statements on Ducati Questions: 1) From

Retained earnings

My company showed retained earnings of $400,000 on its balance sheet last year. This year, the company's earnings per share (EPS) were $3.00 and its dividends paid per share (DPS) were $1.00. The company has 200,000 shares of stock outstanding. Showing the computations what is the level of retained earnings on the company's ba

Personal Finance and accounting Problem

PROBLEMS 6.38 Nonconstant Growth: A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at 5 percent per year thereafter. The expected rate of return on the stock is 12 percent. A. What is the current price of the stock? B. What

Charlies Furniture Store - Accounting and Fiance

ROI analysis using DuPont model. Charlie?s Furniture Store has been in business for several years. The firm's owners have described the store as a "high-price, high service" operation that provides lots of assistance to its customers. Margin has averaged a relatively high 32% per year for several years, but turnover has been a r


A firm wants the use of a machine that cost $100,000. If the firm purchases the equipment, it will depreciate the equipment at the rate of $20,000 a year for four years, at which time the equipment will have a residual value of $20,000. Maintenance will be $2,500 a year. The firm could lease the equipment for four years for an

Personal Finance and accounting Problem

Marshall 12-18 (Means chapter 12, problem 18) CVP analysis-what-if questions; sales mix issue. Kiwi Manufacturing Co. makes a single product that sells for $32 per unit. Variable costs are $20.80 per unit, and fixed costs total $47,600 per month. Required: A. Calculate the number of units that must be sold each month for

Calculate Kirkland Motors expected stock price five years from now

Kirkland Motors expects to pay a $2.00 a share dividend on its common stock at the end of the year (i.e., D1 = $2.00). The stock currently sells for $20.00 a share. The required rate of return on the company's stock is 12 percent (i.e., rs = 0.12). The dividend is expected to grow at some constant rate over time. What is

Materials and conversion costs, cost recon. schedule

Hi-Tech Mortgage Company uses a process costing system to accumulate costs in its loan application department. When an application is completed it is forwarded to the loan department for final processing. The following processing and cost data pertain to September. 1. Applications in process on Beginning WIP: September 1