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Delray Technology finance: new $2 million plant, bond issues, journal entries

Problem 1 Delray Technology is considering these two alternatives to finance its construction of a new $2 million plant: (a) Issuance of 200,000 shares of common stock at the market price of $10 per share. (b) Issuance of $2 million, 6% bonds at face value. Complete the table and indicate which alternative is preferabl

Developing a personal retirement plan

Can someone please help me with this? I'm not understanding how to come up with this, or if I am to create my own figures for calculation? Please help. Case study: Develop a personal retirement plan assuming that you'll retire at the age of 65. The plan should specify the amount of money you need to retire, your longevity, an

Finding Mean, Median and Modal Prices

The American Automobile Association checks the prices of gasoline before many holiday weekends. Listed below are the self-service prices for a sample of 15 retail outlets during the May 2003 Memorial Day weekend in the Detroit, Michigan, area. 1.44 1.42 1.35 1.39 1.49 1.49 1.41 1.46 1.41 1

Data Back-Up Systems: Interest Calculations for 90 Day Loan

Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. Assume a 365-day year. 1. How much interest (in dollars) will the firm pay on the 90-day loan? 2. Find the effective 90-day rate on the loan. 3. Annualize your result in part b to find the effective annual r

Rosario Company: Break Even Analysis

Rosario Company, which is located in Buenos Aires, Argentina, and manufactures a component used in farm machinery. The firm's fixed costs are 4,000,000 p per year. The variable cost of each component is 2,000 p, and the compoents are sold for 3,000 p each. The company sold 5,000 components during the prior years. (p denotes t

Present Value, Price of stock, WACC

1. Janice Smith wishes to accumulate $8,000 by the end of 5 years by making equal annual end-of-year deposits over the next five years. If Janice can earn 7 percent on her investments, how much must she deposit at the end of each year to meet this goal? 2. J& J just issued a bond with a $1,000 face value and a coupon rate

Financial Planning for the Holidays

Ways to Save for the Holiday Season Along with good cheer, the holidays bring so many expenses--Christmas parties, travel, decorations and extra grocery costs. And all that is on top of holiday gifts! No wonder many Americans sink further into debt during the holidays--something that many work-at-home moms can't afford to do.

NPV and Price of Equity

1) You are considering a project which has been assigned a discount rate of 8%. If you start the project today, you will incur an initial cost of $480 and will receiv cash inflows of $350 a year for three years. If you wait one year to start the project, the initial cost will rise to $520 and the cash flows will incrase to $

Finding Sustainable Growth and Bond Price

1) The Green Giant has a 5% profit margin and a 40% divided payout ratio. The total asset turnout is 1.40 and the equity multiplier is 1.50. What is the Sustainable rate of growth? 2) Consider a bond which pays 7% semiannually has 8 years to maturity. The market requires an interest rate of 8% on bonds of this risk. What is t

Investment questions

9.How would you use portfolio management to assess the risk and return of an investment? 10. Predict how the results would be different based on different risk preferences. 11.In the concept of managerial accountability, what legal compliance issues could come up? 12. What is agency theory? 13.What ethical issu

What is a sensitivity analysis? What is a scenario analysis?

5. What is a sensitivity analysis? 6. What is a scenario analysis? 7. How would you apply each one to a potential investment opportunity? 8. How would you use the information from this analysis? Explain. What are some risk management techniques?

Exercise 2-2 Classification of Costs as Period or Product Costs [LO2] Suppose that you have been given a summer job at Fairwings Avionics, a company that manufactures sophisticated radar sets for commercial aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its tremendous growth. The bank requires financial statements before approving such a loan.

________________________________________ Exercise 2-2 Classification of Costs as Period or Product Costs [LO2] Suppose that you have been given a summer job at Fairwings Avionics, a company that manufactures sophisticated radar sets for commercial aircraft. The company, which is privately owned, has approached a bank for a

Financing Alternatives: Analyzing Financial Data

Can someone please help me with this. I'm confused and don't even know where to begin! I've calculated the debt ratio and got 39%. Is this correct? Here's the problem: Laurel Street, president of Uvalde Manufacturing Inc. is preparing a proposal to present to her board of directors regarding a planned plant expansion that will c

Use of financial reports: hired by a new company

You have been hired into a new company to oversee the accounting department. Explain what type of financial reports would you expect to see in your department? How will you use the financial reports available to you to make business decisions?

Stock Valuations: Ch 9 problems 1, 2, 4, 6, 9, 11 on Pages 296-297

Complete problems 1, 2, 4, 6, 9, & 11 on text pp. 296-297 of Ch. 9. 1. General Cereal common stock dividends have been growing at an annual rate of 7 percent per year over the past 10 years. Current dividend (D0) is $1.70 per share. What is the current value of a share of this stock to an investor who requires a 12 percent

Stock Valuation: Nonconstant Growth

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 15 years, because the firm needs to plow back its earnings to fuel growth. The company will pay a $6 per share dividend in 16 years and will increase the dividend by 6 percent per year thereafter. If the required return on

Introduction to Finance: FV and annual payment amount

1. Determine the future values if $5,000 is invested in each of the following situations: A. 5 percent for ten years. Future value=$5,000 x (+ 5 2. Determine the annual payment in a 415,000, 12 percent business loan from a commercial bank is to be amortized over a five-year period. PVA= PMT(PVIFA 10%4) $415,

Using Excel: Calculating percentage changes and growth rates

From Mayes' Financial Analysis with Microsoft Excel (4th ed.), p. 266. 1. Using the Yahoo! Finance website (, get the current price and five-year dividend history for Eli Lily & Co. To gather this data, enter the ticker symbol (LLY) in the Get Quotes box at the top of the page and then click the GO

Stormy Weather Plowback or Retention Ratios: Stock Price

Stormy Weather has no attractive investment opportunities. Its return on investment (ROE) is equal to the discount rate which is 10 percent. Its expected earnings this year are $3 per share. Find the stock price and growth rate of dividends for plowback ratios (retention ratios) of: a. Zero b. 5% c. 10% d. 15%

Loan Payment Amortization Schedule

You have borrowed $14,300 at an interest rate of 15 percent. You feel that you will be able to make annual payments of $3,000 per year on your loan. (Payments include both principal and interest.) a. How long will it be before the loan is entirely paid off (to the nearest year)?

Effective annual rates

Steaks Galore needs to arrange financing for its expansion program. One bank offers to lend the required $1,000,000 on a loan which requires interest to be paid at the end of each quarter. The quoted rate is 10 percent, and the principal must be repaid at the end of the year. A second lender offers 9 percent, daily compoundin

Preferred Stock and Required Rate of Return

Joe's preferred stock currently has a market price equal to $80 per share. If the dividend paid on this stock is $6 per share, what is the required rate of return investors are demanding from Joe's preferred stock?

Finance: Compute ROR for Clarkson Corp stock, percentage gain on initial equity

1. The price of the stock of Clarkson Corporation went from $50 to $56 last year. The firm also paid $2 in dividend. Compute the rate of return. 2. In the following year, the dividend was raised to $2.25. However, a bear market developed toward the end of the year, and the stock price declined from $56 at the beginning of the

Finance: Cost of Capital, Zoldt

As the cost of capital is increased, the: a. IRR remains constant. b. Payback period remains the same. c. Discounted payback period increases. d. Both "b" and c. e. All of the above In the event that Zoldt Corporation, which has a low P/E ratio, were to acquire Sky Corporation, whi