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Percival Hygiene Portfolio Combinations Risk and Return

Percival Hygiene has $10 million invested in long-term corporate bonds. This bond portfolio's expected annual rate of return is 9 percent, and the annual standard deviation is 10 percent. Amanda Reckonwith, Percival's financial adviser, recommends that Percival consider investing in an index fund which closely tracks the Sta

Debt financing / Optimal Capital Structure

Part I - 1. Please explain the advantages and disadvantages of debt financing. 2. How does the use of debt financing affect the rate of return that shareholders require on their investment in the firm's shares. How does the cost of equity (i.e., the rate of return investors require on their investment in the firm's shares

Calculate 13 financial ratios and 3 market value ratios

1. Calculating Ratios. Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT Net sales 13,193 Cost of goods sold 4,060 Other expenses 4,049 Depreciation 2,518 Earnings before interest and taxes (EBIT) 2,566 Interest expenses 685 Income before tax

Value weighted portfolio

Given $100,000 to invest, construct a value weighted portfolio of the four stocks listed below: Stock Price/Share $ #of shares(millions Golden Seas 13 1000 Jacobs and Jacobs 22 1.25 MAG

Albatross Airline, Fastron Inc: Computing Leverage and Breakdown Analysis

4) Albatross Airline's fixed operating costs are $5.8 million, and its variable cost interest rate is 0.20. The firm has $2 million in bonds outstanding with a coupon interest rate of 8 percent. Albatross has $30,000 shares of preferred stock outstanding, which pays a $2 annual dividend. There are 100,000 shares of common stock

Cost of the newly issued stock

Roto Roofing Corp. just paid a dividend of $1.85. This dividend is expected to grow at a constant annual ratae of 3% per year. Roto Roofing's common stock is currently selling for $12.50. The firm can sell new stock at this price subject to floatation costs of 15%. What will the cost of the newly issued stock be? a.) 17.8%

Delphi Technique in Risk Management

What is the Delphi technique in risk management? How would you use the results of the Delphi technique? Are the results of the Delphi technique applicable to an issue in an organization that you are familiar with? Explain.


The initial proceeds per bond, the size of the issue, the initial maturity of the bond, and the years remaining to maturity are shown in the following table for a number of bonds. In each case, the firm is in the 40 percent tax bracket, and the bond has a $ 1,000 par value. Proceeds per Size of Initial Maturity Years Remainin

Loan Comparison: Uncle Fred's new boat...

Can you help me get started with this assignment? Your uncle Fred just purchased a new boat. He brags to you about the low 7% interest rate (APR, monthly compounding) he obtained from the dealer. The rate is even lower than the rate he could have obtained on his home equity loan (8% APR, monthly compounding). If his tax ra

Public Organization's Finances

How to understand public finances I need several examples of each answer. a. Identify opportunities to develop the state or local economy. b. Identify strategies to improve the government's bond rating. c. Explain how unplanned events affect intergovernmental fund transfers. d. Recommend long-term fina

What is Upton's current stock price?

The Upton Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 18.00% for 2 years, after which are expected to grow at a rate of 6.00% forever. Upton's required return is 12%. What is Upton's current stock price?

Price of the Common Stock

Rentz RV Inc. (RRV) is presently enjoying relatively high growth because of a surge in the demand for recreational vehicles. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which high gas prices will probably reduce the growth rate in earnings and dividends to zero, i.e., g=0. The

What is the estimated intrinsic value per share of common stock?

You must estimate the intrinsic value of Tsetseko Technologies' stock. Tsetseko's end-of-year free cash flow (FCF) is expected to be $17.50 million, and it is expected to grow at a constant rate of 7.00% a year thereafter. The company's WACC is 10.00%. Tsetseko has $125.00 million of long-term debt plus preferred stock, and the

O'Henry's Data Services: Compute a purchase price given the financial information

Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for th

Techniques to Balance Spending

A friend tells you that he has a job that pays US $1,500 per month (after tax); however, he is spending US $1,900 per month and taking on more credit card debt to meet his monthly bills. In conversation he says, "I love to fix up my car, and I love purchasing new clothes. I need money for the things I want to do." He ends the co

Musumeci's Expected Portfolio Return

Musumeci Capital Management has invested its portfolio as shown here. What is Musumeci's expected portfolio return? ASSET PORTFOLIO WEIGHT EXPECTED RETURN Money market securities 10% 4% Corporate bonds 20 8 Equities 70 12

Calculating equivalent annual cost: aging storage tank

An 8 year old storage tank has to be replaced or repaired because of severe corrosion. You have been asked to investigate three alternatives Replace tank to original specifications. -Repair tank with stainless steel lining. -Replace tank with stainless steel tank. You have obtained the following information: Shut dow

Value of a sinking fund

$2000 is deposited into a sinking fund at the end of each year for 5 years. The fund earns interest at 10% per year, compounded annually. What is the principal of the fund right after the fifth deposit has been made?

Remaining Cash Fow, Treasurer Responses, and Profitability

1. A firm generated free cash flow of 2348 million and paid net interest of 23 million after tax. It paid a dividend of 14$ million and issued shares for 54 million. There were no share repurchases. What did the treasurer do with the remaining cash flow and for how much? 2. A firm generated a negative free cash flow of 1857 m

Analyze financial data to determine a Better Yet's financial position

See attached Excel file. The income statement, similar to a video, measures the firm's profitability over a period of time: one month, one quarter, or one year. The statement focuses on the operations of the firm and explains what was produced and sold. In essence, it summarizes revenues generated and the results. Mark un

Interest : Average Daily Balance and Adjusted Balance; Credit Recommendations

Bernie and Pam Britten are a young married couple beginning careers and establishing a household. They will each make about $50,000 next year and will have accumulated about $40,000 to invest. They now rent an apartment but are considering purchasing a condominium for $100,000. If they do, a down payment of $10,000 will be requi

Different Types of Risk

I have to answer the questions below in 250 words. I have been reading the chapter and don't fully understand these questions. 1. What are the different types of risk? How would you differentiate a typical risk and a corporate risk? Which type of risk has the most impact on a health benefits company that provides health, life

Overview of Corporate Risk

I have to answer the questions below in 250 words. I have been reading the chapter and don't fully understand these questions. 1. What is risk management? What is the importance of risk management in an organization? How does risk management mitigation create value for an organization?

Costaguanan Stock Market: Real vs. Nominal Returns

The Costaguanan stock market provided a rate of return of 95 percent. The inflation rate in Costaguana during the year was 80 percent. In the United States, in contrast, the stock market return was only 12 percent, but the inflation rate was only 2 percent. Which country's stock market provided the higher real rate of return?