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A Mutual Fund Manager: Average Beta

A mutual fund manager has a $20.0 million portfolio with a beta of 1.50. The risk-free rate is 4.50%, and the market risk premium is 5.50%. The manager expects to receive an additional $5.0 million which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 1

Using the AFN Equation to Calculate the AFN for the Coming Year

Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Last year's sales = S0 $200,000 Last year's accounts payable $50,000 Sale

Clayton Industries: What is the AFN for the coming year?

Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions. Last year's sales = S0 $350 Last yea

Determine increase in cost of education

At Takoma Park University, they offer a multitude of courses each quarter. The students pay $1,200 per course. However, Dean Dong realizes that the tuition needs to be increased because of rising costs. After some analysis, Dean Dong determined that tuition needs to increase by $300 per course. At dinner one evening, Patsy P


I need some help to start in writing a 700-word paper in APA format with references evaluating the financial aspects of the American Red Cross. Answering these questions o How do they fund their programs? o How reliable are their funding sources? o Do they implement financial accountability measures to ensure that funds are

Redford Investment Company: Comparing returns on warrants and stocks

The Redford Investment Company bought 100 Cinema Corp warrants one year ago and would like to exercise them today. The warrants were purchased at $24 each, and they expire when trading ends today (assume there is no speculative premium left). Cinema Corp common stock is selling today for $50 per share. The exercise price is $

Value of stock warrants

The Preston Toy Co has warrants outstanding that allow the holder to purchase a share of stock for $22. (exercise price) The common stock is currently selling for $28, while the warrant is selling for $9.25 per share. a. What is the intrinsic (minimum) value of this warrant? b. What is the speculative premium on this warr

Portfolio Managers and Commission on Products

Do you care if the portfolio manager 'stays''? What effect can/should you expect with regard to the tenure (or lack thereof) of a particular portfolio manager? Are load (commission loaded) or no-load (commission free) products better? Why?

Capital Structure and Dividend Policy : Dividend Paid

Fletcher Corp. has a capital budget of $1,000,000, but it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts this year's net income to be $600,000. If the company follows a residual dividend policy, what will be its dividend paid?

Capital Structure and Dividend Policy : Recapitalization

Jones Co. currently is 100% equity financed. The company is considering changing its capital structure. More specifically, Jones' CFO is considering a recapitalization plan in which the firm would issue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the


1. What is the meaning of the following sentence: Amortization affects the amount of interest expense? How does amortization of premium affect the amount of interest expense? How does amortization of discount affect the amount of interest expense? 2. Why might some stockholders be included to buy preferred stock rather th

Five aboriginal trackers were not paid from 1880: what is PV of the unpaid amount?

In 1880 five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1993 the granddaughters of two of the trackers claimed that this reward had not been paid. The prime minister of Victoria stated that, if this was true, the government would be h

Coefficient of varitaion

Five investments alternatives have the following returns and standard deviations of return. Alternative Returns-Expected Value Standard Deviation A $5,000 $1,200 B 4,000 600 C 4,000 800 D 8,000 3,200 E 10,000 900 Using

Values of Investments

Which would you prefer? a. An investment paying interest of 12 percent compounded annually. b. An investment paying interest of 11.7 percent compounded semiannually. c. An investment paying 11.5 percent compounded continuously. Work out the value of each of these investments after 1, 5, and 20 years.

What is the PV of $100 received in

What is the PV of $100 received in: a. Year 10 (at a discount rate of 1 percent). b. Year 10 (at a discount rate of 13 percent). c. Year 15 (at a discount rate of 25 percent). d. Each of years 1 through 3 (at a discount rate of 12 percent).

Executive Summary of Honda Motor Company

Headquartered in Japan, Honda Motor Company is one of the major producers of quality motor vehicles around the world. Honda's quality, innovation and reliability has made it one of the most sought after car brands in the world.

Finance problem solving

Please show the work on how each problem is done 3) You are trying to save for $140,000 Ferrari. You have $30,000 to invest and your bank pays 4.2% annual interest. How long before you have enough to buy the car? 8) In a typical month, Curfman Company receives 100 checks totaling $75,000. These are delayed 4 days on a

Business Finance: calculate cash and current assets

Cash Equation. A Company has a book net worth of $38,000. Long-term debt is $6,500. Net working capital, other than cash, is $4,300. Fixed assets are $32,500. How much cash does the company have? If current liabilities are $7,200, what are current assets?

Calculating the Total Percentage Gain on Shares

An investor buys shares in the no-load Go-Go Mutual Fund on January 1 at a NAV of $ 21.20. At the end of the year the price is $ 25.40. Also the investor receives .50 cents in dividends and a capital gains distribution of .35 cents. What is the total percentage gain on the beginning NAV (round off to two places to the right of t

Business risk versus financial risk

This is a critical thinking and concepts review question. I am trying to figure out from the Essentials of corporate finance by Ross Westerfield Jordan 6e Book for my finance class. Business risk versus financial risk. -Explain what is meant by business and financial risk. Suppose firm A has greater business risk than fi

MM Proposition 21-22

21. In a world of no corporate taxes if the use of leverage does not change the value of the levered firm relative to the unlevered firm this is known as: MM Proposition III that the cost of stock is less than the cost of debt. MM Proposition I that leverage is invariant to market value. MM Proposit

Pecking order

13. The pecking order states how financing should be raised. In order to avoid asymmetric information problems and misinterpretation of whether management is sending a signal on security overvaluation the firm's first rule is to: finance with internally generated funds. always issue debt then the market won't

The NuPress Valet Co. has an improved version of its hotel stand.

11. The NuPress Valet Co. has an improved version of its hotel stand. The investment cost is expected to be $72 million and will return $13.5 million for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%. The appropriate discount rate, ass

Which of the following are examples of erosion?

4. Which of the following are examples of erosion? (I) the loss of sales due to increased competition in the product market (II) the loss of sales because your chief competitor just opened a store across the street from your store (III) the loss of sales due to a new product which you recently introduced (IV) the loss of sal

Contemporary Issues in Financial Management

I need help in this area and suggestion if this is the right company to research the selected contemporary issue? Thank you!! How many credits will i need to answer following questions? evaluate the impact of mergers and acquisitions on Exxon/mobile In your evaluation be sure to address the following items:Describe your selecte

Capital Budgeting : Internal Rate of Return

Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year: 0 1 2 3 4 Cash flows: -$1,000 $250 $23