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# Finance

### Rangoon Corp - TATO

Rangoon Corp's sales last year were \$400,000 and its year-end total assets were \$300,000. The average firm in the industry has a total assets turnover of 2.5. The new CFO belives the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the asset

### Multiple Choice Questions- Financial Markets

Multiple Choice Questions: 1. The interest rate charged by banks with excess reserves at a Federal Reserve Bank to banks needing overnight loans to meet reserve requirements is called the_________. A) prime rate B) discount rate C) federal funds rate D) call money rate E) money market rate 2. You want to purch

### Thomas Company

I have two problems that I am unable to find a solution. Please see attachments. E10-6 Journalize entries for disposal of plant assets. (SO 6) Presented below are selected transactions at Thomas Company for 2006. Jan. 1 Retired a piece of machinery that was purchased on January 1, 1996. The machine cost \$62,000 on tha

### Springsteen Music Company's Retained Earnings

I am not sure how to calculate the retained earning increase. Springsteen Music company earned \$820 million last year and paid out 20 percent of earnings in dividends. How much did the company's retained earnings increase?

### Multiple Choice- Financial Markets

Multiple Choice Questions: 1. Assume that you manage a \$10.00 million mutual fund that has a beta of 1.05 and a 12.00% required return. The risk-free rate is 4.75%. You now receive another \$10.00 million, which you invest in stocks with an average beta of 0.65. What is the required rate of return on the new \$20.00 million por

### Multiple Choice- Financial Markets

Multiple Choice Questions: 1. XYZ Inc.'s stock has a 50% chance of producing a 30% return, a 25% chance of producing a 9% return, and a 25% chance of producing a -25% return. What is XYZ's expected return? A. 14.4% B. 15.2% C. 16.0% D. 16.8% E. 17.6% 2. An investor has a 2-stock portfolio with \$50,000 invested in S

### Gateway Inc. Growth Rate

Grateway Inc. has a weighted average cost of capital of 11.5 percent. Its target capital structure is 55 percent equity and 45 percent debt. The company has sufficient retained earnings to fund the equity portion of its capital budget. The before-tax cost of debt is 9 percent, and the company's tax rate is 30 percent. If the exp

### Sharpe measure for Phoenix Fund and the Index Fund

Over the past five years, the Phoenix Fund has averaged a monthly return of .013, while money market instruments have yielded .006. During the same period, the mean return on the market index was .08 with a standard deviation of .25 and beta of 1. While evaluating Phoenix Fund, you computed a standard deviation of returns .36, a

### Margin Calculation Problem

Phoenix Trader opens a brokerage account and purchases 600 shares of Widget Company at \$50 per share. He borrows \$6,000 from his broker to help pay for the purchase. The interest rate on the loan is 8%. What is the margin in Phoenix's account when he first purchases the stock?

### Demand, Market Surveys, Market Experiments, Linear Regression

OTA, please assist with the following questions based on your business experience and education. Please cite any sources. A) How do you think Apple Computer determines demand, market surveys, market experiments, linear regression? B) Do you think Apple computer stock will continue to rise? C) How has the software market

### Types of Mortgages

Here is a type of mortgage problem that I always have trouble with. I think I can get the first part just fine but get stuck on part 2. If you can work it out slowly, it would be helpful. Question: You buy a house for \$500,000 and put 20% down payment. You get a 30 year fixed rate mortgage at 6.2% . A) What is your

### Expected Return and Risk Free Rate

The following is the market situation: Security Beta Expected Return A Co. 1.25 19% B Co. 0.75 15% Assume that these securities are priced according to the CAPM. What is the expected return on the market? Wha

### Multiple Choice Questions Finance/Stock Markets

Multiple Choice Questions : 1. Which of the following statements is most correct? a. A good goal for a corporate manager is maximization of expected EPS. b. Most business in the US is conducted by corporations; corporations' popularity results primarily from their favorable tax treatment. c. A good example of an agen

### Estimate the value of a privately-held firm based on the following information

1. Estimate the value of a privately-held firm based on the following information: total market value (or capitalization value) of a comparable firm = \$200,000; net income of a comparable firm = \$40,000; number of shares outstanding of the comparable firm = 20,000; net income for the target firm - \$15,000; number of shares outst

### Finance Problem - LowTec Corporation

The LowTec Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forcasted as: 1 (\$50,000) 2 (\$20,000) 3 \$100,000 4 \$400,000 5 \$800,000 Investors in LowTec have an expected rate of return of 30 percent on their investment until year 5, when the rate of re

### A venture capitalist wants to estimate the value of a new venture.

A venture capitalist wants to estimate the value of a new venture. The venture is not expected to produce net income or earnings until the end of year 5 when the net income is estimated at \$1,600,000. A publicly-traded competitor or "comparable firm" has current earnings of \$1,000,000 and a market capitalization value of \$10,000

### International Finance - Balance of Payments

How will the following transactions be reflected in the U.S. balance of payments? a. A U.S. MNC sells \$5 million in automotive parts to a firm in Italy, receiving a check drawn on the Italian company's U.S. bank account. b. A Japanese corporation purchases a plant in the United States for \$200 million, using the proceeds of a

### International Finance - Capital Accounts

What are the components of the capital account in the balance of payments? What are the components of the current account in the balance of payments? Suppose you know that a certain country has a surplus on the capital account on its balance of payments; what does this imply about the current account? What does a surplus in the

### Computing comparisions and dimension averages

Need assistance computing comparisions and dimension averages. Please see attachment.

### Short Term Volatility

The Gold Rush Mining Company is concerned about short-term volatility in its revenues. Gold currently sells for \$300 an ounce, but the price is volatile and could fall as low as \$280 or rise as high as \$320 in the next month. The company will bring 1,000 ounces to the market next month. a. What will be total revenues if the fi

### Reconciling analyst's views

You are a junior analyst at a well-known mutual fund company (i.e., a buy-side analyst) and are assigned to value, say, the stock of General Electric. You look around at what famous analysts have written and you find one who says that the stock is overpriced at its current price (roughly \$42/ share as of October 9, 2007). Anot

### Payback Period for Jenark Inc

Jenark Inc. project has the following cash follow: What would be the payback period? Year CF 0 (50,000) 1 (20,000) 2 60,000 3 100,000 4

### The Stafford Coal Seam

The Stafford coal seam contains 25,000 tons of coal. It costs \$100 per ton to extract the coal and deliver it to the market. (This is a constant marginal cost). The demand for coal can be represented by the following inverse demand equation: P = 600 - 0.02*Q. a. If you were only concerned with this period, what would the o

### UTC: Evaluate The New Membership Plan and Fee Structure

Required: Your consulting firm has been hired to help UTC evaluate its new fee structure. Write a letter to the club's president answering the following questions. 1. Will Urban Tennis Club's new membership plan and fee structure improve its ability to plan its cash receipts? Explain your answer. 2. Urban Tennis C

### Bonds

John Wilson is a conservative investor who has asked your advice about two bonds he is considering. One is seasoned issue of the Capri Fashion Company that was first sold 22 years ago at a face value of \$1000, with a 25-year term, paying 6%. The other is a new 30-year issue of the Gantry Elevator Company that is coming out now a

### Finance Questions - The XYZ Electric Company

Total Assets: \$12,500,000 Total Liabilities: \$8,500,000 Common Shares Outstanding: 200,000 Preferred Shares Outstanding: 50,000 Common Stock Par Value: \$1 Preferred Stock Par Value: \$50 Common Stock Dividends: \$200,000 Preferred Stock Dividends: \$150,000 Earnings After Taxes: \$500,000 What is the EPS

### Detailed Explanation To Current Stock Price

The Zumwalt Company is expected to pay a dividend of \$2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the current stock price? a. \$42.25 b. \$43.

### A financial analysis of Krispy Kreme Donuts

In general, do you expect analysts' forecasts for a company like KKD to be optimistic, pessimistic or unbiased? Why?

### The spread in the annual prices of stocks selling for under \$10

I have the following problem to figure out and I am completely lost: The spread in the annual prices of stocks selling for under \$10 and the spread in prices of those selling for over \$60 are to be compared. The mean price of the stocks selling for under \$10 is \$5.25 and the standard deviation \$1.52. The mean price of those

### Wilcox Co. is considering the following alternative financing plans

Wilcox Co. is considering the following alternative financing plans Plan 1 Plan 2 issue 12% bonds (at face value) \$1,000,000 \$500,000 issue preferred \$2 stock,\$10 per share ----