You have estimated the following probability distributions of expected future returns for Stocks X and Y: Stock X Stock Y pj rj rj x pj pj rj rj x pj 0.1 -10% -0.01 0.2 2% 0.004 0.2 10% 0.02 0.2 7% 0.014 0.4 15% 0.06 0.3 12% 0.036 0.2 20% 0.04 0.2 15% 0.03 0.1 40% 0.04 0.1 16% 0.016 15% 10%
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Describe why accounts involving significant management estimation are generally viewed as inherently risky.
Egyptian Ingot is the Egyptian subsidiary of TransMediterranean Aluminum, a British multinational that fashions automobile engine blocks from aluminum. TransMediterranean's home currency is the British pound. Egyptian Ingot's December 31 balance sheet follows. At the date of this balance sheet, the exchange rate between Egyptia
Linden Industry $ % $ % Sales 6000 100.0 64000 100.0 COGS 3200 53.0 33650 53.0 Gross Margin 2800 47.0 30350 47.0 Expenses: Sales & Marketing 430 7.2 3850 6.0 Engineering 225 3.8 2650 4.1 Finance &
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Can you describe the three forms of the efficient-market hypothesis? Which form are you inclined to believe the market is actually operating in? Why? What advantages do financial leases offer?
Par value: a. is greater than market value. b. is less than market value. c. changes in proportion to market d. is not related to market value. 2. Which of the following is a disadvantage of a sole proprietorship? a. Double taxation. b. Excessive regulation. c. Entrenched management. d.
Objective: Determine a value for Shang-wa cash flows Create a pro forma income statement for Shang-wa ( 2005,2006, 2007, 2009 FYE) using the assumptions below create an annual cash flow, and determine the present value of those future cash flows by using a 10% discount rate. Projections: 2005, 2006, 2007, 2008, 2009
Assume a firm is considering a purchase of equipment for $20,000. The equipment is expected to generate net cash inflows of $6,250 for the next five years. The firm has a 10% cost of capital (required return) and is in the 34% marginal tax bracket. Calculate the NPV.
Change in assets = change in debt and change in equity. What does it mean? How does it relate to a company's financial planning? (word count > 75)
What is a break-even point? If an organization's fixed costs increase, what happens to the break-even point? How can the break-even point be lowered? Why is the break-even analysis an important tool for management? When evaluating a company, how might this information be used?
1) In estimating revenues for a business case companies often require a range of results to be evaluated. What are they usually? How does this help in decision making? Give an example from your experience where this might have been useful. 2) We're in a global economy. What are some of the cultural factors you should consi
This file contains a formatted MS Excel spreadsheet that illustrates the use of, and determination for Discontinued Operations.
7. On May 1, Foxtrot Co. prepared a formal agreement to sell Footwear Division. The following additional facts pertain to the transaction: ·The Footwear Division operations and cash flows can be clearly distinguished operationally and for financial reporting purposes from the rest of the company. ·Footwear's assets
In the following 3 scenarios, identify if they represent a diversifiable or an undiversifiable risk. Consider these scenarios in terms of the viewpoint of investors and explain it. The 3 scenarios are: 1. A a large hurricane severely damages a major us city 2. A substantial unexpected drop in the price of oil 3. The CEO o
Joan and Harry Leahy both had income in 2006. Harry made $52500 in wages. Joan has an incorporated small business that paid her a salary of $30000. In addition, the business had profits of $15000, which were paid to the Leahys as dividends. They received $5600 in interest on savings and $350 in interest on a loan made to Harry's
Please assist me with sections 3 (journal entry), 4 (depreciation), 6 (equity) and 7 (cashflows) in the attached document. SECTION III - JOURNAL ENTRIES Ex. 135 Prepare journal entries to record the following transactions entered into by Elway Company: 2006 June 1 Received a $25,000, 12%, 1-year note from Ann Holt
Fred Gowen opened Gowen Retail Sales as a sole proprietorship and recorded the following transactions during his first month in business: (1) Purchased $50000 of fixed assets, putting 10% down and borrowing the remainder. (2) Sold 1000 units of product at an average price of $45 each. Half of the sales were on credit, none o
Myers Implements is attempting to develop and market a new garden tractor. Fixed costs to develop and produce the new tractor are estimated to be $10,000,000 per year. The variable cost to make each tractor has been estimated at $1,800.00. The marketing research department has recommended a price of $4,000.00 per tractor. (a)
Many corporate acquisitions result in losses to the acquiring firms' stockholders. Accordingly, why do firms purchase other corporations? Are they simply paying too much for the acquired corporation? A co-worker asks your opinion. Specifically state the reasons for your argument.
1. Would better internal controls have prevented any of the biggest corporate scandals over the past few years? Give examples and explain. 2. Is it ethical to maintain the minimum required internal controls, or does an organization have a responsibility to provide more than the minimum? Why or why not? 3. If internal contr
True or false In efficient markets the expected return on each stock is the same.
What is the current price of a share of stock for a firm with a $5 million in balance-sheet equity, 500,000 shares of stock outstanding , and a price/book value of 4?
Shock Electronics sells portable heaters for $25 per unit, and the variable cost to produce them is $17. Mr. Amps estimates that the fixed costs are $96,000. a. Compare the break-even points in units. b. Fill in the table below (in dollars) to illustrate that the break-even points has been achieved. Sales: -Fixed Costs
1. UVP preferred stock pays $5.00 in annual dividends. If your required rate of return is 13%, how much will you be willing to pay for one share? 2. A project costs $10,000 and is expected to return after-tax cash flows of $3,000 each year for the next 10 years. This project's payment period is ________. 3. ABC servic
1. Explain how rapidly expending sales can drain the cash resources of a firm. 2. Discuss the relative volatility of short-and long-term interest rates. 3. What is the significance to working capital management of matching sales and productions? 4. How is a cash budget used to help manage current assets? 5. "The most appropr
Gardner Denver, Inc ~ Determine the importance of control programs and effective internal control techniques to the selected organization.
Select a publicly traded organization. Locate the financial section of the organization's most recent annual report. Perform a financial analysis on your selected organization to include liquidity, efficiency, and profitability ratios, asset management, debt management, and market returns. Identify the key strengths and wea
A firm's stock presently sells for $71 per share. The stock just paid a dividend of $2.12. The dividend is anticipated to increase at a constant rate of 5.5% a year. What stock price is anticipated one year from now?
Bob has $70,000 invested in a stock that has a beta of 1.7 and $300,000 invested in a stock that has a beta of 0.7. If these are the only two investments in his portfolio, what is the beta of his portfolio?
The Joe Company is experiencing financial difficulties. Its dividends and earnings are falling at a constant rate of 7% per year. Its stock just paid an annual common stock dividend of $1.50 per share; the stock has a beta of 0.45; the three-month U.S. Treasury bill rate is 4.8%, and the market risk premium is 7%. What's the val