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Two robotic machines are available to make the cell phone

Your company, which is financed entirely with common equity, plans to manufacture a new product, a cell phone that can be worn like a wristwatch. Two robotic machines are available to make the phone, Machine A and Machine B. The price per phone will be $250.00 regardless of which machine is used to make it. The fixed and vari


You have been approved for a $70,000 loan toward the purchase of a new home at 10% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume you pay yearly. $7425 $8690 $5740 None of the above First Choice Bank pays 9% APR compound

Calculating expected return, risk-free rate and more...

1. A stock has an expected return of 13 percent, its beta is 0.55, and the risk-free rate is 7.15 percent. What must the expected return on the market be? 2. You own a portfolio equally invested in a risk free asset and two stocks. If one of the stocks has a beta of 1 and the total portfolio is equally as risky as the market,

Incremental analysis - Sally's spaghetti sauce

Can you help me get started with this assignment? ****************** Production Jars of sauce Ingredient cost (variable) 16,000 Labor cost (variable) 9,000 Rent (fixed) 4,000 Depreciation (fixed) 6,000 Other (fixed) 1,000 Total 36,000 Consider the production cost information for Sal

Company fare after his inevitable departure

In 1965, Warren Buffett acquired control of a New England textile business called Berkshire Hathaway for about $10 a share. Today the stock sells for around $135,000 a share and Mr. Buffett is the second richest person in America. The stock has never paid a dividend. How does this amazing success fit the theory that the value of

Capital Budgeting

1. Front up cost of plant is $100 million. Profits of $30million at the end of every year. Calculate the NPV if the cost of capital is 8%. Should you take the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. 2. Upfront costs

Leverage and Break even

I have attached a file of the problems. Solve and submit problem 1. Be sure to show your work. 1. Carlsbad Machine Company is considering an expansion of its facilities. Its current income statement is as follows: Carlsbad Machine Company Income Statement Sales $4,000,000 Less: Variable expense (50% of sales) 2,000,

Bonds & Stock Value

Question 1 Blue Water Designs is preparing a bond offering with a 7 percent coupon rate and a face value of $1,000. The bonds will be repaid in 5 years. The company plans to issue the bonds at par value and pay interest semiannually. Given this, which one of the following statements is correct? The bonds will be sold at a

Perpetual system

Cash 8400 Inventory 2000 Common stock 8000 Retained Earnings 2400 During 2012, D & L Enterprises experienced the following events: 1. purchased inventory costing 5600 on account from Smoot Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of 500 were paid in cash. 2. Returne

Comprehensive accounting cycle problem

The following trial balance was prepared for Gifts, Etc. on Dec. 31, 2010, after the closing entries were posted. debit credit cash 110,000 Acct. Rec. 136,000 Allowance for doubtful accts.

Financial Management Schedules

10. (This problem combines material from Chapters 21 and 22.) The financial manager has determined the following schedules for the cost of funds: Cost of Debt Ratio Cost of Debt Equity 0% 5% 13% 1

Systematic and Unsystematic Risks

I need to know whether each of the following is mostly a systematic or unsystematic risk factor. a. Bernie Ebbers resigns unexpectedly as CEO of MCI Corporation b. Disney receives an unsolicited bid from General Electric. c. The United States reports an unexpected increase in the consumer confidence index level. d. Apple

Financial Management of U.S. Companies

Which of the following statements is true regarding the goal of financial management? A U.S. company considering international operations will have a different goal than a company that only conducts operations in the U.S. The firm's structure (i.e. corporation, sole proprietorship, partnership) is not relevant to

Abnormal rates of return

Problem1: Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk): Stock Rit Rmt B 11.5%

Oakton River Bridge Case Study (Integer Programing Model)

Oakton River Bridge Case study The Oakton River had long been considered an impediment to the development of a certain medium sized metropolitan area in the southeast. Lying to the east of the city, the river made it difficult for people living on its faster bank to commute to jobs in and around the city and to take advantage

Finance Allocation

Assume that $2 mil of Financial Services are related to billing and managerial reporting and $1 mil are related to payroll and personnel management activities. a. Devise and implement a cost allocation scheme that recognizes that Financial Services has two widely different functions? b. Is there any additional information

Finance: Cost Allocation for St. Mary's Hospital

Assume that the hospital uses salary dollar as the cost driver for the General Administration, housekeeping labor hours as the cost driver for Facilities, and patient services revenue as the cost driver for Financial Services. (The majority of the costs of the Facilities Department are devoted to housekeeping services) a. Wha

How to calculate the expected return on an investment?

The expected return for an investment is 30%. If we know the following information about the return distribution of the investment, what return will the investment produce if the economic climate is average? Climate Return Probability Poor 20% 0.30 Average

Finance: Practice exam questions

1. The primary users of external financial reports are a. Those who direct day to day operations of a business enterprise b. Individuals who have an economic interest in the firm but who are not part of management c. Managers of an enterprise who plan, implement plans, and control costs d. None of the above

Investment Analysis

You have $40,000 to invest on Sophie Shoes, a stock selling for $80 a share. The intial margin requirement is 60 percent. Ignoring taxes and commissions, show in detail the impact on you rate of return if the stock rises to $100 a share and if its declines to $40 a share assuming: (a) you pay cash for the stock and (b) you buy i

Would like someone to explain how to estimate stock price volatility and apply it to this question. Question: Suppose that observations on a stock price (in dollars) at the end of each of 15 consecutive weeks are as follows: 30.2, 32.0, 31.1, 30.1, 30.2, 30.3, 30.6, 33.0, 32.9, 33.0, 33.5, 33.5, 33.7, 33.5, 33.2 Estimate the stock price volatility. What is the standard error of your estimate

Would like someone to explain how to estimate stock price volatility and apply it to this question. Question: Suppose that observations on a stock price (in dollars) at the end of each of 15 consecutive weeks are as follows: 30.2, 32.0, 31.1, 30.1, 30.2, 30.3, 30.6, 33.0, 32.9, 33.0, 33.5, 33.5, 33.7, 33.5, 33.2 Esti

Finance Problems P1-1A, P1-2A, BYP1-4

P1-1A. Barone's Repair Inc. was started on May 1. A summary of May transactions is presented below. 1. Stockholders invested $10,000 cash to start the repair company. 2. Purchased equipment for $5,000 cash. 3. Paid $400 cash for May office rent. 4. Paid $500 cash for supplies. 5. Incurred $250 of advertising costs in the


Mr. Smith is in the 30% tax bracket. He earns $50,000 per year. What is his tax bracket after-tax income? 50000 x 0.60 = (1-0.40 = 0.60) 50000 x 0.60 = 30000.00 Mr. Smith has two investment opportunities: a. Megacorp, a for-profit healthcare company offering a bond at 8% b. Good Neighborcare, a not for profit h

Evaluating Alternatives for Raising Funds

ORNE Corporation plans to raise $2 million to pay off its existing short-term bank loan of $600,000 and to increase total assets by $1,400,000. The bank loan bears an interest rate of 10 percent. The company's president owns 57.5% percent of the 1,000,000 shares of common stock and wishes to maintain control of the company. Th