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Decomposition equation

18 Which of the following would least likely be considered as signaling a potential problem regarding the "quality of earnings" for a firm? a. the firm has experienced a significant increase in earnings relative to the industry overall b. the firm's accounts receivable account is increasing at a rate faster than the firm's inc

Assume wealth

2 If market interest rates are currently 15% and your investment provides you this 15% return, does that imply that you are 15% more wealthy (after vs before this investment return)? Assume wealth is defined as the ability to consume (purchase) goods or services. a. Yes, because with inflation you do indeed have 15% more money


Need help with attached problems. FIN 450 Week 7 Chapter 21 Questions 11. What do 12b-1 fees pay and what is the maximum amount that these fees can be? 15. What regulatory changes have been adopted or are being considered to deal with abuses in the mutual fund industry? Quantitative Problems On January 1, a mut

Managerial Finance Accounting True/False Questions

1. Setting discount rates too high due to fear of future rates tends to bias decisions against making strategic investments. True False 2. An accountant who works as a managerial accountant usually produces accounting information for one specific company. True False 3. Managerial accounting information must be

Investment Fund

For questions 67-68, consider the following information for the BU Scholarship Investment Fund. The total investment in the fund is $1 million. STOCK INVESTMENT BETA EXPECTED RETURN A $200,000 1.5 25% B $300,000 -0.5 4% C $500,

Stock's expected price today

43 Regardless of your work above, assume that D0, which was just paid, = $1.00, D1= $1.20, D2 = = $1.40, D3 = $1.55, D4 = $2.00, D5 = $2.13, D6 = $2.27, and P3 = $80.00. What should be the stock's expected price today, (i.e.. P0)? I encourage you to draw a time line clearly indicating the situation. Again, assume the require

Contingent payoff

31 The simple corporation has an outstanding debt obligation (total of principle and interest due) to the Complex Corporation of $250 (Assume this is Simple's only debt.). It is year end and the total cash flow of Simple from all sources is $325. The contingent payoff to the debt and equity holders of Simple Corporation is: a

Share prices

Apex Inc., is a biotechnology firm that is about to announce the results of its clinical trials of a potential new cancer drug. If the trials were successful, apnex stock will be worth $70 per share. If the trials were unsuccessful, Apnex stock will be worth $18 per share. Suppose that the morning before the announcement is s

I need help preparing a cash budget

Prepare a cash budget for XYZ Company for the first three months of 2004 based on the following information: Month Estimated Sales Estimated Factory Overhead Estimated Selling, General and Admin Expenses (SG&A) December $ 2,800,000 $ 320,000 $ 625,000 January 4,000,000 325,000 637,500 February 5,600,000 335,000 642,50

Ratios for three companies using recent five year averages

Compute a recent five-years average of the following ratios for three companies of your choice (attempt to select diverse firms) : A-Retention rate. B-Net profit margin C-Equity turnover D-Total asset turnover E-Total assets/equity Based on these rations, explain which firm should have the highest growth rate of earnin

Finance MCQ: Common, preferred stock, equity capital, cumulative dividend

1.Key differences between common stock and bonds include all of the following EXCEPT 1. bonds have a stated maturity but stock does not. 2. common stockholders have a junior claim on assets and income relative to bondholders. 3. common stockholders have a voice in management; bondholders do not. 4. dividends paid to bondho

Calculating firm value for overtime corporations

Problem: Overtime Corporation expects an EBIT of $35,000 every year forever. Overtime Corporation currently has no debt, and its cost of equity is 14 percent. The company can borrow at 8 percent. If the corporate tax rate is 38 percent, what is the value of firm? What will the value be if the company converts to 50 percent debt

Questions involving a company's finances

The basket of goodies costs $300, and is expected to cost $515 next year. The real rate of interest is 2%. Our company, Basic, Inc. has a bond risk premium of 2.5% and a preferred stock risk premium of 3%. The Market Risk Premium is 4% and Basic has a Beta of 1.25. Basic's target capital structure is 40% debt, 50% common s

Enterprise Market Value of Hp

A. General Mills, Inc., the large manufacturer of packaged foods, reported the following in its annual report for the year ending May 25, 2008 (in millions): Short-term borrowing $ 442.0 Long-term debt 4,348.7 Stockholders' equity 6,215.8 The short-term borrowing and long-term debt are carried on the balance sheet at app

Grotius Corporation Patent Amortization

A patent was acquired by Grotius Corporation on January 1, 2000, at a cost of $72,000. The useful life of the patent was estimated to be 10 years. At the beginning of 2004, Grotius spent $9,000 in successfully prosecuting an attempted infringement of the patent. At the beginning of 2005, Grotius purchased a patent for $25,000 th

Bank Loan

I need assistance with the following: The net income of Simon and Hobbs, a department store, decreased sharply during 2000. Carol Simon, owner of the store, anticipates the need for a bank loan in 2001. Late in 2000, Simon instructs the store's accountant to record a $10,000 sale of furniture to the Simon family, even though

Finance Problems: Investments

1) Stock A has the following probability distribution of expected returns. What is Stock A's expected rate of return and standard deviation? . Probability________Rate of Return 0.1.............................-15% 0.2.................................0 0.4................................5 0.2............................10

Pension amortization-Calculating Expense

Hello, I do not seem to find my notes on the years-of-service method in calculating and my book is not explaining it well enough. Can someone show me how to do this? On January 1, 2003, Sunny Incorporated amended its pension plan which caused an increase of $4,800,000 in its projected benefit obligation. The company has 40

Cash Budget - The Sharpe Corporation

I need assistance on completing this example. (Cash budget) The Sharpe Corporation's projected sales for the first eight months of 2004 are as follows: January $ 90,000 May $300,000 February 120,000 June 270,000 March 135,000 July 225,000 April 240,000 August 150,000 Of Sharpe's sales, 10 percent is for cash, another 60

Assessing Financial Markets

1. The U.S. Treasury issues bills, notes, and bonds. How do these three securities differ? 2. A call provision on a bond allows the issuer to redeem the bond at will. Investors do not like call provisions and so require higher interest on callable bonds. Why do issuers continue to issue callable bonds anyway? EBay went pub

Monthly Percentage Price Change for Four Market Indexes

The following are monthly percentage price changes for four market indexes MONTH DJIA S&P500 RUSSELL2000 NIKKEI 1 0.03 0.02 0.04 0.04 2 0.07 0.06 0.1 -0.02 3 -0.02 -0.01 -0.04 0.07 4 0.01 0.03 0.03 0.02 5 0.05 0.04 0.11 0.02 6 -0.06 -0.04 -0.08 0.0

Business Finance

1.Nico bought 100 shares of Cisco Systems stock for $24.00 per share on January 1, 2002. He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized return du


1.The financial leverage multiplier is an indicator of a corporation utilizing 1.long-term debt. debt. assets. 4.operating leverage. 2.The analyst should be careful when conducting ratio analysis to ensure that 1.the same accounting procedures were used. 2.all of these 3.the d

Assessing Bankruptcy Laws

I do a lot of work with smaller companies that are in severe financial difficulty. I constantly hear comments, from others, that bankruptcy is a "dodge" and it allows less than honest business owners to scam their creditors and emerge "clean". Do you think that the bankruptcy laws are necessary, are fair and are good for the