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Computing the Market Value of a Bond

Heinz Corporation bonds carry a coupon of 8% and will mature in 5 years at $1,000. Newly issued 5-year bonds with similar characteristics are yielding 4%. Calculate today's market price of the Heinz bond. Compute your answer, submit all your work, and then answer the following questions. 14. What is the discount rate you used

Which of the following is true regarding float?

A. Checks written by a firm generate collection float B. checks received by firm create disbursement float C. In general, a firm's disbursement activities and its collection activities generate float D. A firms float is negative when its available balance equals its book balance E. A firm cannot exploit float by using the ca

Intrinsic value of industry

The Home Appliance Industry had free cash flow to equity (FCFE) of $87 for the year ending December 31, 2007. The industry anticipates a growth rate of 8% for the next three years due to favorable economic conditions. However the growth rate is expected to decline to 4% after three years and remain at that level indefinetly. The

Earnings multiplier model to calculate expected price

You are provided the following information about Javier Corporation. Sales for the year 2004 were $500,000: the Net Profit Margin (NPM) was 15%. Analysts project sales to grow by 12% next year (that is 2005).However because of more competition, the NPM is expected to decline by 10% for the year 2004. The expected P/E multiple fo

Purchase of Fixed Assets for Cash

1. Consider the current asset accounts (cash, accounts, receivable and inventory) individually and as a group. What impact will the following transactions have on each account and current assets in total (Increase, Decrease, No change)? (Hint: Each transaction has two sides that are equal in amount but opposite in sign. Consider

Cost of bank loan

15.9 Cost of bank loan Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. (Note: Assume a 365-day year.) a. How much interest (in dollars) will the firm pay on the 90-day loan? b. Find the effective 90-day rate on the loan. c. Annualize your result in p

Personal Finance Investing Bonds

Summarize the concept of investing in bonds. include a definition of what kind of investment a bond is, how bonds are bought and sold, how bond prices are affected by interest rate fluctuations, and what type of investors are best suited for investing in bonds, and what expectations they should have. Be sure to include a brief a

Personal Finance

Summarize the concept of investing in stocks. Include a definition of what kind of investment the purchase of a stock is, how stocks are bought and sold in primary and secondary markets, what determines prices, and what type of investors are best suited for stock market investing. Be sure to include a description of how the stoc

Biases Situations Associates

Which one of the following biases best applies to this situation where one associates A with being better than B? An article just appeared in a respected journal that attributes behavioral biases to mispricing of different classes of common stock. For instance, the authors suggest that if class B shares of common stock have b


Company ABC has expected sales of 12,000 units this year, an ordering cost of $6 per order and carrying costs of $1.60 per unit. What is the average inventory? 310 units 300 units 150 units 155 units None of the above 9.The operating cycle begins when _____ and ends when___

Valuation Process and Acquisition Process

There is both an Acquisition Process and Valuation Process that an organization will undertake. Please Describe the valuation process in detail and secondly, compare and contrast the business valuation approaches. Identify the potential strengths and weaknesses that may exist for each approach

Stock Value and Predicted Return: Tom and Joe's Company

On January 1st, Joe's Company began to show serious interest in Toms Company. Joe's was trading at $52/ share with a beta of 1.02 and Tom's stock was trading at $28/ share with a Beta of .93. The S&P 500 had a return of 14.875 as of December 31st. On March 31st, Joe's was trading $50/ share and Tom's was trading for $31/ shar

Cost Cutting Measures

After reviewing all the cost cutting measures I anticipate I could cut back and save approximately $15000 a year if I put those measures into practice. Some of the cost cutting measures would not be hard to do because I do not smoke and I make my own coffee at home. However, I do love my shoes and I love to pamper myself with

Current & Future Trends in Financial Services

Please help with the following problem. SUBJECT: The Future of the Financial System and Trends in the Money and Capital Markets QUESTION: If you were managing a small bank or insurance agency in your local community, what current and future trends in financial services and institutions would likely have the greatest impac

Finanace - Impact on Shareholders

Please help with the following problem. Currently a firm has $1 million in 10% debt. The firm also has 50,000 shares outstanding that sell for $40 each. The firm used the $1.0 million to repurchase stock, as they previously were an all equity firm. Three states of the economy are possible: a slump under which the firm would

Calculating Net investment: Airstat Example

Airstat is replacing an old stamping line that cost $80,000 five years ago, with a new, more efficient machine that will cost $225,000. Shipping and installation will cost an additional $20,000. The old machine has a book value of $15,000 but will be sold as scrap for $5,000. The new machine will be depreciated with a 7 year lif

Growth rates and common stock valuation

Business has been good for Keystone Control Systems, as indicated by the four-year growth in earnings per share. The earnings have grown from $1.00 to $1.63. a. Determine the compound annual rate of growth in earnings (n = 4) b. Based on the growth rate determined in part a, project earnings for next year. c. Assume t

Mortgage Amortization

On September 30, 2009, Dixon Inc. incurs a 30-year $700,000 mortgage liability in conjunction with its purchase of a candy factory. This mortgage is payable in equal monthly installments of $3,758 which include interest computed at an annual rate of 5%. The first monthly payment is made on October 31, 2009. This mortgage is f

Financial Management Account Payable Increases

Airstat is replacing an old stamping line that cost $80,000 five years ago, with a new, more efficient machine that will cost $225,000. Shipping and installation will cost an additional $20,000. The old machine has a book value of $15,000 but will be sold as scrap for $5,000. The new machine will be depreciated with a 7 year lif

Contribution Margin for Rhetorix, Inc.

Rhetorix, Inc. produces stereo speakers.The selling price per pair of speakers is $900. The variable cost of production is $300 and the fixed cost per month is $60,000. Required a. Calculate the contribution margin associated with a pair of speakers. b. In August, the company sold six more pairs of speakers than plann

Article Summary

Summarize the article below. 652 words ----------------------------- Copyright Thomson Tax and Accounting d/b/a RIA Jan/Feb 2007 [Headnote] With much of the Sarbanes-Oxley compliance effort now behind them, chief financial officers are using a suite of methodologies that are comprised under business performance mana


If you were analyzing a replacement project and suddenly learned that the old equipment could be sold for $1,000 rather than $400, would this new information make the replacement look better or worse? Explain.


A company produces two products: Product A and Product B. Each product must go through two processes. Each Product A produced requires 2 hours in Process 1 and 5 hours in Process 2. Each Product B produced requires 6 hours in Process 1 and 3 hours in Process 2. There are 80 hours of capacity available each week in each process.


10. Jo's Coffee Company owns two stores in Arizona. Their corporate office is considering eliminating the one of their stores due to declining sales. Segmented contribution income statements are as follows and common fixed costs are allocated on the basis of sales. West East Total