As a tool for risk analysis; what are the advantages and disadvantages of sensitivity analysis?
What types of utility curves (increasing, decreasing, or constant marginal utility of wealth) are generally associated with each of the following attitudes toward risk: (a) risk-averse, (b) risk-neutral, and (c) risk-seeking?
What weakness of the standard deviation is overcome through the use of the coefficient of variation?
Dividend and Capital Gain Yield A stock with a current price of $25 / share pays a current annual dividend of $2 which is expected to increase by 4% per year. What is the stock's capitalization rate?
Gearworks, Inc, manufactures parts for industrial machinery. The manufacturing process requires a variety of machines that grind, heat treat, and polish steel into various shapes. Three different product lines are produced using a traditional process-oriented plant layout as follows: A. Discuss the differences in traditional
Bottleneck identification and management at Perma-Clear Glass Company. Perma-clear Glass Company was founded in 1980 by Rob Samson and enjoyed rapid growth as demand for new construction materials exceeded supply. The company became efficient at converting large sheets of glass into various smaller dimensions demanded by resi
A stock just paid a dividend of 2.00$. Due to the introduction of a proprietary product, the dividend growth rate is expected to be 30% for the next two years, 15% for the years 3 and 4, and then return to a constant growth rate assumption of 4 percent thereafter. The required return on the stock is 18 percent. Calculate
California Clinics, an investor-owned chain of ambulatory care clinics, just paid a dividend of $2 per share. The firm's dividend is expected to grow at a constant rate of 5% per year, and investors require a 15 % rate of return on the stock. 1. What is the stock's value? 2. Suppose the riskiness of the stock d
Using data in chart 6-11 calculate a moving average forecast for months 4 through 12 using weights of 3, 5,9 What is the MAD for this forecast? Using data in chart 6-11 calculate a 3-month moving average forecast for month 12. Time period actual rates $000 1 $445 2 478 3 525 4 660 5 570 6 600 7 632
Now, if Zebra's average cost (expenses) were $13.13 (per case) and the Distributors (wholesale) work on a 23% margin and the retailers work on a 20% margin; what would the income per case be for Zebra beer at the following three retails? Please check your answers to the following: 1. $4.99 per 6 pk.
Assume RMH is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?
21. You buy $5,000 par value of U.S. government 10 1/4s09 bonds at a price of 99 seventy-three days into the interest period. If you pay a commission to your broker of $40, how much does the trade cost you, including accrued interest?
1) I am a man trying to get muscular; please help me write about how I'm going to get in shape to be muscular in the next two years by working on my arms, legs and stomach. Remember I am male. How am I going to get muscular? What it takes with hard work? 2) I need permanent government job in the next 2 years. How am I going
A firm issued a preferred stock which matures in 30 years and carries a maturity value of $45. The dividend is $4 per year over the 30 year period. The current market discount rate for this stock is 8%. What is the value of the preferred share?
A firm's current investment opportunity schedule and the weighted marginal cost of capital schedule are shown below: Investment Opportunity IRR Initial Investment Schedule A 15% $200,000 B
Risk Return (FAQ) Stock market, market risk. Is it true the Stock Market is a no-win situation? What is market risk? How can I reduce my risk? What is risk -return trade off?
Describes the three forms of an organization: sole proprietorship, a partnership and a corporation. Gives advantages and disadvantages.
Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What are the expected return and standard deviation of a portfolio invested 30% in Stock A and 70% in Stock B?
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of the year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, r, is 15%. What is the value per share of the company's stock?
You are considering an investment in the common stock of Crisp's Cookware. The stock is expected to pay a dividend of $2 a share at the end of the year (D1 = $2.00). The stock has a beta equal to 0.9. The risk-free rate is 5.6%, and the market risk premium is 6%. The stock's dividend is expected to grow at some constant rate
5. A company currently pays a dividend of $2 per share, Do = $2. It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then the dividend will grow at a constant rate of 7% thereafter. The company's stock has a beta equal to 1.2, the risk-free rate is 7.5%, and the market risk pre
Accounting: Concepts & Applications, by Albrecht. Problem: Chapter 15: Discussion question How can out-of-pocket costs and opportunity costs be applied to your personal financial decisions?
Which one of the following is an example of a sunk cost? 1. $1500 of lost sales because an item was out of stock 2. $1200 paid to repair a machine last year 3. $20000 project that must be forfeited if another project is accepted 4. $4500 reduction in current dress sales if a store starts selling coats 5. $1800 increase in
Here is a condensed version of your firm's balance sheet: Total Liabilities $30, 000, 000 Preferred Stock 10, 000, 000 Common Stock 60, 000, 000 Total Assets $100, 000, 000 Total Liabilities & Equity $100, 000, 000 If your firm's aftertax cost of debt is 6%, the cost of preferred stock is 10%, and the cost of com
Suppose the RiskFree Rate is 8%, the Expected Return this year on the S&P 500 stock market index is 13%, and the stock of Joe's Junkyard has a Beta of 1.4. Given these conditions what is the required rate of return for Joe's stock?
To raise money to finance the capital budget projects you've been evaluating, your firm plans to borrow money at an interest rate of 14%, before-tax. If your firm's effective tax rate is 40%, what is the aftertax cost in percent of the new loan?
If you constructed a set of pro forma financial statements for 2005 and found that projected Total Assets exceeded projected Total Liabilities and Equity by $11,250, you would know that: a. your forecasting method is inaccurate b. your forecasting assumptions or calculations must be in error, because projected Assets
Consider the following condensed Income Statement: 2004 Sales $8,000,000 COGS 6,500,000 Gross Profit 1,500,000 Sales growth in 2005 is expected to be 15% If COGS is assumed to vary directly with sales, then Gross Profit for 2005 will be:
Bernie and Pam Britten are a young married couple beginning careers and establishing a household. They will each make about $50,000 next year and will have accumulated about $40,000 to invest. They now rent an apartment but are considering purchasing a condominium for $100,000. If they do, a down payment of $10,000 will be requi
Please help with the following problem. A large furniture store is considering adding appliances to its sales. Which of the following should be considered to purchase the appliance inventory? 1. utilizing the credit offered by a supplier to purchase the appliance inventory 2. benefiting from increased furniture sales to