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Finance

Calculating the Break-Even Point

In very general terms, how do we calculate breakeven? How do we have to adjust our approach to accommodate breakeven for a firm selling multiple products?

Operating Leverage for start up business

If you were running a start up business would you prefer to have a business with high or low operating leverage? Alternatively, if you were running a well-established profitable business, which would you prefer? Support your view.

Bonds: Calculate the value of a $1,000 bond

Calculate the value of a $1,000 bond which has 10 years until maturity and pays quarterly interest at an annual coupon rate of 12%. The required return on similar-risk bonds is 20%. A. $845.66 B $2,201.08 C $835.45 D $656.77

Airline Costs for Promotional Campaign

An airline is considering a new promotional campaign to attract college students by offering them the right to fly stand-by at low prices when seats are not otherwise filled. List several examples of relevant and irrelevant costs from the airlineâ??s point of view

EAR for two banks, make a recommendation to the best option

Calculate the EAR for two banks, make a recommendation to the best option and compute payments for the selected loan. Task 1: Assessing loan options for AirJet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate

Present Value and Stream of Cash Flows

Find the present value of the following stream of cash flows, assuming that the firm's opportunity cost is 9%? Yr. Amount 1-5 $10,000/yr. 6-10 $16,000/yr. A. $10,972 B. $13,252 C. $79,348 D. $141,588

Financial Relationships

See the attached file. Financial Relationships Using the Dell and Delta's Financial Statements Paper, write a summary (300 words) comparing Delta and Dell most recent fiscal years based upon the following: A. Briefly discuss the inter-relationships noted among the data provided by each of the statements. http://finan

External financing to finance a sales increase

Rodeo Supply Company is planning to increase its sales by 20% next year. The sales increase will require a total additional investment in receivables, inventory, and fixed assets of $750,000. Increases in liabilities such as accounts payable and other accruals will supply $175,000 of financing. Rodeo also expects total profits o

Wealth Creation for Employees

Many firms have encouraged their employees to own stock in the company they work for. How would you explain to the employee the importance of his job in increasing the stock price? Assume that this employee is an operations person meeting the customer.

effects of compounding

The Wintergreens are planning ahead for their son's education. He is eight years old now and will start college in 10 years. The couple can deposit $35,000 today with one of the three local banks. Bank A pays 8.25% with annual compounding; Bank B pays 8.125% with quarterly compounding; and Bank C pays 8% with monthly compoundi

The Capitol Asset Pricing Model

Using Yahoo! Finance find the value of beta for your reference company (Apple, INC.) a. What is the estimated beta coefficient of your company? What does this beta mean in terms of your choice to include this company in your overall portfolio? b. Given the beta of your company, the present yield to maturity on U.S. gov

Equity Futures

One specialized type of security is called an equity futures. This is a contract that guarantees you a share of a particular company to be delivered to you not today, but sometime in the future, at a price that is determined by the market right now. This price is usually called the futures price of the stock (note - the term is

Different methods to value stock for Larry, Moe and Curley

Larry, Moe, and Curley are brothers. They're all serious investors, but each has a different approach to valuing stocks. Larry, the oldest, likes to use a 1-year holding period to value common shares. Moe, the middle brother, likes to use multiyear holding periods. Curley, the youngest of the three, prefers the dividend valuatio

Hartford Corporation: When is the optimal time to abandon the asset?

An asset costs $100,000 and will generate cash benefits of $30,000 at the end of each year for 5 years for Hartford Corporation. Salvage value are $50,000, $40,000, and $0 at the end of year 3, year 4, and year 5 respectively. The required return is 10%. Assuming that this asset can be replicated, when is the optimal time to aba

Operating Break Even Point Analysis

NEED HELP WITH THIS PRACTICE PROBLEM. Molly Jasper and her sister, Caitlin Peters, got into the novelties business almost by accident. Molly, a talented sculptor, often made little figurines as gifts for friends. Occasionally, she and Caitlin would set up a booth at a craft fair and sell a few of the figurines along with jewel

Investment problems

1. Invest $200,000 in a portfolio consisting of 4 stocks. 2. Conduct an Internet search to find the return of each stock in the previous 52 weeks and its beta. 3. Calculate the return of the portfolio and its beta for the previous year. 4. Write about 300 words report on the formation of the portfolio and the rationale for th

Basic Finance

True or False questions. 1. Dividends reinvested are not subject to federal income tax. 2. The value of a stock depends in part on future dividends and on the investors' required return 3. The value of a stock should increase if investors' require rate of return declines. 4. Valuation of stock depends on past dividends. 5.

Financial Valuation

Assume your $200,000 home appreciates in value at a rate of 5% per year. (use annual compounding) Assume you take out an 80% mortgage (loan to original value) at 6% interest rate for 30 years. Therefore, you provide 20% or $40,000 equity in the home at the outset of the mortgage. What is the amount of equity (the the

Risk Standard Deviation for Two-Security Portfolio

1. Assume ABC are all positively correlated. A fourth stock is being considered for addition to the portfolio, either stock D or stock E. Both D and E have expected returns of 12%. If stock D is positively correlated with ABC and E is negatively correlated with ABC, which stock should be added to the portfolio? Why? 2. As

Growing Investment Amounts

1. I invested $15,000 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? 2. To what amount would the investment grow in 3 years if the fund earns 8% compounded semiannually? 3. I need $25,000 in 4 years. What amount must be invested today if his investment earns 12% comp

Bonds

Jia Hua Enterprises wants to issue sixty 20-year, $1,000 par value, zero-coupon bonds. If each bond is priced to yield 7% , how much will Jia Hua receive ( ignoring issuance costs) when the bonds are first sold? A. $18,880 B $12,393 C. $20,000 D. $15,505 E $11,212

Rate of return

Question 10 What's the rate of return you would earn if you paid $950 for a perpetuity that pays $85 per year? 6.52% 7.25% 8.05% 8.95% 9.84% Question 11 What is the future value of $1,500 after 5 years if the appropriate interest rate is 6%, c

Personal Financial Planning: Stocks

A. John inherited $2 million in an IRA, which comprised of the entire estate from his father. He promptly withdrew the funds. The appropriate marginal tax rate was 28 percent. Was there any tax due? YES If so, how much? $2,000,000 *.28=$5,600,000 b. Assume it was $2 million in stocks held in a personal account. Would

Finance Questions

1. The three key elements of investment policy are the return, risk, and constraints. Explain why they are important. 2. Would these three (3) elements have different priorities if referring to an individual investor versus a mutual fund? How about a young adult versus an adult who is retired from his/her working years?

Financial Comparison Analysis for managers of Delta Airlines and Dell Computers

Review of Financial Statements-Delta Airlines and Dell Computers You are attending a managerial meeting, within your publicly held company, to hear a proposal for a possible corporate merger with a competitor. After a brief discussion, the Chief Financial Officer (CFO) conducts a slide presentation showing the competitor's f

Managers

Since managers are agents of stockholders, it is their professional obligation to make decisions to maximize the wealth of existing stockholders. Therefore, the interest of other stakeholders, such as customers, suppliers, employees, lenders, communities, as well as the society at large should not be a consideration in the decis

Integral Funding and Attendance in the Conference

Consider the following: assume that the company has as an integral funding strategy to their strategic plan that they will participate in an IPO in approximately twenty four months. Will this add to or detract from the necessity of attending the conference?

Common stock/ returns

Please see attached file. 1) The following are the returns for 1980 to 1986 on 5 types of capital-market instruments: common stocks, small-capitalization stocks, long-term corporate bonds, long-term U.S. government bonds, and U.S. Treasury Bills. You can use a spreadsheet program to make calculations. A. Calculate the ave

Income Stocks versus Growth Stocks

1. Describe and comment on the total return concept. 2. Would the concept of Total Return be different between Income Stocks versus Growth Stocks? How about with Common Stocks versus Preferred Stocks versus Corporate Bonds?