Suppose that you wish to save for your child's college education by opening up an educational IRA. You plan to deposit $100 per month into the IRA for the next 18 years. Assume that you will be able to earn 10%, compounded monthly, on your investment. How much will you have accumulated at the end of 18 years? a. $21,600 b. $54
Which of the following choices is the best example of how a firm can use operating leverage to increase its earnings before interest and taxes? a. Issue new bonds to repurchase common stock. b. Toughen credit standards to improve the collection of accounts receivable. c. Purchase inventory in larger quantities. d. Instal
Which of the following statements is correct? a. The effect of new information about a company on the firm's stock price depends more on how the new information compares to expectations than on the actual announcement itself. b. If an increase in the cost of equity capital occurs when a company announces an increase in its d
Siebling Manufacturing Company's common stock has a beta of .8. If the expected risk-free return is 7% and the market offers a premium of 8% over the risk-free rate, what is the expected return on Siebling's common stock? a. 7.8% b. 13.4% c. 14.4% d. 8.7%
You have invested in a project that has the following payoff schedule: Payoff Probability of Occurrence $40 .15 $50 .20 $60 .30 $70 .30 $80 .05 What is the expected value of the investment's payoff? (Round to the nearest $1) A) $70 B) $60 C) $59 D) $65
You are considering a security with the following possible rates of return: Probability Return (%) 0.20 9.6 0.30 12.0 0.30 14.4 0.20 16.8 Calculate the expected rate of return Calculate the standard deviation of the returns
Which of the following statements is true? a. A bond that has a rating of AA is considered to be a junk bond. b. A bond will sell at a premium if the prevailing required rate of return is less than the bond's coupon rate. c. A zero coupon is a bond that is secured by a lien on real property. d. The legal document that desc
Senbet Ventures is considering starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be $2.50; and fixed costs are estimated at $120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero for the stereo
2. What is the benefit of a short-term performance forecast? How might a manager combine the benefits of both short-term and long-term performance forecasts to develop a more accurate value forecast? 6. Identify the strengths and weaknesses of the Enterprise DCF, Economic Profit, and Multiples approaches to estimating conti
A15. (Stock valuation) Let's say the Mill Due Corporation is expected to pay a dividend of $5.00 per year on its common stock forever into the future. It has no growth prospects whatsoever. If the required return on Mill Due's common stock is 14%, what is a share worth?
1) This company pays a perpetual annual dividend of 2.5% of its par value. Par value is $100 per share. If investors require rate of return on this stock is 15%, what is the value of per share? 2) your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected
What is the present value of the following cash flows at an interest rate of 10% per year? a) $100 recieved five years from now. b) $100 received 60 years from now. c) $100 received each year beginning one year from now and ending 10 years from now. d) $100 received each year from 10 years beginning now. e) $100 each year
Real estate, Inc., has purchased a building for $1 million. the economic life of the building is 30 years and it will be fully depreciated over the 30 years using the straight-line depreciation method. the discount rate is 14% and the coporate tax rate is 35%. assume there is no inflation. what is the minimum lease payment the c
8-1: Does a balance sheet that is dated year-end 2004 reflect only transactions for that year? 8-7: In computing return on assets, how does the age of the assets influence the interpretation of the values? 21-5: What does the correlation coefficient measure? What are the two most extreme values it can take, and what d
Suppose that you buy a stock for $48 by paying $25 and borrowing the remaining $23 from a brokerage firm at 8% annualized interest. The stock pays an annual dividend of $0.80 per share, and after one year, you are able to sell it for $65. Calculate your return on the stock. Then, calculate the return on the stock if you had use
1)Nick has a revolving department store credit card account with an annual percentage rate of 15%. Last month's balance on the account was 423.78. During the current month, he made purchases totaling 123.42 and made a payment of 100. The store uses the unpaid balance method. According to this information, what must be the amou
You are offered two jobs. One initially pays $100,000 annually, and your salary will grow annually at 11.5%. The other pays $97,000 annually but your salary will grow at 12%. After ten years, which job pays the higher salary?
A firm has the following investment alternatives: Cash Inflows Year A B C 1 $500 $0 $0 2 $500 $400 $0 3 $500 $800 $0 4 $600 $900 $1900 Which investment should be considered? Use a 9.5% discount rate.
Assume the following information over a five-year period: ? average risk-free rate =6% ? average return for Crane stock =11% ? average return for Load stock = 14% ? standard deviation of Crane stock return =2% ? standard deviation of Load stock returns = 4% ? Beta of Crane stock = 0.8 ? Beta of Load stock = 1.1 Can yo
200,000 in assets to get into operation with only 2 financing alternatives 1. (all equity-all common stock) 2.50% equity and 50percent debt. You will put the entire 200,000 needed to purchase the assets if 50 percent debt financing is used you will contribute only 100,000 of your own funds and the remaining 100,000 will be obtai
How does the security market line react to changes in the rate of interest, changes in the rate of inflation, and changing investor expectations?
The last dividend paid by Klein Company was $1.00. Klein's growth rate is expected to be a constant 4%. Klein's required rate of return on equity is 12%. What is the current price of Klein's common stock?
Your eccentric uncle died and left you $100,000. However, the will stipulated that the entire amount must be invested in common stocks. Specifically, $50,000 must be invested in a single stock (a one-stock portfolio) and the other $50,000 must be invested in a 100-stock portfolio. You are very risk averse, so you want to mini
What are the different categories of ratios? Which category of ratios is of the most importance to a bondholder? Why? Which category of ratios is of the most important to a stockholder? Why? In your personal investments, which ratio is the most important to you? Why?
I have to answer the questions below in 250 words. I have been reading the chapter and don't fully understand these questions: How could a country risk assessment be used to adjust a project's required rate of return? How could such an assessment be used instead to adjust a project's estimated cash flows?
1) What is the goal of negotiating? Why is planning critical to the negotiation process? When would an organization negotiate for an item or product instead of releasing a simple purchase order? 2) How do terms and conditions affect your financial targets or budgets?
Please see attached. Please work the formula in steps.Last year's sales = So $400,000 Last year's accounts payable $40,000 Sales growth rate = g 30% Last year's notes payable $20,000 Last year's total assests = Ao $140,000 Last year's accruals $30,000 Last year's profit margin = M 15.0% Target payout ratio 30.0% a.
The LJB Company contribution income statement for the most recent month is presented below: See attached word doc for figures Compute the company's contribution margin percentage and break-even point in both units and dollars.
I have completed this assignment, but I wish to make sure I did everything correctly. The grade I will receive for this assignment is very important, because it will make me either pass this class with a good grade, or it will make me fail the class. Please help. Key Financial Data Dreamscape, Inc. Industry Average Ratio F
1. Debt securities that are accounted for at amortized cost, not fair value, are held-to-maturity debt securities. trading debt securities. available-for-sale debt securities. never-sell debt securities. 2. Bista Corporation declares and distributes a cash dividend that is a result o