Share
Explore BrainMass

Finance

Money scenario

I'm using this scenario which is attached. I need to make a management decision about how to fund my business. I have several options. I can borrow money, sell stock, or license the technology. Chose the type of funding which you prefer. Then, I need to write a 2-3 page report to introduce myself to potential lenders or investo

Monte Carlo Simulation:grocery store quantities of fresh produce

A grocery store is trying to determine the optimal amount of fresh produce to have on hand each week. They have (based on historical figures) determined that their demand for produce is governed by the following discrete random variable. Winter Summer Demand Probability Demand Probability 1500 0.1 2000 0.

Accounting

Accounting: Using the given information, prepare a complete statement of cash flows for calendar-year 2005 using the indirect method. SEE ATTACHED WORD DOCUMENT

Calculate selling price of bonds

A firm has an issue of $1000 par value bonds with a 12% stated interest rate outstanding. The issue pays interest annually and has 10 years remaining to its maturity date. If bonds of similar risk are currently earning 8%, how much will the firm's bond sell for?

Personal Finance Questions: Annual Payments with Interest

Please help me answer these questions: After a protracted legal case, Joe won a settlement that will pay him $11,000 each year at the end of the year for the next ten years. If the market interest rates are currently 5%, exactly how much should the court invest today, assuming end of year payments, so there will be nothing le

Computing the Break-Even Point

The problem follows: Please provide a step-by-step analysis for my own understanding. PROBLEM 15-12A BREAKEVEN POINT DATA Output level 10 million units Return on oper. assets 25% Oper. asset turnover 5 times Oper. assets $20 million Oper. leverage 4 times Step 1 Operating profit margin = Step 2 Sales level = S

Multifactor Models

Suppose stock returns can be explained by a two-factor model. The firm-specific risks for all stocks are independent. The following table shows the information for two diversified portfolios: Beta 1 Beta2 E(R) Portfolio A .75 1.2 18% Portfolio B 1.6 -0.20 14

Factors Models and Return on a Stock

Suppose a factor model is appropriate to describe the returns on a stock. The current expected return on the stock is 10.5 percent. Information about those factors is presented in the following chart : Factor B Expected value Actual value Growth in GNP 2.04 3.5%

PV of a perpetuity

A perpetuity will make its first payment in ten years. The first payment will be $1,000, and future payments will increase at a 4% annual rate. What is the present value of this investment, assuming a 7% discount rate?

Compute the FV of Anne's College Fund

Question: Anne is planning to attend college when she graduates from high school in 7 years from now. She anticipates that she will need $10,000 at the beginning of each college year to pay for tuition and fees, and have some spending money. Anne has made an arrangement with her father to do chores if her dad deposits $3,500

Preparing and Analyzing Journal Entries

Please help with the following problem about journal entries. Make the journal entry necessary to record the transaction. Impact of a Transaction The company borrowed $85,000 in cash from Eastern Bank. a. List the accounts impacted by the transaction. b. For each account, indicate whether the transaction increased or

Finding effective annual rate of commercial paper sold at a discount

Commercial paper is usually sold at a discount. Corporation A has just sold an issue of 90-day commercial paper with a face value of $1 million. The firm has received initial proceeds of $978,000. (Note: assume a 365-day year). a) What effective rate will the firm pay for financing with commercial paper, assuming that it is r

Compensating Balances and Effective Annual Rates

Company X has a line of credit at Bank A that requires it to pay 11% interest on its borrowing and to maintain a compensating balance equal to 15% of the amount borrowed. The company has borrowed $800,000 during the year under the agreement. Calculate the effective annual rate on the company's borrowing in each of the following

Risk Reward Behavior and Stock Portfolio Diversification

You are a risk-averse investor who is considering investing of two economies. The expected return and volatility of stocks in both economies is the same. In the first economy, all stocks move together - in good times all prices rise together and in bad times they all fall together. In the second economy, stock returns are indepe

Factors Models and Market Models

Chapter 9: 22. Arithmetic and Geometric Returns A stock has had returns of 29 percent, 14 percent, 23 percent, −8 percent, 9 percent, and −14 percent over the last six years. What are the arithmetic and geometric returns for the stock? Chapter 11 3. Factors Models Suppose a factor model is appropriate to describe the re

Inventory Control Consideration

In December, a silversmith estimates the need for 10,000 ounces of silver in June but believes the price may rise before then. The silversmith establishes a hedge in December. In December, June silver futures are trading at $3.95/ounce and the December cash price is $3.75/ounce. On May 25, silver sells for $4.15/ounce in the cas

Buy or Sell recommendation for a stock

A firm reports book value of shareholders' equity of $850 million with 25 million shares outstanding. Those shares trade at $45 each in the stock market. An analyst values the equity by following the scheme: Value = Book value + Extra value. She calculates extra value of $675 million. Should she issue a buy or sell recommendatio

International Finance Assistance

1.) Which banks cannot accept foreign deposits? 2.) Banking tends to be 3.) Edge Act banks are 4.) Eurocurrency is 5.) The more concentrated a national stock market is the 6.) A foreign branch bank operates 7.) In reference to capital requirements, bank capital 8.) Which investment is likely to be the most

Abnormal return - AT&T and TCI and S&P500 Index Example

On Wednesday June 24, 1998, AT&T announced its intent to acquire TCI. The assets of obtained in the acquisition helped create AT&T Broadband. Three years later, on Monday July 9, 2001, Comcast announced its intent to purchase the Broadband assets from AT&T. a) Given the following data, what was AT&T's abnormal return at the a

Use the Hamada equation to find Harley's unlevered beta

14-4 UNLEVERED BETA Harley Motors has $ 10 million in assets, which were financed with $ 2 million of debt and $ 8 million in equity. Harley's beta is currently 1.2, and its tax rate is 40%. Use the Hamada equation to find Harley's unlevered beta, bU.

Corporate Finance

Submit answer in an Excel spreadsheet: Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $2

Stock Value calculations for Integrated Potato Chips Company

Integrated Potato Chips paid a $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent per year. a. What is the expected dividend in each of the next 3 years? b. If the discount rate for the stock is 12 percent, at what price will the stock sell? c. What is the expected stock price 3

Question about Leverage and risk

X Company produces inflatable beach balls, selling 400,000 balls a year. Each ball produced has a variable operating cost of $0.84 and sells for $1.00. Fixed operating costs are $28,000. The firm has annual interest charges of $6,0000, preferred dividends of $2,000, and a 40% tax rate. a) Calculate the operating breakeven poi