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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

Annual Reports Comparison: ACE Aviation and Nortel Networks

QUESTION: a. Compare the 2007 annual report for ACE Aviation and the 2007 annual report for Nortel Networks Corporation. Explain the similarities and differences in how the 2007 assets have been financed between these two companies. Also comment on the productivity of the assets during 2007 for each of the two companies. In you

Analyze and answer questions about financial data

See attached file. Review the spreadsheet and answer 1. What is happening to the growth in sales? How can this be explained? 2. What is the significance of the roughly $250,000,000 write off of Goodwill and Intangibles in the first quarter of 2009? 3. Does Gardner have good cost control? Cite evidence. 4. Does

Term Interest Rates Declining Over Recent Years

Lang -term interest rates have declined over recent years. What impact do you think this has had on the incentive for firms to employ financial leverage? Explain. Please don't copy paste from Wikipedia.

Honda Accord Car: Loan Amortization Schedule


Finance problem for a MBA level

If a company's beta were to double, would its return double? If investors risks aversion were to increase, would the risk premium on a high beta stock increase more or less than that on a low beta stock? Explain.

Cost Classifications

Outer Banks Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on the premises. Several costs incurred by the company are listed below. Match the following cost classification with the cost Item listed below. A cost item may have more than one cost classification. COST CLASSIFI

Finance Problem for a MBA level

The problem: You are considering a machine that will cost $ 50,000 and which can be sold after 3 years for $10,000. $12,000 must be invested in working capital and will be recovered after year 3. Sales will be $ 50,000 a year. Operating costs will be 40% of sales. Depreciation will be $ 40,000, $5,000 and $5,000 each year. Th

Expected Return

Please see attached. 1-Portfolio expected return you have 10,000 to invest ion a stock portifolio. Your choices are stock x with an expected return of 14 percent and stock y with an expected return of 9 percent .If your goal is creat a portfolio with an expected return of 12.2 percent, how much money will you invest in stock

Returns and variability

1-Calculating returns and variability you have observed the following return on Mary ann Data Corporation's stock over the past five years: 216 percent, 21 percent, 4 percent, 16 percent, and 19 percent. a. what was the arithmetic average return on Mary Ann's stock over this five-years period? b-What was the variance of Mary A

Profitability Index: Example Problem

Trucks-R-Us leases truck to eight potential customers. The expected revenue from each customer is shown below along with the number of trucks that they require to achieve the revenue. Customer F is a long term customer and critical to the business, so they must be serviced. Customers will not accept a partial allocation. If the

NPV and the Payback Rule

The following projects are being considered by the Corporate Investment Committee who has an investment budget of $1,000,000. Project approval will be granted if the payback is achieved within 3 years. Which ones will be funded?. Project Length of project Up Front Investment Annual Cost each Year Annual Bene

Comparing Monthly Loan Payments

Anthony and Cleopatra have a dilemma. It seems like a good time to buy their first home but their savings are not sufficient to get the interest rate that Tony would like to pay. If they buy today they can get a loan at 7.0% APR interest compounded monthly. If they wait three years, they will have saved enough to get a loan at

Calculating NPV for Markets

Josephine needs to sell her house in a down market and to do this, she is willing to finance the buyer. She found a buyer that suggested multiple offers. Which one should she take to maximize her net present value if her risk free annual percentage interest rate is 6%? Cash up front monthly payment # of monthly payme

Present Value and Bonds

1. Given the following cash flows, what is the present value if the discount rate is 8%? Yr1 $200, Yr2 $350, Yr3 $800, Yr4 $1,125 a.$1,115.07 b.$1,947.23 c.$2,165.70 d.$2,358.96 e.$2,922.62 6. A bond with an annual coupon of $100 originally sold at par for $1,000. The current market interest rate on this bond i

Finance: Evaluation with NPV

Bauer Industries is an automobile manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental free cash flow projections (in mil