At Charter One Bank, they are offering a 2 year CD at 4% compounded annually. Now the bank offers a three year CD at 5% (simple, annual interest). If you decide to invest the money there, how much would you have after three years? If a day at SpaMadnesscosts $3000,will you get your day of leisure in three years?
(See attached file for full problem description). Fill in the blanks on the financial statements provided. Then, calculate return on assets (ROA), total asset turnover, and book value per share (assume 50 million shares outstanding). All dollar figures are in thousands.
7/1 Warr corporation just paid a dividend of $1.50 a share (i.e., D0 =$1.50). the dividend is expected to grow 5 percent a year for the next 3 years, and then 10 percent a year thereafter. What is the expected dividend per share for each of the next 5 years? 7/6 A stock is trading at $80.00 per share. The stock is expecte
What are the advantages and disadvantages of debt?
Why is the cost of debt less than the cost of preferred stock if both securities are priced to yield 10 percent in the market?
If I have a home loan for $224,000.00 at a 8% variable monthly interest rate for 30 years what is my monthly payments and can you show me how you got it? Also suppose I had to move within in one year and the interest payments over the first year were $17,852, would it be better to rent the property if it would cost me $1400.0
Consider a bond with a face value of $1000. The coupon payment is made semiannually and the yield on the bond is 12% (effective annual yield). How much would you pay for the bond if: a. The coupon rate is 8% and the remaining time to maturity is 20 years? b. The coupon rate is 10% and the remaining time to maturity is 15 yea
Suppose you deposit $10,000 dollars for 2 years at a rate of 10%. calculate the return (A) if the bank compounds annually (n = 1) Round your answer to the hundredth's place. Now calculate the return (A) if the bank compounds quarterly (n=4). Now calculate the return (A) if the bank compounds monthly (n=12). Now calculate th
A consultant has collected the following information regarding Y publishing: total assets 4,000 million; operating income (EBIT $300 million; interest expense 0 million; net income $180 million; share price $32; tax rate 40%; debt ration 0%; WACC: 10%; market/ book ratio 1.00X; EPS = DPS $3.20 The company has no growth oppor
Circle the one best answer. Circle the correct one 1. The amortization of premium on bonds payable a. will increase bond interest expense. b. should take place over a period not to exceed 40 years. c. will decrease bond interest expense. d. will increase bond interest revenue. 2. A corporation issued $600,000 of 8%, 5
Prepare a 700-1,050 word response for this Mini-case: You will need to follow all assumptions in the Mini-case precisely and carefully to complete the following: a. Identify the steps necessary to financially plan and forecast for 2005, 2006, and 2007, b. Project future years using the growth rate assumptions
1. Delilah's Haircuts can borrow from its bank at 13 percent to take a cash discount. The terms of the cash discount are 2/15, net 55. Should the firm borrow the funds? Explain. 2. Maxim Air Filters, Inc. plans to borrow $300,000 for one year. Northeast National Bank will lend the money at 10 percent interest and require
The Ness Company sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds have an effective yield of 9%. Present value factors are below: 10% 9% PV factor 1 year 0.90909 0.91743 PV factor 2 years 0.82645 0.84168 PV factor 3 years 0.75131 0.77218 PV factor 4 years
The Ness Company sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds have an effective yield of 9%. Present value factors are below: 10% 9% PV factor 1 year 0.90909 0.91743 PV factor 2 years 0.82645 0.84168 PV factor 3 years 0.75131 0.77218 PV factor 4 years 0.68
The Ness Company sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds have an effective yield of 9%. Present value factors are below: 10% 9% PV factor 1 year 0.90909 0.91743 PV factor 2 years 0.82645 0.84168 PV factor 3 years 0.75131 0.77218 PV factor 4 years 0.
The Marcus Corporation plans to issue $10,000,000 of 20-year bonds next June. The company's current cost of debt is 12 percent. However, the firm's financial manager is concerned that interest rates will increase in coming months, and has decided to take a short position in U. S. government t-bond futures. The following settle
Blackwater Adventures has a bond issue outstanding that matures in sixteen years. The bonds pay interest semi-annually. Currently, the bonds are quoted at 103 percent of face value and carry a 9 percent coupon. The firm's tax rate is 34 percent. What is the firm's after-tax cost of debt?
An old lady known to you as "Granny" has been evaluating an investment proposal from her son, Uncle Sal. Sal suggests that the investment is "too good to pass up," but based on past performance, Granny is suspicious. After doing some research, Granny has determined that Sal's investment has a high risk of default, for which sh
Bank A offers the following terms for a $10 million loan: - interest rate: 8 percent for one year on funds borrowed - fees: 0.5 percent of the unused balance for the unused term of the loan Bank B offers the following terms for a $10 million loan: - interest rate: 6.6 percent for one year on funds borrowed - fees: 2 p
1) The treasurer of Riley Coal Company is asked to compute the cost of fixed income securities for her coroporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 2 percent less than that for preferred stock. Based on the following facts, is she correct? Debt can be issued at a y
The following information is available for the Parker Company: Credit sales during 2005 $100,000 Allowance for doubtful accounts at December 31, 2004 1,200 Account receivable deemed worthless and written off during 2005 1,600 During 2005 Parker estimated that its bad debt expense should be 1% of all credit sales. As
When the market rate of interest was 11%, Welch Corporation issued $100,000, 8%, 10-year bonds that pay interest semiannually. Using the straight-line method, the amount of discount or premium to be amortized each interest period would be:
A business invests $10,000 in a savings account for two years. At the beginning of the second year, an additional $3500 is invested. At the end of the second year, the account balance is $15,569.75. What was the annual interest rate? keywords: solving, solve, evaluate, evaluating, finding, find
Bob has a rich uncle who wishes to help with his education. He will invest in a bond fund paying 4% compounded semi-annually and maturing in 18 years. How much should he invest if he wants the value of his bond fund to be worth $85,000 when it matures? _____ ?
A child's grandparents purchased a $10,000 bond fund maturing in 18 years to be used for her college education. The bond fund pays 4% compounded semi-annually. How much will the bond fund be worth at maturity?
What is the WACC for the following business that is 40% financed by common stock and 60% financed by debt, if the tax rate is 20%. The stock pays no dividends and is priced at $14 and is expected to rise to $16 in one year's time. The bonds are selling for 102% of par value, 3 years to maturity and have a coupon rate of 10%.
Maese Industries Inc. has warrants outstanding that permit holders to purchase 1 share per warrant at a price of $25. a. Calculate the exercise value of the firm's warrants if the common sells at each of the following prices: (1) $20, (2) $25, (3) 30, (4) $100. (Hint: A warrant's exercise value is the difference between the s
On June 8, Acme Co. issued an $80,000, 6%, 120-day note payable to Still Co. Assume that the fiscal year of Acme Co. ends June 30. What is the amount of interest expense recognized by Acme in the current fiscal year
I borrowed 33 1/3 percent of the appraised value to purchase a comercial property. The lender charged me interest at the rate of 11% per annum. My interest for the first ayear amounted to 5,315.51. What was the appraised value of the property and how did you get it?
Why is the effective interest rate on debt multiplied by (1- tax rate) when similar adjustments are not made to the required return on preferred stock and common stock?