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Current Yield and YTM

I have completed the problem but would appreciate it if someone could check my work. Thanks 9. Bonds of XYZ Corp. with a par value of $1,000 sell for $950, mature in 8 years, and have a 9% annual coupon rate paid semiannually. I used Excel for the YTM. Thanks Calculate the: i. Current yield $90 / 950 = 9.47

Receivables Outstanding Credit

A firm has outstanding receivables of $125,000. Its credit terms are net 30. If during the past three months credit sales are $100,000, $105,000, and $60,000, how many days of sales are outstanding as receivables?

External Financing: Percentage Sales Method

Given the compressed version of balance sheet and income statement, estimate the amount of external financing needed to increase sales by 20% next year (use percentage of sales method). (Dividend payout is 50%) Balance Sheet (End of the Year) Assets $2,000 Debt $1000 Equity

aggregate expenditure model and tax cuts

What were the key provisions of the tax cuts passed by Congress in spring 2003? How would these tax cuts be represented by the aggregate expenditure model and the IS curve?

Future values of money invested

How to figure a settlement using a future payment equation e.g.eleven thousand dollars per year for 10 years.with a market interest rate of 5% exactly how much should the court invest today so nothing is left in the account after the final payment is made?

Reservation prices

The reservation prices of three classes of demanders of Cable Channels Bravo and Disney are given below: Class Bravo Disney 30 Year Old Adults $11 $5 12 to 15 year olds $ 8 $9 3 to 7 year olds $ 9 $10 It cost $4 to produce and distribute each Channel. The cable company can sell each separately, sell

Negative expected rate of return on a security/asset

Need assistance in explaining these two parts Part 1) Suppose rf is 5% and rM is 10%. According to the SML and the CAPM, an asset with a beta of −2.0 has a required return of negative 5% [= 5 − 2(10 − 5)]. Is this be possible, why or why not? Part 2) Does this mean that the asset has negative risk? Why

Expected return and standard deviation of a stock

I have completed this problem but wondered if someone would check it for me. Thanks, Victoria a. What is the expected return of a stock given the following information: State of Probability Return Economy Good .2 20% Normal .5 12 Poor .3 5 (0.20)(.20)+(.50)(.12)+(.30)(.05) =11.5% b. What is the st

Rate of Return using the CAPM

A stock has a beta of 1.6, the risk free rate is 4% and the expected market return is 10%. What is the required rate of return using the CAPM model? If the expected return for the stock is 14%, would you recommend purchasing the shares now? Explain your answer in detail.

Margin Call

Suppose that HP is currently selling at $30 per share. You buy 400 shares using $6500 of your own money and borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 4%. If the maintenance margin is 25%, how low can HP's price fall before you get a margin call?

Capital Asset Pricing Model to Find Expected Return

1. The expected return on the stock market is 10% with a standard deviation of 27%. The risk-free rate is 3%. AB Corp. has covariance (COV) of 0.075 with the market return. The stock currently trades at $100 and is expected to increase to $114. What is the required return on the stock?

ACCOUNTING INC STATEMENT BALANCE SHEET

AC556 Week 6 Problem Proforma Statements NOTE: It is expected that this problem will be completed using an Excel spreadsheet using formulas. Please see the Excel Tutorial that is available under the course home tab. The Duncan Company has just completed a number of budgets for the coming year. The cost of goods manufacture

Price help

Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows: Price to public: $5 per share Number of shares: 3 million Proceeds to Beedles $14,000,000 The out-of-pocket expenses incurred by Security Brokers in the design and distribution of

Accounts receivable days outstanding

Sellograph Corporation reports sales of $10M for Year 2, with a gross profit margin of 40%. 20% of Sellograph's sales are on credit. (assume 360 day year) Year 1 Year 2 Accounts receivable Y1-$ 150,000 Y2-$ 200,000 Inventory Y1-900,000 Y2-1,000,000 Accounts payable

Sellograph Corporation: Accounts Receivable Days Outstanding

Sellograph Corporation reports sales of $10M for Year 2, with a gross profit margin of 40%. 20% of Sellograph's sales are on credit. (assume 360 day year) Year 1 Year 2 Accounts receivable $ 150,000 $ 200,000 Inventory 900,000 1,000,000 Accounts payable 1,100,000 1,

Purchase Decision / Degree of Financial Leverage

5. You are considering the purchase of new equipment for your company and you have narrowed down the possibilities to two models which perform equally well. However, the method of paying for the two models is different. Model A requires $5,000 per year payment for the next five years. Model B requires the following payment sched

Determining Productivity and Wages: Example Problem

A advertising employee for Tires R US has the following. Weekly wage package is W = 1,000 + .5Q, where Q is her dollar volume of sales. Productivity is Q = 200e + u, where e denotes her hours of effort and u is a random variable with mean 0. If he works an additional hour, the expected value of his wages rises by:

Expected return of equity

Hardmon Enterprises is currently an all-equity firm with an expected return of 12%. It is considering a leveraged recapitalization in which it would borrow and repurchase existing shares. a. Suppose Hardmon borrows to the point that its debt-equity ratio is 0.50. With this amount of debt, the debt cost of capital is 6%. What

IRR & NPV

Consider this project with an interest rate return of 13.1 percent. Should you except or reject this project if the discount rate is 12 percent? Year Cash Flow 0 +$100 1 - 60 2 - 60

Calculating the NPV and IRR of a Project

Please help with the following problem: Your company is considering investing in a new plant. The initial investment is $220 million, obtainable at the end of the plant's useful life in ten years. Your company uses straight line depreciation (seven years). The net income from the project is expected to be $28 million per y

Enterprise value / value of equity

At the end of 2006, Blue Light, Inc. has net debt of $740 million and forecasts its cash flows (in millions) as: 2007 2008 2009 Cash flow from operations $1,400 $1,500 $1,750 Cash investment $1,000 $1,100 $1,300 The free cash flow wi

Solution to "Stock valuation" question

How much are you willing to pay for one share of Delphia stock if the company just paid a $1.34 annual dividend, the dividends increase by 2.8% annually, and you require a 14% rate of return? a) $9.84 b) $11.96 c) $12.30 d) $12.99 e) $13.61 Please explain!!!

Present value

What is the present value of $10,000 received. 1) 12 years from today when the interest rate is 4% per year? 2) 20 years from today when the interest rate is 8% per year? 3) 6 years from today when the itnerest rate is 2% per year?

Cash flow and the net present value

You are asked to analyse the following project: Initial investment: Equipment: $3,500,000 Initial net Working capital 10% of first year sales Operating results Year 1 Year 2 Year 3 Year 4 Year 5 $4,000,000 $5,000,000 $5,000,000 $5,500,000 $5,000,000 Variable costs: 60% of sale

Estimating the price of a common stock: Example problem

You are considering the purchase of a common stock that paid a dividend of $1.00 yesterday. You expect this stock to have a growth rate of 20% for the next 3 years, resulting in dividends of: D1 = $1.20 D2 = $1.44 D3 = 1.73 The long run normal growth rate after year 3 is expected to be 8% (that is,a constant growth rate

Alice Bates: Capital Budgeting

Alice Bates needs to reduce prices to her companies operating system software since its getting strong competition from a number of competitors. If she institutes a 30% discount she can probably increase next year's sales 25%. But if she reduces the price 60%, she can get it installed on notebook computers which is expected to i