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Finance

Tax allocation and more

1. Do you think tax allocation can improve the prediction of future tax payments in the short run? 2. what are the economic consequences of SFAS No. 87? 3. What is the fundamental issue surrounding capitalization versus expensing? 4. which approach do you believe management would prefer? 5. Which approach do you

Banannas Inc. has stock currently selling for $40 per share. The company has 1,200,000 shares outstanding. What would be the effect on the number of shares outstanding and on the stock price of the following: 1. 15% Stock Dividend 2. 4-for-3 Stock Split 3. Reverse 3-for-1 Stock Split

Banannas Inc. has stock currently selling for $40 per share. The company has 1,200,000 shares outstanding. What would be the effect on the number of shares outstanding and on the stock price of the following: 1. 15% Stock Dividend 2. 4-for-3 Stock Split 3. Reverse 3-for-1 Stock Split

Value of a business

What would the present value of a business that earns the following profit be using a 5-yr life span and a 12% risk-adjusted discount rate. yr 1 Expected profit received at end of yr $10,000? yr 2 Expected profit received at end of yr $20,000? yr 3 Expected profit received at end of yr $50,000? yr 4 Expe

Return on equity

Businesses are now providing stocks to managers for increased financial performance using annual return on equity. How would this decrease the agency problem between managers and shareholders as a whole? Why could directors be more efficient than shareholders at increasing managerial performance and changing their incentives?

Standard & Poor's 500 Stock Market Index

What is considered a poor, average, or good index? What kind of scale does Standard & Poor use? Which is better a higher or a lower index? Specifically, what does this score tell us exactly regarding economic growth? Would this information be helpful to a small business that is planning its strategies for the following year?

Acquisition problem

Please use “Superior Printing” (Harvard Business School case, no. 9-800-197) for your response. ----- Sorry to drop this in your lap, but I've got to fly to New York to work on the goReader deal. To recap our conversation today: 1. Superior Printing has hired us to advise them on how to finance their acquisition of B

Present Value Calculations: Present Worth of Computers R Us'

The Engineering Economics Finance Company (EEFC) had approached Dr. T. Man, a private investor, the day before. It seemed that EEFC was interested in loaning money to Computers R Us Enterprises, one of its larger clients, but Computers R Us Enterprises' demands were such that EEFC could not manage the whole thing. Specifically,

Corporate Finance

Question 1: The attached table contains a summary of (daily) data on two stocks and the market. a) Compute the expected returns and standard deviation of a portfolio composed by 80% WMT and 20% MRK. Comment on your results. b) Compute the beta for WMT and MRK. c) Discuss total risk, diversifiable and undiversifiabl

Corporate Finance

Question 1 A company has a capital structure composed by 20% Debt and 80% Equity. The cost of the debt is 5% per year while the cost of equity is 15% per year. The company is considering two different projects. The cash flows of the two projects are reported in the table below. Please see attached. A company has a capita

Corporate Finance: Project Cash Flows; NPV

Question 1 PLI produces unusual gifts targeted at wealthy consumers. The company is analyzing the possibility of introducing a new device designed to attach to the collar of a cat or dog. This device emits sonic waves that neutralize airplane engine noise, so that pets traveling with their owners will enjoy a more peaceful ride

Call Option

. You are based in Canada. A 1yr call option to buy USD at strike1.3500 CAD/USD has premium of .0595CAD. Spot CAD/USD is 1.3535. a) What is the moneyness of the call? What is its intrinsic value and time value? b) Everything being equal, if the option has a life of 6M, is the call option going to cost more or le

Weak Form EMH

Question enclosed! Lets assume we consider data on a groups of companies of similar investment risk. It was stated in class that under the weak form of EMH, the movement of price of a stock i is a random walk: where is the same for all stocks in the group and is independent of, and cannot be predicted by, past prices.

Variance/Covariance Efficient Portfolios

Question 9. You have the following info about company ABC: Variance of market returns = 0.05492 Covariance of the returns on Durnham and the market = 0.0635 Suppose that the market risk premium is 8.4% and the expected return on Treasury bills is 4.9%. a. Write the equation characterizing the set of efficent portfolios in

Stocks..current price..selling price

Avery industries jsut paid a dividend of $2.00 per share (i.e.,D0=$2.00). analysts expect the company's dividend to grow 25% for the next 2 yrs and 15% for the following 3 years. After 5 years the dividend is expected to grow at a constant rate of 5%. the required rate of return on the company's stock is 12%. what should be the

Equation Rather than to Calculate it Manually

One day your economics professor shows you a picture of a BMW automobile. You mess around with different configurations for the available options and accesories and it can be yours for $77,942. You notice a rather sinister glint in your professor's eye as he notes your interest in the car, but tells you nonetheless that you wo

Annuity Calculations

Please include with your response any necessary formula to solve this problem (on a regular calculator, NOT a financial calculator), along with a detailed explanation of how to solve the problem. You are offered an annuity of $10,000 for 10 years starting four years from now. With interest rates at 5%, how much should you b

Financial Management

Which of the following are concerns about target costing? a. Conflicts may arise within organizations. b. Employees may experience burnout due to the pressures of meeting target costs. c. Development time may increase. d. All of the above.

Financial Management

Which of the following is least likely to be a barrier in ABC implementation? (a) computer hardware and software problems (b) individual resistance to change (c) organizational resistance to change (d) lack of senior management commitment

Number of Periods

Please include a formula for the calculations, along with an explanation of how to work out the problem. How long will it take for $400 to grow to $1,000 at the interest rate specified? a) 4 percent b) 8 percent c) 16 percent

summary of Greenspan's opinion on trade

A http://www.federalreserve.gov/BoardDocs/speeches/2004/20040126/default.htm b. Read the above speech and summarize Greenspan's opinion on trade. Does he admonish the current administration's policies on trade? What does he say about job movement overseas and labor costs.

Trade Credit: A firm currently offers terms of sale of 3/20, net 40. What effect will the following actions have on the implicit interest rate charged to customers that pass up the cash discount?

Trade Credit Rates. A firm currently offers terms of sale of 3/20, net 40. What effect will the following actions have on the implicit interest rate charged to customers that pass up the cash discount? State whether the implicit interest rate will increase or decrease. a) The terms are changed to 4/20, net 40. b) The terms are

Cash Management Plan

Marcia and Phil Helm have been married for several years. They have no children, and each has a professional career. Marcia is a trainee for a management position at a large department store, and Phil is an engineer at an electronics firm. Their careers have promising futures, but neither has exceptionally good income protection

Managerial Finance: Calculating the weighted average cost of capital

A company's pre-tax cost of debt is 10%. Their preferred stock pays a $10 dividend and sells for $100. Common stock is selling for $50 and the next expected dividend will be $3. The dividend growth rate on common stock is 8%. The company's tax rate is 30% and their capital structure is: Debt: 50%