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Economic Model: Value of the Multiplier

In the simple economic model with no government or foreign sectors, the value of the multiplier is defined as: 1/MPC. 1/(1-MPC). 1/(MPC-1) 1/(MPC+1). None of the above.

Read the following newswire on the US Treasury Secretary's proposed sweeping changes in the US financial institutions of the Wall Street as its first significant overhaul since the Great Depression of 1930s

4) Read the following newswire on the US Treasury Secretary's proposed sweeping changes in the US financial institutions of the Wall Street as its first significant overhaul since the Great Depression of 1930s. http://money.cnn.com/2008/03/31/news/economy/paulson_regulation/index.htm?postversion=2008033115 As a part of the

Financial break even quantity

Consider a project with the following data: accounting break-even quantity = 30,000 units; cash break-even quantity = 16,500 units;life = 6 years; fixed costs = $210,000; variable costs = $29 per unit; required return = 14 percent. Ignoring the effect of taxes, the financial break-even quantity is units. (Round your answer to

Current ratio notes

A. A firm has $1.2 million in current assets and $1.0 million in current liabilities. If it uses $.5 million of cash to pay off some of its accounts payable, what will happen to the current ratio? What happens to net working capital? B. A firm uses cash on hand to pay for additional inventories. What will happen to the c

Balance sheet treatment - cash /credit purchase

Compare and contrast the balance sheet treatment of a car purchased by cash and a car purchased on credit. How is equilibrium of the basic accounting equation maintained in both instances? Clarify why the two different methods of purchase might be treated differently?

Net present value (NPV) for the following 20-year projects

Calculate the net present value (NPV) for the following 20-year projects. Comment on the acceptability of each. Assume that the firm has an Opportunity cost of 14%. 1. Initial investment is $10,000: cash inflows are $2,000 per year 2. Initial investment is $25,000: cash inflows are $3,000 per year 3. Initial investment is $

Times-interest-earned ratio/fixed-charge-coverage ratio

Please see the attached file. Page 77, 20. The Lancaster Corp's income statement is given on page 78. a) What is the times-interest-earned ratio? b) What would be the fixed-charge-coverage ratio? Sales 200,000 Cost of goods sold 116,000 Gross profit 84,000 Fixed charges (other than interest) 24,000 Income befo

Book value/market value

Amigo Software, Inc has total assets of $800,000 current liabilities of $150,000, and long-term liabilities of $120,000. There is $65,000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued. a) Compare book value (net worth) per share b) If there is $48,000 in earnings available to co

Flint Fruits Cash flows

Flint Fruits is considering two equally risky, mutually exclusive projects, Projects A and B, that have the following cash flows: Year Project A Project B 0 -$100,000 -$100,000 1 40,000 30,000 2 25,000 15,000 3 70,000 80,000 4 40,000 55,00

Margin Call

You purchased 100 shares of KLM at $40 a share by depositing the minimum amount of margin. If the initial margin requirement was 50% and the maintenance margin requirement is 30% you will get a margin call if KLM's price falls to: $12 $20 $29 $32

Bond price

Moerdyk Corporation's bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 4.75%, based on semiannual compounding. What is the bond's price?

Present value

Rita Gonzales won the $60 million lottery. She is to receive $1 million a year for the next 50 years plus an additional lump sum payment of $10 million after 50 years. The discount rate is 10%.What is the current value of her winnings?

Macroeconomic metrics and micreconomic basics for corporate expansion

While at lunch, you and the company's chief financial officer (CFO) begin to discuss opportunities to expand in the U.S. Discuss the opportunities to expand in the U.S., what it would take, and the potential hurdles the firm would have to overcome. Be sure to identify specific retail companies that could potentially sell CPI's p

Earnings per share of common stock

Farah Snack Co. has earnings after taxes of $128,750. Interest expense for the year was $20,000; preferred dividends paid were $18,750; and common dividends paid were $30,000. Taxes were $15,000. The firm has 100,000 shares of common stock outstanding. What are the earnings per share on the common stock?

Pickard and Associates

Please provide answers to the following: The following selected information is taken from the records of Pickard and Associates: Accounts payable = $143,000 Accounts receivable = 95,000 Advertising expense = 14,500 Cash = 63,000 Supplies expense = 31,500 Rent expense = 12,000 Utilities expense = 2,500 Income taxes (

Call options

The book we are using does not explain short and long positions at all. Could someone explain what these mean and how to answer this question? Which one of the following statements about the value of a call option at expiration is false? a. A short position in a call option will result in a loss if the stock price exceeds t

Risk assets

Suppose there are 2 risky assets. One offers a higher return than the other, but it also has a higher standard deviation. Will one of these assets always lie on the efficient frontier? Will one of them always be inefficient if held alone?

standard deviation formula

Returns for the Shields Company over the last 3 years are shown below. What's the standard deviation of Shields' returns? (Hint: This is a sample, not a complete population, so the sample standard deviation formula should be used.) Year Return 2006 2

Annual financing cost of this commercial paper financing

Walters Manufacturing Company has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the firm. The dealer indicates that Walters could sell a $5 million issue maturing in 182 days at an interest rate of 6 percent per annum (deducted in advance). The fee to the dealer for selling the is

Cash Collections Calculations

The L. Company has projected the following quarterly sales amounts for the coming year: Q1 Q2 Q3 Q4 Sales: $800 $760 $940 $870 A. Accounts receivable at the beginning of the year are $300. L. Company has a 45-day collection period. Calculate cash collection

Size of Account Receivable

Vitale, Baby!, Inc., has weekly credit sales of $18,000, and the average collection period is 29 days. The cost of production is 80% of the selling price. What is Vitale's average accounts receivable figure?

Bankruptcy

A. What is the ratio of Chapter 7 to Chapter 11 filings for businesses? b. What is the typical time span for filing for chapter 11, confirmation, and successful completion of the reorganization plan? c. What are the most common reasons that force an individual to file for bankruptcy? d. What kind of individual debts may

Number of shares to be sold

The St. Anger Corporation needs to raise $25 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. a. If the offer price is $35 per share and he company's underwriters charge an 8% spread, how many shares need to be sold? b. If the

Payback, Net present value, and depreciation tax shield

1)Calculate the payback for a project that costs $1,000 and is expected to provide cash inflows of $400 per year for the next three years. If the required payback is 3 years, should the firm accept the project? 2)Calculate the net present value for a project that costs $1,000 and is expected to provide cash inflows of $400 p