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# Finance

### Finance. Calculating Yards of Nylon. Inventory

Please show formulas and explanation. Camping USA uses 6 yards of nylon for each tent produced. On April 1, Camping had 48 yards of nylon on hand. If Camping desired an ending inventory of 30 yards of nylon and plans to produce 120 tents during the month, how many yards of nylon should the company purchase during April?

### Beta for stock

If a stock consistently goes down (up) by 2.1% when the market portfolio goes down (up) by 1.5% then what is the beta (b)?

### Weighted average cost of capital (WACC)

In March 2007, Hertz Pain Relievers bought a massage machine that provided a return of 8 percent. It was financed by debt costing 7 percent. In August 2007, Mr. Hertz came up with a heating compound that would have a return of 14 percent. The CFO, Mr. Smith, told him it was impractical because it would require the issuance of

### Price of Common Stock Using the Dividend Discount Model

Stagnant Iron and Steel currently pay a \$4.20 annual cash dividend. They plan to maintain the dividend at this level for the foreseeable future as no future growth is anticipated. If the required rate of return by common stockholders is 12 percent, what is the price of the common stock?

### Company's Average Accounts Receivable Balance

Barney's Antique Shop has annual credit sales of \$1,080,000 and an average collection period of 40 days in 2007. Assume a 360-day year. What is the company's average accounts receivable balance? Accounts receivable are equal to the average daily credit sales times the average collection period.

### Chart Problems Approaches

a college has been approached to offer a select degree program with a corporation but the charge cannot exceed \$150 per student per course The college usually charges \$1500 per student The expense of providing one course will be 10,000 (travel, faculty fee, etc ) The only reason the college will consi

### Financial Ratios

What is the effect (increase, decrease, no effect) of a cash dividend payment on the following ratios (all else equal) Times Interest Earned and Long-term Debt to Equity? What is the effect (increase, decrease, no effect) of selling inventory for profit on the following ratios (all else equal) Times Interest Earned and Long

### Economics Question

You have the following information for a country for 2005, with all price indexes utilizing 1995 as the base year: The export price index is 120, the import price index is 130, the quantity index of exports is 115, and the quantity index of imports is 100. Calculate the commodity terms of trade and the income terms of trade for

### Operations Management

See attached file for full problem description.

### Compute Mean and Variance

See attached file for full problem description. 1. Assume that there are 5 states of the world, s = 1, ..., 5. Suppose that the probabilities are given by pi_1 = pi_2 = pi_3 = 0.1, pi_4 = 0.35, pi_5 = 0.35. Consider three random variables (x(s), y(s), z(s))^2_s-1, which are defined as follows. X(A) = 1, x(2) = 2, x(3) =

### Net present Value

A project costing \$35 - million is expected to generate profits of \$11 - million in the first year, \$14 - million in the second year, \$16 - million in the third year, and 12 - million in the fourth year. What is the NPV if the hurdle rate is 8%?

### Calculating Current NAV: Example Problem

If you had a mutual fund made up with the 4 stocks only: Stock Shares Price IBM 2500 11.00 HP 2100 14.00 Apple 2700 23.00 SUN 1900 15.00 Your mutual fund originated by selling \$100,000 of stock at \$10 per share. How would you go about calculating the NA

### Price/book value ratio as a measure of relative value

What is the rationale for using the price/book value ratio as a measure of relative value?

### Financial Economics - Saving Functions and Market Interest Rates

Financial Economics - Saving Functions and Market Interest Rates. See attached file for full problem description.

### Financial Economics - Compounding and Present Value

1. Compounding: Suppose someone invested 2 dollars on January 1, 1776 at 3.3 percent interest compounded yearly. a) How much interest would the investment be worth on January 1, 2001 (225 years later)? b) Suppose the interest rate were 6.6 percent instead of 3.3 percent. What would the investment be worth? c) Suppose the i

### Multiple Choice: Capital, IRR, Relevant cash flows, Financial risk, Dividend irrelevance, Sale of new stock, Preferred stock, Cash Management, Risk Management, Bankruptcy law

Capital 1. Capital can be defined as the funds supplied by investors. a. True b. False IRR 2. The internal rate of return is that discount rate which equates the present value of the cash outflows (or costs) with the present value of the cash inflows. a. True b. False Relevant cash flows 3. When calculating t

### Compute annual payment

Intermediate term loan for 1,000,000 to be paid off in equal installments at the end of each of the next 5 years. The interest rate is 14%, what is the annual payment.

### Computing NPV

I am trying to decide whether to accept a project, the estimated after-tax cash flows are: Year 0 - (\$50,000) Year 1 - \$25,000 Year 2 - 20,000 Year 3 - 10,000 Year 4 - 7,500 The required rate of return is 10%. What is the net present value and should I accept the project?

### Identify and describe at least three of the largest variable expenses for home depot and Lowe's for each of the three most recent fiscal years. Explain what financial impact each of those expenses has had on the companies' margins and profitability in each year.

Identify and describe at least three of the largest variable expenses for home depot and Lowe's for each of the three most recent fiscal years. Explain what financial impact each of those expenses has had on the companies' margins and profitability in each year.

### Weighted average cost of capital

Cost of equity is 16%; the before tax cost of debt is 13% ; the marginal tax rate is 40%. Stock sells at book value. I need to calculate the after tax weighted average cost of capital using the following balance sheet. Assets Liabilities and Equity Cash

### The dividend will increase at a 6% rate annually thereafter.

Biogenetics Inc plans to retain and reinvest all of their earnings for the next 30 years. Investors believe that at the end of year 31 the firm will pay a dividend of \$12 per share. The dividend will increase at a 6% rate annually thereafter. Given a return of 15%, what is the selling price of the stock?

### Tit for Tat pricing

What is an easy to understand explanation of tit for tat pricing?

### Find the Total Cost and show proof

Given: Marginal Cost = (&#948;TC)/( &#948;q) = a - [(b)/((c-q)^x)] Find the Total Cost and show proof.

### Basic question about datasets cross-sections

I'm working with a cross-section of the NLSY97 (using the program Stata). I'm a new econometrics grad student. I'm trying to make sure I understand how these datasets work but I'm almost embarrassed to ask this question: the observations are linked somewhere in the dataset right? What I mean is, its not just statistics on th

### Example of the tone of term in assessing controls.

I need help getting started. I have no clue what kind answer is looking for. Could you please give example of the tone of term in assessing controls. The problem I am asking about is Problem 5-57

### Stock Valuation

You are considering buying the stock of two very similar companies. Both companies are expected to earn \$3 per share this year. However, Company D is expected to pay all of its earnings out as dividends, while Company G is expected to pay out only one-third of its earnings, or \$1. D's stock price is \$20. . Both companies are equ

### CPI and cost of living

Suppose the CPI is calculated assuming that one-quarte of expenses is for health, transportation , and entertainment , and three-quartes for all other items. When the prices of items in the first category double and the prices of all other items quadruple, then does the CPI change overstate, understate, or measure accurately the

### Black-Scholes Formula for European Stocks

Given that Stock S and a European Call Option on Stock S The current market price of stock S is \$20. (So = \$20) This option of stock S has Exercise Price x=\$21 and Expiration Date is after 1 year (t=1) The Risk free rate is 3%(Rf=3%). this rate is based on continuously compounding. Suppose the market price of this option i

### Darwin, Inc

Shares of Darwin, Inc. sell for \$20 per share. 40% of earnings are paid in dividends. What is the dividend yield? Earnings are \$100,000, and there are 10,000 shares of stock outstanding.

### Receipts and receivables

US Sports Company projects the following sales: April May June \$75,000 \$95,000 \$110,000 Ninety percent of US' sales are on credit with 60 percent of receivables collected in the month after the sale and the rest of receivables are collected in the second month after the sale. February sales were