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net effect to Microsoft's payment

8. Suppose Microsoft is paying LIBOR + 2% per annum to its lenders. If Microsoft enters into a interest rate swap with Intel to receive LIBOR+1 and pay fixed 5.9%, what will be the net effect to Microsoft's payment?

Futures and Options - Forward Rate

Help!! Please see attachment for data. Here is the question. The actual data is attached. What is the value of an FRA that promises to pay you 5.0% (compounded semi-annually) on a principal of $1 million for the six-month period starting in 18 months?

rates with continuous compounding

The 6-month, 12-month, 18-month, and 24-month zero rates are 3%, 3.5%, 3.75%, and 4% with semi-annual compounding. Q1: What are the rates with continuous compounding? Q2: What is the forward rate for the six-month period beginning in 18 months?

I need help with these problems

Please help me solve these problems. Problem The following are the information on the income statements of an Oil firm, for 2007 and 2008 (all dollar figures are in millions): 2007 Sales: $12,200.00, cost of goods sold: 72% of sales, depreciation: $850.00, additional CAPEX: $900.00, additional investment in net working ca

Managerial Decisions for Firms with Marketing Power

Antitrust authorities at the Federal Trade commission are reviewing your company's recent merger with a rival firm. The FTC is concerned that the merger of the two rival firms in the same market will increase market power. A hearing is scheduled for your company to present arguments that your firm has not increased its market p

solution to a work allocation problem

As a manager of a financial planning business you have two financial planners, Phil and Francis. In an hour, Phil can produce either one financial statement or answer 8 phone calls, while Francis can either produce 2 financial statements or answer 10 phone calls. Does either person have an absolute advantage in producing both pr

Problems with Call and Put Options

A trader buys a European call option and sells a European put option. The options have the same underlying asset, strike price, and maturity. Describe the trader's position. Under what circumstances does the price of the call equal the price of the put?

Financial Analysis

The MorTex Company assembles garments entirely by hand even though a textile machine exists that can assemble garments faster than a human can. Workers cost $50 per day, and each additional laborer can produce 200 more units per day (ie. marginal product is constant and equal to 200). Installation of the first textile m

Financial Planning

Sosa Diet Supplements had earnings after taxes of $800,000 in the year 2008 with 200,000 shares of common stock outstanding. On January 1, 2009, the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 30 percent. a. Compute earnings

How the find the taxable income

Little Books Inc. recently reported net income of $3 million. Its operating income Income Statement (EBIT) was $6 million, and the company pays a 40 percent tax rate. What was the company's interest expense for the year? [Hint: Divide $3 million by (1 - T) = 0.6 to find taxable income.]

Accounting for stock dividends and stock splits

An electronics corporation's common stock is selling for $44 per share, and its common stockholders' equity is shown here. a. Show the impact of a 50% stock dividend. b. Show the impact of a 3-for-2 stock split. c. Describe how the stock market would react to each event. How would you explain the difference in reaction? P

WACC with rebalancing

A gourmet catering service has an unleveraged required return of r =43%. The company rebalances its capital structure each year to a target of L= 0.52. T * =0.20. The owner can borrow currently at a rate of rd =26%. What is the company's WACC? Please provide all equations used in detail

Determining Present Value of a Lease: Example Problem

If I commit to 6 annual lease payment of $100,000.00 and the first payment due immediately What is the present value of the lease is the borrowing rate is 9% and it tax rate is 35%? The lease payments are tax deductible.

how to calculate realized compound yield

I don't understand how to calculate realized compound yield. Is it the same as yield to maturity? Please see problem below. 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. Calculate the realized compound yield for an investor with a 2

Expected return analysis

1. Sam Tsantes has analyzed two stocks, Acme Airlines and Ajax Travel Associates. His analysis concludes that Acme has a 30% chance of producing a return of 10% and a 70% chance of producing a return of 15%. At the same time, Ajax has a 30% chance of losing 25% and a 70% chance of producing a return of 50%. If Sam invests

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

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

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