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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.

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?

Basic question about datasets. Not a

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

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

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

Average collection period

MICROLIMP'S account receiveables total $4,000,000 on annual sales of $400 million. What is the companys average collection period?

Return on assets

Company has annual sales of $5 million, maintains a net after tax profit margin of 5% and has a sales to assets ratio of 4. What is the return on assets? If its debt/equity ratio is 0.5, what is the return on equity?

Flotation costs

Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 9 percent loan, with gross proceeds of $4,250,000. Kendrick's pretax cost of debt is 9 percent. Flotation costs are estimated to be 1.25 percent of gross proceeds and will be amortized using a straight-line schedule over the 10-year life of the loan. Kendrick is

Journalize Adjusting Entries

The ledger of Salizar Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $40,000. Instructions (a) If Allowance for Doubtful Accounts has a credit balance of $2,500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debt

Working Capital Problems

4. Your firm has an average collection period of 48 days. Current practice is to factor all receivables immediately at a 2 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely. 5. Firm Z has net working capital of $900, current liabilities of $4,320, and inventory o

4 questions: stocks

You believe that the required return on Dynegy stock is 16% and that the expected dividend growth rate is 12%, which is expected to remain constant for the foreseeable future. Is the stock currently overvalued, undervalued, or fairly priced? a. Overvalued b. Undervalued c. Fairly priced d. Cannot tell without more info

Inheritance Decisions: Opportunity Cost

Your uncle has given you three alternatives for your inheritance. You can have $12,000 now; $2,000 per year for the next eight years; or $18,000 at the end of eight years. You assume your opportunity cost or discount rate is 12% annually. Which inheritance alternative would be best? Why? (see details in attached file) Con

Check my answers please

True False 1. The discount rate is related to the capitalization rate by the relationship discount rate = capitalization rate + long term sustainable growth rate. T or F? 2. The concept of present value is the inverse of future value compounding. T or F? 3. The IRR is the discount rate that will cause the net present val

Levered and unlevered firms: Estimate firm A's cost of capital. Estimate firm B's rate of return on reinvested funds. Estimate firm C's equity cost of capital. What is firm C's cost of capital if corporate tax is 30%?

A) Firm A is an all equity financed firm. Its current equity price is £1.06 cum dividend. Also, its current earnings per share (eps) and current dividend payment are 20p and 12p, respectively. The market expects the ratio of eps to dividend to stay the same in the future. Firm A's rate of return on reinvested funds is equal to

Cost Allocation

I would like help on identify the relative advantages and disadvantages of each of the three primary cost allocation methods (Direct Allocation, Step-Down Allocation, and Reciprocal Allocation).

Calculating Market Value Ratios

Company A has additions to retained earnings for the year end of $300,000. The firm paid out $220,000 in cash dividends, and it has ending total equity of $5 million. If Comapany A currently has 300,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? If the stoc

Article on ethics considerations in financial management

Use the Internet or other resources to locate an article regarding ethics considerations in financial management. Prepare an analysis of your article. Discuss how ethics impacts the financial decision-making process and explain the ethics considerations involved in the financial decision making outlined in your article. Identify

Liquidity

1. Explain why financial ratios are more meaningful for financial analysis than individual entries? Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a compa

How corporations issue Securities

Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO Shares allocated to me Price per share Initial Return A 500 $10

Net present value and other investment criteria

NPV/IRR. Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual growing stream of cash flows. Cash flow at the end of this year will be $5,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 5 percent. a. If the discount rate for th

Suppose the expected return and standard deviation

Suppose the expected returns and standard deviations of stocks A and B are E(R^A)=0.15, E(r^B)=0.25, s^a=0.1, and s^b=0.2, respectively. a.Calculate the expested return and standard deviation portfolio that is composed of 40 percent A and 60 percent B when the correlation between returns on A and B is 0.5. b. Calculate the

Employee Stock Options/Short Essay

Employee Stock Options/Short Essay How do you understand this statement: "By granting employee stock options?" Can we say that employee stock options act like an investment? That is why, as any investment, it incurs a risk. Right?

Managerial Economics-Reliability

1) Given the following component reliabilities of a simple system consisting of 3 components,Find the reliability of the system (an electrical Current will travel from pt A to B successfully C1 C2 C3 A---.996----.990----.860----B (Series system) 2) Given the parallel arrangement of the some compo

Pricing types

Describe the difference between Penetration and Prestige pricing. Give an example of each as well as the benefits and disadvantages of the two types of pricing.

Employee Stock Options

Application: In a conventional employee stock-options plan, key employees are granted the right to buy a fixed number of shares for a predetermined period. The number of shares granted depends on the employee's level of responsibility. Usually, the number of shares granted under an employee stock-option plan is commensur