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How do you calculate a range of yield to maturity (YTM) when you have a 5year-fixed term deposit at a bank. You get a fixed interest rate 4% p. a. for the first half of your deposit.
The exchange rate on this date was 0.77euros/$. Assume no repayment of principal and an exchange rate today of 0.74euros/$. What is the current value of the CD principal ? What is the current value
If your 15 year-old daughter's wedding is going to cost you and estimated $35,000 in 7 years, how much money should you set aside today on a saving fund earning 5.5% per year with continuous compoun
A firm has EBIT of $300,000 and depreciation expense of $12,000. Fixed charges total $44,000. Interest expense totals $7,000. What is the firm's cash coverage ratio
What is your weighted average cost of capital? (calculate and show the work) What coud this business do to bring this cost down?
Suppose that this person has a 40% chance of wealth of $50,000 and a 60% chance of wealth of $1,000,000 as summarized by P(0.40, $50,000, $1,000,000). Construct a graph of this utility function (rec
Determine the expected return on your portfolio. Determine the portfolio beta (βP). Given the portfolio beta and the assumptions that the risk-free rate (rRF) is 7 percent and the expected retur
Your salary will increase at 2.5 percent per year, and you can earn a 14.2 percent return on the money you invest. If you save a constant percentage of your salary, what percentage of your salary mu
Explain cost of capital in terms of the financing costs to the corporations. Include a detailed explanation of the following:
Brian Donlvey expects to have $32,000 in his savings account 8 years from now. If he earns 9% interest on his investment, what should he invest today?
Discuss and provide examples of at least four derivative securities. Be sure to include the pros and cons of each one.
What is meant by the "Self-Supporting Growth Rate?" How is this rate related to the AFN equation, and how can the equation be used to calculate the self-supporting growth rate?
In a short paper, describe two difficulties or challenges businesses face when estimating the incremental cash flows of a proposed project.
Suppose Frank and Sarah are unsure about what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 2 percent rate of return? Frank should
Circle Stores has net income of $41,000, a profit margin of 6.7 percent, and a return on assets of 9 percent. What is the capital intensity ratio?
Why do firms like Southwest hedge? What are the benefits of hedging? (Suggestion: refer to Carter, Rogers and Simkins (2004) for assistance in answering this question).
If the beta of Puritan stock equals 1.6, the risk-free rate equals 6%, and the expected return on the market portfolio equals 11% then what is its cost of equity.
How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate?
Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000, respectively. The firm has a cash balance of $5,00
Given your risk tolerance and your need to diversify, explain how the selected realized returns (1926-2006) page 212 and the effects of portfolio risk for average stocks will impact your future inve
A firm has net income of $5,890 and interest expense of $2,130. The tax rate is 34 percent. What is the firm's times interest earned ratio?
What are variable costs and fixed costs? What are some examples of each? How are these costs estimated in forecasting operating expenses?
What is the difference between average tax rate and marginal tax rate? Which one should we use in calculating incremental after-tax cash flows?
What is the difference between nominal and real cash flows? Which rate of return should we use to discount each type of cash flow?
Why do we use forecasted incremental after-tax free cash flows instead of forecasted accounting earnings in estimating the NPV of a project?