[ad_1]
Get college assignment help at uniessay writers CAPITAL BUDGET PROJECT FOR ONLINE COURSE Evaluate a capital budget project using financial time value of money Objective: calculations to determine likelihood of investment. Project: and why it is needed. Explain any revenues that should be realized and expenses associated with the capital project resulting in the cash flows over the useful life of the capital. Show calculations regarding establishment of cash flows. perform a financial analysis be pursued. This analysis should include net present value, payback period and IRR if applicable. Present your findings and give your conclusion/recommendations. Keep in mind that you are investors would want to see before investing. Choose a capital budget project. Give brief explanation of what project is 2 Next you are to to determine if capital investment is reasonable and should trying to get investors to invest in your project. Hint: Anticipate what Presentation Guide: Format: Powerpoint with use of excel worksheets and audio recording. Length 5-8 minutes Thus be succinct and prepared! Description of Capital Investment and reason for investment Determination of Revenues and Expenses (high level) Yearly Perform Financial Analysis (Capital investment calculations) Content: life ws on Conclusion/Recommendation
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 11% annual coupon. Bond L matures in 20 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturity and that 20 more payments are to be made on Bond L a. What will the value of the Bond L be if the going interest rate is 4%? Round your answer to the nearest cent $ What will the value of the Bond S be if the going interest rate is 4%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 10%? Round your answer to the nearest cent. S the going interest rate is 10% Round your answer to the nearest cent What will the value of the Bond S be S What will the value of the Bond L be if the going interest rate s 11%? Round your answer to the nearest cent. S What will the value of the Bond S be the going interest rate is 11%? Round your answer to the nearest cent. S b. Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change? I. Long-term bonds have lower reinvestment rate risk than do short-term bonds. II. The change in price due to change in the required rate of return increases as a bond’s maturity decreases. III. Long-term bonds have greater interest rate risk than do short-term bonds. IV. The change in price due to a change in the required rate of return decreases as a bond’s maturity increases v. Long-term bonds have lower interest rate risk than do short-term bonds. -Select- #
YIELD TO CALL f call Nine years ago the Templeton Company issued 30-year bonds with an 12% annual coupon rate at their $$1,000 par value. The bonds had an 8% call premium, with 5 years protection. Today Templeton called the bonds a. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places. b. Why the investor should or should not be happy that Templeton called them. I. Since the bonds have been called, interest rates interest receipts, they can now do so at hiqher interest rates ust have risen sufficiently such that the YTC is greater than the YTM. If investors wish to reinvest their II intorast Donds einteract u ave risen sufficiently such that the YTC is greater than the YTM, If investors wish to reinvest their capital gain on their tax returns. III. Since the bonds have been called, investors will receive a call premium and can declare IV. Since the bonds have been called, investors will no longer need to consider reinvestment rate risk. v. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC receipts, they must do so at lower interest rates. less than the YTM. If investors wish to reinvest their interest Select-
A firm’s bonds have a maturity of 10 years with $1,000 face value, have an 8% semiannual coupon, are callable in 5 years at $1,050, and currently sell at a price of $1,096.70. a. What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. b. What is their nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places. c. What return should investors expect to earn on these bonds? I. Investors would expect the bonds to be called and to earn the YTC because the YTC less than the YTM. II. Investors would expect the bonds to be called and to earn the YTC because the YTM is less than the YTC. III. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM IV. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC V. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. -Select5
YIELD TO MATURITY AND FUTURE PRICE bond has a $1,000 par value, 12 years to maturity, and a 8% annual coupon and sells for $980. a. What is its yield to maturity (YTM)? Round your answer to two decimal places. b. Assume that the yield to maturity remains constant for the next 4 years. What will the price be 4 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.
Madsen Motors’s bonds have 7 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate 6%; and the yield to maturity is 9%. What the bond’s current market price? Round your answer to the nearest cent.
You are able to deposit $2875 semiannually into a bank account that is paying 5% annually How much will you be able to accumulate after 11 years? Your Answer:
An individual has $50,000 invested in a stock with a beta of 0.3 and another $60,000 invested in a stock with a beta of 1.9. If these are the only two investments her portfolio, what is her portfolio’s beta? Round your answer to two decimal places. Assume that the risk-free rate s 5.5% and the required return on the market is 11%. What is the required rate of return on a stock with a beta of 1.1? Round your answer to two decimal places. % 3%, and the market risk premium is 7.5 %. Mudd has Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 5% rate of inflation in the future. The real risk-free rate beta of 2, and its realized rate of return has averaged 10.5% over the past 5 years. Round your answer to two decimal places. % Suppose you are the money manager of a $4.47 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta 200,000 1 50 (0.50) F 620,000 C 1,100,000 1.25 2,550,000 0.75 f the market’s required rate of return is 11% and the risk-free rate is 6% , what is the fund’s required rate return? Do not round intermediate calculations. Round your answer to two decimal places.
Assume that the risk-free rate is 5% and the market risk premium is 5%. a. What is the required return for the overall stock market? Round your answer to two decimal places. % b. What is the required rate of return on a stock with a beta of 1.3? Round your answer to two decimal places. %
QUESTION 36 Valente Company’s bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 8.7% on these bonds. What is the bond’s price? $930.25 $876.86 $839.85 $845.89 $792.89
Get college assignment help at uniessay writers Dr.Lionel A. Messi is considering an annuity which costs $100,000 today. The annuity pays $6,000 at the end of each year. The rate of return is 4.5%. What is the length of the annuity time period? 24.96 years 29.48 years O 31.49 years 33.08 years 38.00 years
Insigne Corporation is considering two investment projects (projects A and project B) that are exclusive. Project A requires cash out flow of $15,000,000 today. The expected end-of-year cash inflows of each project the following table: mutually an initial cash out flow of $10,000,000 today and Project B requires an initial given in are Cash Inflow project A 3,500,000 6,000,000 6,000,000 9,000,000 Cash Inflow project B 7,500,000 8,000,000 4,000,000 4,500,000 Year Weighted average cost of capital is 13% for both projects. a. What is the IRR of each project’t? b. What is the NPV of each project? c. What is MIRR of each project? d. What is payback of each project? e. Which project should Insigne Corporation take? Please explain why. 1234
Based on the following information, calculate the expected return and standard deviation for two stocks: Probability Rate of Return Stock A State of the Economy Rate of Return Stock B Recession .25 05 -19 Normal 50 06 14 Boom 25 10 34 Fill in the value in the spreadsheet. Input area Stock A State Probability Stock B Recession 0.25 0.05 (0.19) Normal 0.50 0.06 0.14 Boom 0.25 0.10 0.34 Output area: Return Squared Deviation Stock A Deviation Probability Return Product Product Recession Normal Вoom E(R) 0.0000 Variance = Standard Deviation 0.00% Return Squared Stock B Deviation Deviation Probability Return Product Product Recession Normal Вoom E(R) 0.0000 Variance Standard Deviation 0.00%
Styles ding URE Rew capital structure, you would like to create a pie chart. Another pie chart that is available is the pie of pie chart, Using the pie A Chapter 16- Master it! The TL Corporation currently has no debt outstanding. Josh Culberson, the CFO, is considering restructuring the company by issuing debt and using the proceeds to repurchase out standing equity. The company’s assets are worth $40 million, the stock price is $25 per share, and there are 1, 600, 000 shares outstanding. In the expected state of the economy, EBIT is expected to be $3 million. If there is a recession, EBIT would fall to $1.8 million and in an expansion EBIT would increase to $4. 3 million. If the company issues debt, it will issue a combination of short-tern debt and long-term debt. The ratio of short-tern debt to long term debt will be 0. 20. The short-term debt will have an interest rate of 3 percent and the long-term debt will have an interest rate of 8 percent. On the next worksheet, fill in the values in each table. For the debt-equity ratio, create a spinner that changes the debt-equity ratio. The resulting debt-equity ratio should range from 0 to 10 at increments of 0.1. a. Graph the EBIT and EPS for the TL Corporation on the same graph using a scatter plot. b. What is the breakeven EBIT between the current capital structure and the new capital structure? c. chart, Using the pie of pie chart, graph the equity and total debt in the main pie chart and the short-tern debt and long tern debt in d. the secondary pie chart. Note, if you right-click on a data series in the chart and select Format Data Series, Series Options, then To illustrate the new capital structure, you would like to create a pie chart. Another pie chart that is available is the pie of pie Split Series By wil1 permit you to display the series by a customized choice. In the custonization, you can select which data series you want displayed in the primary pie chart and the secondary pie chart. Master it! Solution Current Proposed 40, 000, 000 1, 111, 111 5, 555, 556 Assets $ 40, 000, 000 $ Short-term debt S Long-term debt. Debt S $ 6, 666, 667 33, 333, 333 Equity Short-term debt/Long-term de Debt-equity ratio Share price Shares outstanding Short-term debt interest rat $ 40, 000, 000 $ 0. 20 0.2 Counter: 25 $ 1, 333, 333 25 1, 600, 000 3% 3% Long-term debt interest rate 8% urrent Capital Structure: Debt $0 millio Expansion 4, 300, 000 Recession Expected EBIT 1, 800, 000 S 3, 000, 000 $ Interest Net income ROE EPS 2osed Capital Structure: Debt $6. 667 aili Recession Expected Expansion EBIT Interest Net income ROE EPS 2. 3 4 5 6 b. 7 8 9 6 b. 3 1 2 3 4 5 7 2 c. Breakeven EBIT 3 4 d. 5 6 7 8 70 71 72 73
Student 1: We would see absorption line spectra and the missing lines would correspond to the light from the fluorescent lamp. Student 2: I disagree. We would see an emission line spectra corresponding to nitrogen. This would happen because the nitrogen gas would absorb some energy from the light from the fluorescent lamp and would reemit this energy which would result in an emission line spectra. Which student, if any, do you agree with? Clearly explain why you agree or disagree with each student’s statement.
10p QUESTION 3 Which one of the following is the legal proceeding under which an insolvent firm can be reorganized? 01.restructure process 2. rights offer 3. forced merger 04.bankruptcy 5. legal takeover
10 pa QUESTION 6 A business firm ceases to exist as a going concern as a result of which one of the following? 1.liquidation O2. share repurchase 3. capital restructuring 04. reorganization 5.divestiture
Mini Case: STOCK VALUATION AT RAGAN ENGINES Larissa has been talking with the company’s directors about the future of East Coast Yachts. To this point, the company has used outside suppliers for various key components of the company’s yachts, including engines. Larissa has decided that East Coast Yachts should consider the purchase of an engine manufacturer to allow East Coast Yachts to better integrate its supply chain and get more control over engine features. After investigating several possible companies, Larissa feels that the purchase of Ragan Engines, Inc., is a possibility. She has asked Dan Ervin to analyze Ragan’s value. Ragan Engines, Inc., was founded nine years ago by a brother and sister-Carrington and Genevieve Ragan-and has remained a privately owned company. The company manufactures marine engines for a variety of applications. Ragan has experienced rapid growth because of a proprietary technology that increases the fuel efficiency of its engines with very little sacrifice in performance. The company is equally owned by Carrington and Genevieve. The original agreement between the siblings gave each 150,000 shares of stock. Larissa has asked Dan to determine a value per share of Ragan stock. To accomplish this, Dan has gathered the folowing information about some of Ragan’s competitors that are publicly traded: EPS DPS Stock Price ROE Blue Ribband Motors Corp Bon Voyage Marine Inc. Nautilus Marine Engines $1.09 $16 $15.19 1.00% 1400% 52 12.49 1400 19.00 I16 (32) 23.05 18.00 N/A $16.9 Industry average $.64 $4 13.00% 17.00% Nautilus Marine Engines’s negative earnings per share (EPS) were the result of an accounting write- off last year. Without the write-off, EPS for the company would have been $1.97. Last year, Ragan had an EPS of $5.08 and paid a dividend to Carrington and Genevieve of $320,000 each. The company also had a return on equity of 25 percent. Larissa tells Dan that a required return for Ragan of 20 percent is appropriate. Assuming the company continues its current growth rate, what is the value per share of the company’s stock? 1 Dan has examined the company’s financial statements, as well as examining those of its competitors. Although Ragan currently has a technological advantage, Dan’s research indicates that Ragan’s competitors are investigating other methods to improve efficiency. Given this, Dan believes that Ragan’s technological advantage will last only for the next five years. After that period, the company’s growth will likely slow to the ind ustry average. Additionally, Dan believes that the required return the company uses is too high. He believes the industry average required return is more appropriate. Under Dan’s assumptions, what is the estimated stock price? 2. 3 What is the industry average price-earnings ratio? What is Ragan’s price-earnings ratio? Comment on any differences and explain why they may exist. 4 Assume the company’s growth rate declines to the industry average after five years. What percentage of the stock’s value is attributable to growth opportunities? Assume the company’s growth rate slows to the industry average in five years. What future return on equity does this imply? 5 Carrington and Genevieve are not sure if they should sell the company. If they do not sell the company outright to East Coast Yachts, they would like to try and increase the value of the company’s stock. In this case, they want to retain control of the company and do not want to sell stock to outside investors. They also feel that the company’s debt is at a manageable level and do not want to borrow more money. What steps can they take to try and increase the price of the stock? Are there any conditions under which this strategy would not increase the stock price? 6
Question 8 (15 Marks) KKK, a U.S. MNC, is contemplating making a foreign capital expenditure in India. The initial cost of the project is Indian Rupee (INR) 72mil The annual cash flows over the three year economic life of the project in INR are estimated to be 20mil, 30mil, and 55mil The parent firm’s cost of debt is 8%; equity beta is 1.3; US market return is 9%; US government bond yield is 3%; company tax rate is 30% Long-run inflation is forecasted to be 3 percent per annum in the U.S. and 7 percent in India The current spot foreign exchange rate is INR/USD 72.00. Please show all your workings: a) What is the weighted average cost of capital (WACC) in dollars? 1 mark b) Determine the NPV for the project in USD using local curency (INR) approach (Hint: you will need to use Fisher Effect to obtain the INR equivalent Dollar 15 marks WACC) c) Determine the NPV for the project in USD using period-by-period conversion approach. (Hint: This question requires you to convert your INR cash flows into USD using Purchasing Power Parity forecasted exchange rate.) 15 marks] d) Do you think the NPV in dollars would be higher or lower (comparing with Part C), if the actual pattern of INR/USD exchange rates in the next three years is: SO) 72, S() 75, S(2) = 78 and S(3) 81? And explain why? [Please note you don’t need to show the full calculation but explain your intuition here] 2 marks e) If KKK worries about some potential political uncertainty/risk in India, what would you advise KKK to do to manage political risk in India. (Hint: Your answer needs not have to be lengthy, just illustrate TWO strategies that you would 12 marks propose to KKK. Use less than 200 words to answer this question.)
EL AKTMENT BUSINESS FINANCE II FINAL EXAMINATION 1. Trailer Electric Company sells 500,000 standard wall switches a year. Each switch costs the c $2.0. The percentage cost of carrying the switch is 20% of inventory value. The company can ord switches from either of two competing manufacturers. Manufacturer A delivers in 3 days and re fixed ordering cost of $100 per order. Manufacturer B which would require per order, takes 5 days to deliver. To begin the analysis, assume that no safety stock is carried. a. Calculate Trailer’s EOQ for wall switches for both suppliers. b. How many orders a year must be placed with each supplier, assuming that only one supplier is u c.What are the reorder point levels for ordering from each supplier? d. Considering only inventory costs, should the firm order its wall switches from A or B? e. Assume that the firm chose Manufacturer B as its wall switch supplier. Teweles has been off percent discount if it orders 20,000 units or more at a time. Should the firm increase the ordering to 20,000 units and take the discount? a fixed ordering cos
(3) Unbiased Estimator Y is distributed N( 14, a2 ). Weighted sample mean is defined in the following: N Σ4r Y = – S.Σα =Ν (a) Please prove weighted sample mean is unbiased
The post Question: I Just A Layout What Should I Include In Each Slide Because I Am A Little Confused. appeared first on uniessay writers.
[ad_2]
Source link