Get college assignment help at uniessay writers Question 1 (20 marks) After conducting production and sale of be $16,500,000, and will cost an additional $300,000 to install. There is also an initial requirement of $800,000 of working capital. Sales for the company should increase resulting in net cash flows of $3,500,000 per annum before tax. The production should continue for 6 years and the depreciable items can be written off over the 6 years on a straight line basis. It is anticipated that the plant should have a residual value after 6 years of $1,200,000. In order to there will be an additional one-off marketing and research expense of $200,000 at the end of year 3. feasibility study costing $45,000, Golden Jewellery Limited, is considering the a new line ofjewellery. The initial cost of a new machine for production would a keep up with changing consumer tastęs, Assuming that the corporate tax rate is 30% and this company’s required rate of return is 10 % per annum, calculate whether or not the production line should go ahead. Please set out your work clearly and neatly. If you choose, you can take advantage of the table below or you can continue your workings on the foliowing page which has been intentionally left blank S
12 Which of the following are examples of instituti onal investors? Select ALL correct answers. Mutual funds Private equity firms Companies that are publicly traded on stock exchanges High net worth individuals
Photochronograph Corporation (PC) manufactures time series photographic equipment It is currently at its target debt-equity ratio of .75. It’s considering building a new $76 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $7.4 million in perpetuity. The company raises all equity from outside financing. There are three financing options: 1. A new issue of common stock: The flotation costs of the new common stock would be 6.3 percent of the amount raised. The required return on the company’s new equity is 12 percent. 2. A new issue of 20-year bonds: The flotation costs of the new bonds would be 2.8 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 5 percent, they will sell at par. 3. Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .15. (Assume there is no difference between the pretax and aftertax accounts payable cost.) What is the NPV of the new plant? Assume that PC has a 24 percent tax rate. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole dollar amount, e.g., 1,234,567.) NPV
Please answer the following questions Take care to note the different phases of adoption and adaptation of Chinese institutions, and divergences from those institutions. Also be sure to identify specific historical figures, key reforms, dates, etc. Answers MUST BE: -in FULL SENTENCES and PARAGRAPHS (be sure to separate paragraphs by whole lines when typing out on computer–do not write in one mega-paragraph!)—no bullet points, lists, etc. How did Japan/Korea (CHOOSE ONE) adopt, and then move away from the political, social, religious institutions that were introduced from China? How does Japan/Korea (CHOOSE ONE) look different or the same at the beginning and end of the time period covered? -What Chinese influences remained, what did not? -What changed over time, what did not, and why?
Titan Mining Corporation has 6.9 million shares of common stock outstanding, 250,000 shares of 4.2 percent preferred stock outstanding, and 135,000 bonds with a semiannual coupon rate of 5.7 percent outstanding, par value $1,000 each. The common stock currently sells for $67 per share and has a beta of 1.05, the preferred stock has a par value of $100 and currently sells for $89 per share, and the bonds have 18 years to maturity and sell for 107 percent of par. The market risk premium is 7.7 percent, T-bills are yielding 2.8 percent, and the company’s tax rate is 24 percent. a. What is the firm’s market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 1616.) b. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows? (Do not round intermediate calculations enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Debt a. Preferred stock Equity b. Discount rate %
Whh of the A) wholleowned is NOT a form of FD1 afmliate joint ventre D) greenfield investment risks are those that affect the MNE at the local or project level, but originate at the coutry level A) Country-specifie B) Fin C) Global-specifie D) none of the above Blocked funds are cash flows that: A) com egular intervals in standardized amounts or blocks. in transfer out.of a local country. B) have been C) come from a certain sect D) none of the above r region of the world. industries are NOT typically “protected” by government policy A) Textiles B) Defense C) Agriculture D) “Infant” The traditional financial analysis applied to foreign or domestic projects, to determine the project’s valne to the firm is called: ital analysis. B) capital budgeting. C) capital structure analysis. D) agency theory. A) cost f interest, r Where: i- the nominal rate In its approximate form the Fisher effect may be written as = the real rate of return andm = the expected rate of inflation. (r)(n) (r)(t) C) i r D) i r 2 For purposes of international capital budgeting, which of the following statements is NOT true? A) Managers must evaluate political risk because political events can drastically reduce the value or availability of expected cash flows. B) Parent cash flows must be distinguished from project cash flows. Each of these two types of flows contributes to a different view of value C) An array of nonfinancial payments can generate cash flows from subsidiaries to the parent, including payment of license fees and payments for imports from the parent. D) All of the above are true statements. A foreign firm that is 20% to 49% owned by a parent is called a/an: A) subsidiary B) affiliate. C) partner. D) rival. Whh of the A) wholleowned is NOT a form of FD1 afmliate joint ventre D) greenfield investment risks are those that affect the MNE at the local or project level, but originate at the coutry level A) Country-specifie B) Fin C) Global-specifie D) none of the above Blocked funds are cash flows that: A) com egular intervals in standardized amounts or blocks. in transfer out.of a local country. B) have been C) come from a certain sect D) none of the above r region of the world. industries are NOT typically “protected” by government policy A) Textiles B) Defense C) Agriculture D) “Infant” The traditional financial analysis applied to foreign or domestic projects, to determine the project’s valne to the firm is called: ital analysis. B) capital budgeting. C) capital structure analysis. D) agency theory. A) cost f interest, r Where: i- the nominal rate In its approximate form the Fisher effect may be written as = the real rate of return andm = the expected rate of inflation. (r)(n) (r)(t) C) i r D) i r 2 For purposes of international capital budgeting, which of the following statements is NOT true? A) Managers must evaluate political risk because political events can drastically reduce the value or availability of expected cash flows. B) Parent cash flows must be distinguished from project cash flows. Each of these two types of flows contributes to a different view of value C) An array of nonfinancial payments can generate cash flows from subsidiaries to the parent, including payment of license fees and payments for imports from the parent. D) All of the above are true statements. A foreign firm that is 20% to 49% owned by a parent is called a/an: A) subsidiary B) affiliate. C) partner. D) rival.
Systematic risk: ation of a security’s return B measured with beta. C) measured with standard deviation. D) none of the above Which of the following is NOT a portfolio diversification technique used by portfolio managers? A) diversify by type security C) diversiy the size of capitalization of the securities held D) All of the above are diversification techniques. apital market imperfections leading to financial market segmentation include: A B) corporate governance di fferences. C) regulatory barriers, D) all of the above Theoretically because their cash flows are diversified internationally A) equity ratios B) debt ratios C) temperatures D) none of the above than their domestic counterparts INES should be in a position to support higher For most firms, the cost of capital decreases to a low point as the firm beyond this optimal level, the cost of capital increases as the amount of debt A) decreases; increases B) decreases; decreases C) increases; increases D) increases; decreases debt financing. At some point :.. Not all firms have the same optimal capital structure. Factors that might influence include: firm’s capital structure industry in which it operates. B) the C) the collateral value of itedoperaing income. D) all of the above assets. Depositary receipts traded outside the United States are called A) Euro B) Global C) American D) none of the above depositary receipts. In general, which has the shorter maturity and is more appropriate for funding short-term inventory needs? A) commercial paper B) Euro-Medium-Term notes (EMTNS) C) the international bond market D) all of the above The OLI paradigm is an attempt to create a framework to explain why MNES choose other form of international venture. A) licensing B) joint ventures C) foreign direct investment D) strategic alliances rather than some 4
Accon A) transla B) transaction g to a survey by Bank of America, exposure he type of foreign exchange risk most often hedged by firms is exposure ngent exp D) economic exposure. Translation exposure may elso be called ansaction B) ing C) accounti exposure D) currenes If an imbalance results from the accounting method used for translation, the imbalance is taken either to A) the bank; the B) depreciation; the current income; equity D) current liabilities; equity reserves office rket for foreign exchange swaps Which of the following is NOT an example of a financial cash flow? A) parent invested B) interest on intrafirm lendir payment for goods and services D) intrafirm principal-payments apital A sudden and unexpected appreciation of the U.S. dollar ch orcycles both domestically and abroad. (Assume other factors remain unchanged.) Brimmo Motorcycles internationally. home and , a U.S.-based firm, manufactures and sells elec allow sales to at A) increase; increase B) decrease; decrease C) increase; decrease D) decrease; increase Which of the following is NOT identified as a proactive management technique to reduce exposure to foreign exchange risk? A) matching currency cash flows B) cross-currency swaps C) remang a purely domestic firm D) parallel loans yility lows international capital mark of capital with a properly designed and implemented strategy to participate in A) liquid; segmented B) liquid; large C) illiquid; segmented D) large; illiquid domestic capital markets, it can achieve lower global If a firm lies within a country with cost and greater avail ading Empirical studies indicate that WACC for an MNE is higher than for their domestic competitors. Reasons cited for this increased cost include all of the following EXCEPT: A) agency costs. B) foreign exchange risk. C) political risk D) All of the above are cited as reasons for an MNE’s increased WACC.
Exercise III Calculate Weighted average Cost of Capital. The company is financing its investments by bank loans (data given below). Additionally the external capital is being added by long term financing through bond issue with fixed coupon payments. Corporate tax rate is equal 19%. Based on these data please calculate WARD. Loan 1 Interest rate for loan 1 4600000 $ Loan 2 7,0% 3300000 $ Interest rate for loan 2 6,0% Total value of the bond 10 000 000 $ Face value of one bond 10 000 $ Issue price (market price of the bond at the issue) 10 017 $ Nominal interest rate (coupon rate) 5,5 % Number of coupons during a year 2 Maturity of the bond 4 Corporate tax rate 19% The dividend payout is the result of multiplying the dividend payout per share from last year and current number of common shares being listed and retains the base for calculating the dividend payout ratio. Profitability ratios are being calculated based on the data from the last year. None financial revenues are taken into account. Equity = 8 000 000 $. The debt levels did not change from the last year 1 $ Dividend payout from the last period 17 $ urrent market price of common share 1230000 Number of common shares listed Financial results from the last period of time 9 000 000 S Sales revenues 55% Variable expenses (as % of the sales revenues) 800 000 $ Fixed expenses 19% Corporate tax rate Additionally please calculate how the cost of equity would change when the new issue of common share would be initiated The company would issue 300 thousand new common shares at the current market price with 15% of public offering fees.
If an identical product can be sold in two different markets, and no restrictions exist on the sale f product between markets, the product’s price should be the same e transportation both markets. This is known as: B) interest rate power parity. C) the law of one price. D) equilibrium. A s an exchange rate quoted today for settlement at some time.in the future. spot rate ) curren te at D) yield curve With A) the ma interest arbitrape: B) a “riskless” arbitrag C) the arbitrageur trades D) all of the above e out of equilibrium. exists. both the spot and future currency exchange markets. speculator in the will foreign currency a future market wishing to lock in a price at which they could contract A) buy; sell B) sell; buy buy; bay D) none of the above Which of the following statements regarding currency futures contracts and forward contracts is NOT true? A) A futures B) A futures contract is for a fixed maturity whereas the forward contract is for any maturity you like up to one dardized amount per currency whereas the forward contact is for sired year. C) Futures contracts trade on organized exchanges whereas forwards take place between individuals and banks with other banks via telecom linkages. D) All of the above are true. A call option whose exercise price is less than the spot price is said to be: A) in-the-money. at – the- money out-of-the-money. D) under-the-spot. states that differential rates of inflation between two countries tend to be offset over time by an equal but opposite change in the spot exchange rate. A) The Fisher Effect B) The International Fisher Effect C) Absolute Purchas ing Power Parity D) Relative Purchasing Power Parity exposure measures the change in the present value of the firm resulting from unexpected changes in exchange rates. A) Operating B) Transaction C) Translation D) Accounting son
Get college assignment help at uniessay writers Delam Magemad Student’s Name IBS RANEPA Multinational Financial Management Final Exam The re A) London Interbank Offered Rate B) Prima rate rate interest in the eurocurrency market is the C deral funds rate D) Treasury rate Which of the following is not always understood by MNE management? inancial instruments B) Pol C) Foreign D) Culture, history, and institutions risk nge risk The multinational phase of globalization A) c a firm as one that can be characterized by the: p of assets and enterprises in fore ntries B) potential f denominated in do dtional competitors or suppliers even though all accounts are with domestic firms and are C) imports from foreign suppliers and exports to foreign buyers. D) requirement that all employees be multilingual. The problems that may arise due to the separation fownership and management large business organizations are known as: separation anxiety. B) the agency problem. C) co D)none fdisconnect theory f the above Which of the following is NOT true regarding the market for foreign exchange? A) The market exchanged for s the physical and institutional structure through which the money of one country is another. B) The rate of exchange is determined in the market. C) Foreign exchange transactions are physically completed in the foreign exchange market. D) All of the above are true. While trading in foreign exchange takes place worldwide, the major currency trading centers are located in: A) London, New York, and Tokyo. B) New York, Zurich, and Bahrain. C) Paris, Frankfurt, and London. D) Los Angeles, New York, and London. are agents who facilitate trading between dealers without themselves becoming principals in the transaction. A) Central banks B) Foreign exchange brokers C) Arbitrageurs D) Foreign exchange dealers
Stock B State Probability 0.25 Stock A Recession 0,05 (0.19) Normal 0.50 0.25 0.06 0.14 0.10 Boom 0.34 Return Squared Deviation Return 0.05 Product Deviation Product 1% Stock A Probability Recession 0.25 0.0100 (0.0200) 0.04000 Normal 0.50 0.06 0.0300 (0.0100) 0.0300 0.01000 1% 0.25 Boom .10 .0000 04000 Varian E(R) 0020 0 Standard Deviation 20.00% Return Squared Product Product Stock B Probability De Return 900 00000 Rec (5.0000) 14.00 7.0000 9.00000 Normal 50 0000 5. ,25 34,00 E(R) 9,0000 11.0000 23,0000 Boom 529.00000 132 Variance 362.00000 1902.63% Standard Deviation
14 Which of the following M
15 What should a company do if it wants to reduce the number of shares outstanding? Pay cash dividends more projects Invest in Repurchase shares Issue more debt LC
Financial Ratios Problem Balance Sheet ($ in Millions) Income Statement ($ in Millions) 2015 Liabilities and Owners’ Equity Assets 2015 2015 Current Assets Current Liabilities Sales 6100 Cash 300 Accounts Payable 200 Cost of Goods Sold 500 Notes Payable Accounts Receivable 300 300 Administrative 1200 Expenses Inventory 1100 Total Current Liabilities 500 Depreciation 331 Total Current Assets 1700 Long-Term Liabilities Earnings Before Interest and Taxes Long-Term Debt 100 4069 Fixed Assets Total Long-Term Liabilities 100 Interest Expense 0 Property, Plant, and Equipment Less Accumulated Depreciation 2500 Owners’ Equity Taxable Income 4069 Taxes 1695 Common Stock ($1 Par) 1400 500 2374 Net Income Net Fixed Assets 1100 Capital Surplus 600 Dividends 1654 Retained Earnings 1100 Addition to Retained 720 Earnings Total Owners’ Equity 2800 Total Liab. and Owners’ 2800 2200 Other Information Total Assets Equity Number of Shares 500 Outstanding (Milions) Price per Share 11.49 Current ratio Quick ratio Inventory turnover (times) Average collection period Total asset turnover (times) Debt ratio Times interest earned Gross profit margin Operating profit margin Net profit margin Return on assets (ROA) Return on common equity (ROE)
GWayward.com $1,000 par value bonds have a 4.6% coupon paid semi-annually. They will mature in 6 years and 6 months and are currently selling at $1,015. The yield to maturity for these bonds is A) 2.17% B) 4.33% C) 4.45% D) 4.00%. Answer: B Learning Outcome: F-06 Compare and contrast different types of bonds and explain why bond prices change AACSB: Question Status: Learning Goal: Learning Goal 4 Analytical thinking Previous Edition
Jects should the firm implement? Explain. (2 marks) Question 8 (10 marks) You have been provided with the following information on C-B P/L which has the following on its books sts out stio Cost of Capital (After-tax cost) 6.8% Book value Market value $780,000 $600,000 $400,000 Long-term debt Ordinary equity Preference capital 750,000 $ 450,000 $ 300,000 po: 8.4% 7.1% a) What is the WACC % (using the BV weights)? (4 marks) b) What is the cost of capital and what is the role that it plays in making long-term investment decisions? (4 marks) Why is the cost of equity higher than long or short-term debt? (2 marks) c) END OF EXAMINATION Question 8 (10 marks) You have been provided with the following information on C-B P/L which has the following on its books sts out Cost of Capital (After-tax cost) 6.8% 8.4% 7.1% Book value Market value stio $780,000 $600,000 $400,000 $750,000 $ 450,000 $ 300,000 Long-term debt Ordinary equity Preference capital po: . a) What is the WACC % (using the BV weights)? (4 marks) b) What is the cost of capital and what is the role that it plays in making long-term investment decisions? (4 marks) c) Why is the cost of equity higher than long or short-term debt? (2 marks) END OF EXAMINATION
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Holm frbtuter Unt Inda-2019 11 so854 576514 ked Leam https//learn-ap-southeast-2-prod-fleet01-ythoss3-ap-southeast-2amaonaws.com/stddd02410/547525posecontent deposon n You and your brother are planning a large anniversary party three years from today for your grandparents’ 50th wedding anniversary. You have estimated that you will need $4500 for 9. this party. You can earn 4.5 % compounded annually on your savings. Required: a. How much would you and your brother have to deposit today in one lump sum to pay for the entire party? b. If you would like ‘to add a present for your grandparents that will cost you $1,000 more, how much would you and your brother need to put on your investment now?
CASELEI 2 Assume that it is now January 1, 2017, and you will need P1,000 on January 1, 2020. Your Bank compounds interest at an 8 percent annual rate a. How much must you deposit on January 1, 2018 to have a balance of P1,000 on January 1, 2021? b. If you want to make equal payments on each January 1 from 2018 through 2021 to accumulate the P1,000, how large must each of the payment be? c If your father were to offer either to make the payments calculated in part b or to give vou a lump sum of P750 on January 1, 2018, which would you choose? d. If you only have P750 on January 1, 2018, what interest rate compounded annually would you have to earn to have the necessary P1,000 on January 1, 2021? e. Suppose you can deposit only P186.29 each from January 1, 2018 through January 1, 2020 but you still need P1,000 on January 1, 2021, What interest rate with annual compounding must you seek out to achieve your goal. f. To help you reach your P1,000 goal, your father offers to give you P400 on January 1, 2018. You will get a part time job and make 6 additional payments of equal amounts each 6 months thereafter. If all of this money is deposited in a bank which pays 8 percent, compounded semi-annually, how large must each of the 6 payments be? What is the effective annual rate being paid by your bank in part f? h. Reinvestment risk is the risk that maturing securities (and coupon payments for bonds) will have to be reinvested at a lower rate of interest than they were previously earning. Is there a reinvestment risk involved in the preceding analysis? If so, how might this risk be eliminated? g.
1.Without referring to the preprogrammed function on your financial calculator, use the basic formula for present value, along with the given opportunity cost, r, and the number of periods, n, to calculate the present value of $1 in each of the cases shown in the following table. Case Opportunity cost, r Number of periods, n A 2% B 10 C D 13 2 2.Bond value and changing required returns Midland Utilities has outstanding a bond issue that will mature to its $1,000 par value in 12 years. The bond has a coupon interest rate of 11% and pays interest annually. a.Find the value of the bond if the required return is (1) 11%, (2) 15%, and (3) 8%. b. Plot your findings in part a on a set of “required return (x axis)-market value of bond (y axis)” axes. 4 23
The post Question: Question 1 (20 Marks) After Conducting Production And Sale Of Be $16,500,000, And Will Cost An Additional $300,000 To Install. There Is Also An Initial Requirement Of $800,000 Of Working Capital. Sales For The Company Should Increase Resulting In Net Cash Flows Of $3,500,000 Per Annum Before Tax. The Production Should Continue For 6 Years And The Depreciable… appeared first on uniessay writers.