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Get college assignment help at uniessay writers Question 14 (3 points) The most important role of the financial decision maker is to always make decisions that are in the best interest of the suppliers of debt capital. True False

Question: You have borrowed $20,000 on margin to buy shares in Ixnay, which is now selling per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share. Will you receive a margin call? b. How low can the price of Ixnay shares fall before you receive a margin call? at $40 a.

Q1-Mutual funds provide the following for their shareholders. A. diversification B. professional management C. record keeping and administration D. all of the se options

Q2-Assume that you have just purchased some shares in an investment company reporting $500 million in assets, $50 million in liabilities, and 50 million shares outstanding. What is the net asset value (NAV) of these shares? A.$12 B.$9 C.$10 D. $1

Q3- either buy into or exit from the fund. fund is defined as one in which the fund charges a sales commission to A.A load B.A no-load C. An index D.A speciálized-sector

2. Analysis of an expansion project Companies invest in expansion projects with the expectation of increasing the earnings of its business Consider the case of McFann Co.: McFann Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Unit sales 3,500 4,000 4,200 4,250 Sales price $38.50 $39.88 $40.15 $41.55 Variable cost per unit $22.34 $22.85 $23.67 $23.87 Fixed operating costs except depreciation $37,500 $38,120 $37,000 $39,560 Accelerated depreciation rater 15 % 33% 45% 7% This project will require an investment of $20.000 in new Determine what the project’s net present value (NPV) would be when using accelerated depreciation. equipment. The equipment will have no salvage value at the end of the project’s four-year Ife. McFann pays a constant tax rate of 40 % , and it has a welghted average cost of capital (WACC) of 11% . Determine what the project’s net present value (NPV) would be when using accelerated depreciation. O $39.736 O $35,762) O $45.696 O $47,683 Now determine what the project’s NPV would be when using straight-line depreciation. $39,394 I $45,303 deoreciation method will result in the highest NPV for the pr es1 212 Using the $37,424 No other firm would take on this project if McFann turns it down. How much should McFann reduce the NPV of this prolect if it discoy this orglect would reduce one of its division’s net after-tax cash fows by $400 for each vear of the fourvear prolect? O $931 O $1.365 $1.055 O $1.241 Contact

(b). Which of the following positions benefit given the changes specified in the table below? Indicate your answer in the cell next to the specified scenario. The first row shows an example (6 marks) a. Long position in a call b. Short position in a call c. Long position in a put d. Short position in a put Possible changes Position/s to be benefited Example: Underlying asset price increases а, d Risk free interest rate increases Underlying asset volatility decreases Unexpected dividend to be paid before option expiration

(c). Suppose the price of a European call option according to risk neutral binomial model is $4.76, but it is actually sold in the market for $6, which of the following strategies will yield arbitrage profit? (3 marks) A. buying the option and selling (short) the replicating portfolio B. borrowing at the risk-free interest rate to buy the option and buy the replicating portfolio C. selling (short) the option and selling (short) the replicating portfolio D. selling (short) the option and buying the replicating portfolio

DISCUSSTUn Course Materials Cash Flow Estimation and Risk Analysis Graded Assignment Read Chapter 11 | Back to Assignment Due Friday 06.21.19 at 11:45 Pl Attempts: Keep the Highest: /3 3. Inflation in project analysis Aa Aa E It is often easy to overlook the impact of inflation on the net present value of the project. Not incorporating the impact of inflation in determining the value of the cash flows of the project can result in erroneous estimations. Consider the following scenario: Galaxy Corp. is considering opening a new division to produce units that it expects to sell at a price of $14,800 each in the first year of the project. The company expects the cost of producing each unit to be $6,450 in the first year; however, it expects the selling price and cost per unit to increase by 1% each year. Based on the preceding information, the company expects the selling price in the fourth year of the project to be , and it expects the cost per unit in the fourth year of the project to be Which of the following statements about inflation’s effect on net present value (NPV) is correct? When the selling price and cost per unit are expected to increase at the same rate, you do not need inflation into account when performing a capital budgeting analysis. O When the selling price and cost per unit are expected to increase at the same rate, forgetting to take inflation into account in a capital budgeting analysis will typically cause the estimated NPV to be lower than the true o take NPV. Flash Player WIN 32,0,0,207 Q3 3.34.1 0 2004-2010 Ppa 2013 Save

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You would like to have accumulated $1.8 million in investments when you retire in 26 years. You currently have $28,000 in investments. You expect your investments achieve 8 % per annum between now and retirement (compounded yearly). How much extra will you need to save at the end of each year until retirement? You should assume that the first cash flow is in one year and the last cash flow is in 26 years. You should ignore tax and inflation. Your answer should be to the nearest dollar and you should not include dollar signs or commas.

Problem 4-107 (algorithmic) Question Help The monthly income from a piece of commercial property is $1,200 (paid as a lump sum and $1,000 for property taxes. The property is surrounded by a security fence that cost $4,000 to install four years ago. Assume 52 weeks in a year and end-of-year cash flows t the end of the year). Annual expenses are $4,000 for upkeep of the property a. Ifi 15% per year (the MARR) is an acceptable interest rate, how much could you afford to pay now for this property if it is estimated to have a re-sale value of $170,000 ten years from now? b. Choose the correct cash flow diagram for this situation. Use the viewpoint of the buyer. c. Based on this situation, give examples of opportunity costs. d. Based on this situation, give examples of fixed costs. e. Based on this situation, give examples of sunk costs f. If the 15% interest had been a nominal interest rate, what would the corresponding effective annual interest rate have been with bi-weekly (every two weeks) compounding? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. a. The maximum affordable price of this property is S (Round to the nearest dollar.) Reference Discrete Compounding; i 15% Uniform Series Single Payment Capital Recovery Compound Amount Sinking Fund Compound Amount Present Present Worth Factor Factor Worth Factor Factor Factor Factor To Find F To Find P To Find P Given A To Find A To Find A To Find F Given P Given F Given A Given F Given P F/P P/F F/A P/A A/F A/P 1 1.1500 0.8696 1.0000 0.8696 1.0000 1.1500 0.4651 2 1.3225 0.7561 2.1500 1.6257 0.6151 3 2.2832 0.4380 1.5209 0.6575 3.4725 0.2880 1.7490 0.5718 0.3503 4.9934 2.8550 0.2003 3.3522 2.0114 0.4972 6.7424 0.1483 0.2983 2.3131 3.7845 0.1142 0.2642 0.4323 8.7537 7 0.3759 2.6600 11.0668 4.1604 0.0904 0.2404 0.3269 3.0590 13.7268 4.4873 0.0729 0.2229 9 0.2096 3.5179 0.2843 16.7858 4.7716 0.0596 0.0493 4.0456 0.1993 10 0.2472 20.3037 5.0188 5.2337 11 4.6524 0.2149 24.3493 0.0411 0.1911 5.4206 12 5.3503 0.1869 29.0017 0.0345 0.1845 0.0291 0.1791 13 6.1528 0.1625 34.3519 5.5831 0.0247 0.1747 14 7.0757 0.1413 40.5047 5.7245 0.1229 47.5804 5.8474 0.0210 15 8.1371 0.1710 0.1069 5.9542 0.1679 16 9.3576 55.7175 0.0179 Print Done LO

Here is an anelysis of the one-year hold ing period returns produced by five different classes of assets over 75-year period (1926-2001): Arithmetic Mean of Standard Deviation of Returns Returns Small Company Stocks Large Company Stocks Leng-Term Treasury Bonds Intermediate-Term Treasury Bonds Treasury Bills 18.29% 12.49% 5.53% 5.30% 3.85% 39.28% 20.30% 8.18% 6.33% 3.25% Cuniain hau. -. Take-Home Problem Set #I You recently received $1,000,000 because you were the 1,000,000 person to purchase a 20- 3. ounce Sprite Zero. You want to invest the $1,000,000 by constructing a portfolio of securities. After looking at the historical returns produced by the five classes of assets in the authors analysis, you decided to begin to construct your portfolio by allocating the $1,000,000 to two of the assets in the analysis. You decide on the following allocation scheme: 80% to small stocks and 20% to treasury bills. You want to estimate your portfolio’s expected return and standard deviation based on your asset allocation scheme. You want to analyze the assets carefully to generate probability distributions of their expected returns. To satisfy your immediate curiosity, you decide to use the current T-bill rate of 3.2% and the historical values relative to the small stock from the above table to compute a very rough, preliminary estimate of your portfolio’s expected return and standard deviation. Compute your rough estimate of the expected return from your portfolio. (4 points) a) b) Compute your rough estimate of your portfolio’s standa deviation. (4 points)

15 pts) The following table displays the results regarding different AR processes for a variable Lars 3 AIC 02- 2.2345 2 0948 0257 BIC 2.1289 2.0176 2 0240 5 pts) Based on these results, discuss how you would model the autoregressive process of (a) C b) ( /5 pts) Describe one possible problem that this regression model may have. /5 pts) How would you test for this problem?

Ali Soe Please read the questions carefully, Make sure to show your work and explain your reasoning to get full credit I. ( /10 pts) Consider the following regression model Bo Br- u SupposC that the error term , follows an AR() model and z, is integrated of order 1 time series. (a) /5 pts) What problems does the regression model have? (b) ( 7s pts) Modify the regression model above so that is satisfics the assumption(s) mentioned in part (a).

13. Roland owes three debts: $500 due in one year; $1,500 due in two years, plus simple interest at 6%; $2,000 due in three years, plus simple interest at 5%. He wants to discharge these debts by paying $1,000 now and two equal but unknown payments in one and two years, respectively. Find the size of the equal payments if money is, at present, worth 10% simple interest. Use a focal date of two years. (10 marks)

14. Sylvia borrows $10,500 on August 25 and promises to make three equal payments, February 28. If money is worth 9.75% simple interest, what is the size of the equal payments? Use August 25 as the focal date. (12 marks) one on December 10, and one on October 15, one on

Question 8 (3 points) If the investor’s perception of the risk level of the firm changes to one of greater risk, the market value of the firm’s equity will decrease, all other things remaining the same. en 6… True False

Question 12 (3 points) When a firm’s capital structure changes to the use of more debt financing, this action will always reduce the WACC and increase equity investors’ returns. True False

20 of 52 Question 26 (4 points) If a firm adheres strictly to a residential distribution dividend policy (with all excess earnings distributed in the form of cash dividends), if the available positive investment opportunities exceed the year’s net income after taxes what is the impact on dividends? en 6… The dividend payout ratio would be the same as the previous year. No dividends will be paid for the year. eni 6 egg Capital rationing will occur to fund the best investment opportunities only. resto Sen Both B and C will likely occur

The post Question: Question 14 (3 Points) The Most Important Role Of The Financial Decision Maker Is To Always Make Decisions That Are In The Best Interest Of The Suppliers Of Debt Capital. True False appeared first on uniessay writers.

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November 3, 2019