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Get college assignment help at uniessay writers Question 5: Portfolio Performance Evaluation; International Diversification Your Aunt has been investing in a company’s shares over the last three years. The information on her investment actions and the relevant prices are provided in the following table: I. Year Share Price Action(s) Bought 100 shares. Received dividends of $1 per share on the shares owned and bought 50 more shares. Received dividends of $1.50 per share on the shares owned and bought 30 more shares. Received dividends of $2 per share on shares owned and sold all the shares owned. $20 $22 0 1 $25 2 $28 Calculate the following for your aunt’s investment: dollar weighted return; time- weighted arithmetic average return; and time weighted geometric average return. In a particular year, Aggie mutual fund earned a return of 15% by investing in the following asset classes: 11. Weight 10% 90% Asset class Return Bonds 6% 16% Stocks In the same year, a benchmark portfolio generated 10 % by investing in the following assets: Weight 50% 50% Asset class Return 5% 15% Bonds Stocks Calculate the contributions of asset allocation and security selection to the outperformance of Aggie mutual fund. Briefly explain two risk factors associated with international investing. III.

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Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20 % , ( 2) 32 % , ( 3 ) 19.2 % (4) 11.52 % , ( 5) 11.52% , ( 6) 5.76 %. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32 %. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12 % and the risk-free rate is 5%.Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What is Jake’s WACC? O 11.35% O 19.58% 14.46% 13.58% Answer 13.77% Question 23 1 pts Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20 %, ( 2) 32 % , (3) 19.2 %, ( 4) 11.52 %, (5) 11.52% , ( 6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32 %. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (Its Jake! he is a risky dog-dude!!), the expected market return is 12% and the risk-free rate is 5%. Finally, Jake has 36.000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What is the cost of preferred capital? 13.25% O 13.75% 14.75% 8.75% O 9.25% Next Previous Hide n Sub Stop sharing app.honorlock.com is sharing your screen.

C2: As a finance student, you are considering a potential investment in a company that appears to be of great value. a. The company is expected to earn $21 per share at the end of this year. If the fair rate of return for this stock is 10 percent, what is an appropriate price per share for the stock if the company pays out all earnings as dividends? b. If the company were to pay out half of its earnings as dividends and re-invest the remainder in the company to earn 12 percent, how would the value per share change? c. Interpret the difference between your answers to parts a. and b. ISK2: 5 marks]

B2: You deposit $30,000 for 4 years at 7% annual interest. In 4 years, you add $20,000 to your account, but the rate on your account changes to 9% annual interest (for existing balance and new deposit). You leave the account untouched for an additional 15 years. Required: How much money do you accumulate? (SK1: 5 marks

Section C [SKI, SK2: 10 mar C1: You are considering an investment in a project with a life of seven years, an initial outlay of $420,000, and annual after-tax cash flows of $171,000. The project also requires an increase in inventories of $66,000. This $66,000 investment in inventory is required at the outset of the project and will be released when the project is completed. The appropriate discount rate for this project is 10 percent. 1SK1: 5 marks] Required: Calculate the payback period for this project. b. Calculate the discounted payback period for this project. Calculate the NPV for this project. d. Should the project be accepted? Justify your answer. a. c.

4 Which of the following about conventional finance and behavioural finance is incorrect? Conventional finance argues that investors can process information correctly and make rational decisions a. b. Behavior finance claims that price can deviate from fundament value but will not last for an extended period. Convention finance believes prices are correct and equal to intrinsic value C. d. Behavior finance believes the financial market is not efficient. Behavior finance believes fundamental analysis or technical analysis could be used to earn abnormal returns e.

1 pts Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years Is: (1) 20%, (2) 32%, (3) 19.2%, (4) 11.52%, (5) 11.52%, (6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32%. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12 % and the risk-free rate is 5%.Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share.What is the cost of preferred capital? 13.25% 13.75% 14.75% 8.75% 9.25% Next Previous Subm Hide Stop sharing

You are considering an investment that costs $300 and produces cash flows over three years of $150, $200 and $300, respectively. If the WACC is 12 % , what is the discounted payback period? 2.07 yrs 2.47 yrs o2.54 yrs 2.79 yrs 2.03 yrs

11. [5 marks] For the cashflow diagram below: Cashflow $400,000 $330,000 $280,000 $300,000 $230,000 $180,000 $200,000 TIl $130,000 $80,000 $100,000 $- S 5 6 7 8 9 1 2 3 4 $(100,000) $(200,000) $(220,000) $(300,000) [a] Calculate the Net Present Value of the cashflows given, using a discount rate of 25% [3 marks] b] Write an equation to calculate the Net Present Value of the cashflows using Functional Notation (e.g: NPV = F*(P/F, i, n)) [2 marks]

Get college assignment help at uniessay writers Mid-Term Exam X https://newconnect.mheducation.com/flow/connect.html ami Gaved Help Save

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making the public offering, managers at Nabor have decided to make their qwn estimate of the fim’s comman stork valu The firm’s CEO has gathered data for nerforming the valuation using the free cash ficw valuation modiel The firm’s weighted average cost of capital is 12 % , and it has $2 ,350,000 of debt at market value and $470,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 years, 2016 through 2020, are given in the table, Beyond 2020 to infinity, the firm expects its free cash flow to grow by 5 % annually a. Estimate the value of Nabor Industries’ entire company by using the free cash fiow valuation model. tock value C. If the firm plans to issue 200.000 shares of common stock, what is its estimated value per share? Free cash flow (FCF) Year (t) 2016 $200,000 $230,000 $280,000 $360,000 $430,000 2017 2018 2019 2020

A Federal Reserve document states: “Due to concerns about potential conflicts of interest … Class A directors may not participate in most aspects of the appointment process of Reserve Bank presidents and first vice presidents.” a. Who are the Class A directors? b. What potential conflicts of interest is this document referring to? c. If there is a conflict of interest in the governance structure of the Federal Reserve Banks, why did Congress establish this structure when it passed the Federal Reserve Act in 1913?

http://newcorınect.mheducation.com/flow/connect.html Exam ved A loan is offered with monthly payments and a 12.25 percent APR. What’s the loan’s effective annual rate (EAR)? (Do not round Intermediate calculations and round your final answer to 2 decimal places.) Efective annual rate 1.04:%

Find an example of business corruption and briefly describe. Use marketing terminology in your comments.

Consider a firm with a contract to sell an asset for $148,000 five years from now. The asset costs $84,000 to produce today. a. Given a relevant discount rate of 13 percent per year, calculate the profit the firm will make on this asset. (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At what rate does the firm just break even? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Firm’s profit (loss) -6,764.56 a. Break-even rate b. 11.99 %

Parrino, Funda Help System Announcements S 4 BACK NEX PRINTER VERSION Problem 10.02 Sheridan, Inc. management is considering purchasing a new machine at a cost of $3,810,000. They expect this equipment to produce cash flows of $853,690, $939,950, $866,730, $1,069,400, $1,282,560, and $1,222,400 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e. -45.25. Do not round discount factors. Round other intermnediate calculations and final answer to 0 decimal places, e.g. 1,525.) The NPV is Question Attempts: 0 of 2 used SAVE FOR LATER SUBMIT ANSWE Activate Windows 7:1

Use agency; produce the pilot if favorable, sell if unfavorable No agency; sell the pilot Use agency; sell the pilot if favorable, produce if unfavorable No agency; produce the pilot

Question 10: Portfolio Performance Evaluation; International Diversification (a) Consider the following information regarding the performance of a portfolio manager and of a relevant benchmark in a recent month. Benchmark portfolio Portfolio manager Security Weight Return Return Weight Equity 0.60 2% 3% 0.70 Bonds 1% 0.30 1.5% 0.20 Cash 0.5% 0.10 0.10 0.5% (i How did the manager perform during the last month relative to the benchmark portfolio? (ii) What was the contribution of security selection to the relative performance of the manager? (iii) What was the contribution of asset allocation to the relative performance of the manager? (b) What are the two components of domestic return associated with an investment in foreign securities? Briefly explain a strategy that would guarantee a domestic risk- free rate of return for an investment in foreign securities.

Question 5: Portfolio Performance Evaluation; International Diversification You invested $100,000 in shares through your broker three years ago. The following table shows how your investment account grew each year during this period: I. Balance at the Year end of the year 0 $100,000 $120,000 1 $150,000 2 $100,000 3 Calculate the annual rate of return earned by your investment each year. (a) (b) What are the arithmetic average rate of return and geometric average rate of return earned by your investment? Explain the instances in which the two return metrics calculated in (ii) above are (c) useful.

The post Question: Question 5: Portfolio Performance Evaluation; International Diversification Your Aunt Has Been Investing In A Company’s Shares Over The Last Three Years. The Information On Her Investment Actions And The Relevant Prices Are Provided In The Following Table: I. Year Share Price Action(s) Bought 100 Shares. Received Dividends Of $1 Per Share On The Shares … appeared first on uniessay writers.

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November 3, 2019