the question is attached. please, help me
Assume a simple world in which the U.S. exports soft drinks and beer to France and imports wine from France. If the U.S. imposes large tariffs on the French wine, explain the likely impact on the values of the U.S. beverage firms, U.S. wine producers, the French beverage firms, and the French...
Kingston Development Corp. purchased a piece of property for $2.79 million. The firm paid a down payment of 15 percent in cash and financed the balance. The loan terms require monthly payments for 15 years at an annual percentage rate of 7.75 percent, compounded monthly. What is the amount of...
The Pawn Shop loans money at an annual rate of 21 percent and compounds interest weekly. What is the actual rate being charged on these loans?
You would like to establish a trust fund that will provide $120,000 a year forever for your heirs. The trust fund is going to be invested very conservatively so the expected rate of return is only 5.75 percent. How much money must you deposit today to fund this gift for your heirs?
City Bank wants to appear competitive based on quoted loan rates and thus must offer a 7.75 percent annual percentage rate on its loans. What is the maximum rate the bank can actually earn based on the quoted rate?
Palm Inc. In 2000 the firm 3Com spun out its personal digital assistant division as Palm Inc. On February 23, 2001, the financial services firm Telerate reported the following information about Palm. The closing price for a share of Palm was $21.69. Palm had 565,946,000 shares...
Construct a Replicating Portfolio (RP) to replicate a 1.5-year Bond-0 that pays 11.59 percent of coupon per year. The available bonds for replication are: a one year zero coupon Bond-1, a 1.5-year Bond-2 that pays 9.59 percent coupon per year, and a 1-year Bond-3 which pays 13.59 percent coupon...
The current price of a 6-month zero coupon bond with a face value of $100 is 95.65. If a 9-month strip with a face value of $100 is currently trading for 94.65, find the forward interest rate for the 6 to 9 month period. Solve by both continuous compounding and quarterly compounding. Write your...
If a half-year 5.59 percent coupon bond (paying twice per year) is trading at 102.35 and a one-year 11.59 percent coupon bond (paying twice per year) is trading at 108.7, find half-year and one-year discount factors. The face value of either bond is $100. Assume semi-annual compounding. Write...
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1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10