An investor purchases on margin Orange Computer for $30 a share. The stock s price subsequently rose to $50 a share at which time the investor sold the stock. If the margin requirement is 60 percent and the interest rate on borrowed funds was 7 percent,What would have been the return if the...
A bond issued by Carris, Inc. 10 years ago has a coupon rate of 10% and a face value of $1,000. The bond will mature 4 years from now. What is the value TODAY (to the nearest dollar) to an investor with a required return of 6%?
I'm having problems understand the instructions. In this second assignment you are asked to write a 2- to 4-page analysis involving a) the application of a percentage of sales model to recent financial statements of your chosen company, b) the calculation of internal and sustainable growth...
ComChip is a computer chip manufacturer. Its stock is selling at $50 per share. Estimated earnings next year total $200,000. The company currently has 100,000 shares of common stock outstanding and will pay $20,000 in dividends. What is the firm's P/E ratio? A) 50.00 B) 45.80 C) 25.00 D)...
10. You are considering an annuity which costs $100,000 today. The annuity pays $6,000 a year. The rate of return is 4.5%. What is the length of the annuity time period? A. 24.96 years B. 29.48 years C. 31.49 years D. 33.08 years E. 38.00 years MUST SHOW ALL WORK
Cost savings question 7-11
18. What is the net present value of a project with the following cash flows and a required return of 12%? Year Cash Flow 0 -$28,900 1 $12,450 2 $19,630 3 $ 2,750 A. -$287.22 B. -$177.62 C. $177.62 D. $204.36 E. $287.22 MUST SHOW ALL WORK
19. Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8%? Why or why not? Year Cash Flow 0 -$18,600 1 $10,000 2 $ 7,300 3 $ 3,700 A. yes; because the PI is 1.008. B. yes; because the PI is .992. C. yes; because...
the real risk free rate is 3 percent. Inflation is expected to be 2 percent this year and 4 percent during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2 year treasury securities?
an 8 percent semiannual coupon bond matures in 5 years. The bond has a face value of $1000.00 and a current yield of 8.21 percent. What are the bond's price and YTM?
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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