Cash Flow and Risk Free Asset Essay

15. Investment A has an expected return of $25 million and investment B has an expected return of $5 million. Market risk analysts believe the standard deviation of the return A is $10 million, and for B is $30 million (negative returns are possible here).

1. Given the proposed financing plan, describe your approach (qualitatively) to value AirThread. Should Ms. Zhang use WACC, APV or some combination thereof? Explain. (2 points)

1. A corporation has 2000 shares outstanding and 6 directors are up for election. The stock features cumulative voting. About how many shares do you have to own to guarantee electing at least yourself to one position on the board of directors (ignoring possible ties)?

b. What would Mrs. Beach have to deposit if she were to use common stock and earned an average rate of return of 11%.

2. What would have been Martin’s return for years 2000, 2001, and 2002 if his portfolio had remained with its initial holdings?

3. If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock’s expected total return for the coming year?

21. Suppose you own a risky asset with an expected return of 12% and a standard deviation of 20%. If the

(ST-1) the Calgary company is attempting to establish a current assets policy. Fixed assets are $600,00, and the firm plans to maintain a 50 percent dept-to-assets ration. Calgary has no operating current liabilities. The interest rate is 10% on all dept. three alternative current asset policies are under consideration: 40, 50, and 60% of projected sales. The company expects to earn 15% before interest and taxes on sales of $3 million. Calgary effective federal-plus-state tax rate is 40%. What is the expected return on equity under each alternative?

This means that bond C should take up 96.296% of the portfolio. Calculating Year 1 and 2 the same way, we have:

Resort. Co had uncollateralized term loans (Original Debt) with Bank A of $129.6 million and Bank B of $302.4 million that totals $432 million as of December 31, 2010. There were also unamortized issuance costs of $3 million ($900,000 for Bank A and $2.1 million for Bank B). The maturity date of the Original Debt is December 31, 2020. Because of lower than expected travel during the holiday season, Resort. Co projected a short-term cash flow shortage and would not be able to meet the short term requirements of the Original Debt. In addition, Resort Co. was in default on another debt with Bank C that resulted in cross defaults with both Bank A and Bank B.

19. An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.13 and a variance

5. Estimate the project’s operating cash flows. (Hint: Again use Table 1as a guide) What are the project’s NPV, IRR, modified IRR (MIRR), and payback? Should the project be undertaken?

The stock returns for each month are given in Table 1. Based on the monthly returns, the standard deviation or variability of each stock has been calculated. The standard deviation for California REIT is 9.23% and the standard deviation for Brown Group is 8.17%. This standard deviation is the monthly standard deviation for each of the stocks. On the other hand the standard deviation of Vanguard Index 500 Trust is 4.61%. This shows that the standard deviation of both the individual

      The Statement of Cash flows is a very useful financial statement that can benefit investors, managers and even auditors. The statement of cash flows has not been around as long as the other financial statements such as the balance sheet or income statement. It basically “illustrates the way accounting evolves to meet the requirements of users of financial statements.” (Marshall, 2003) The statement of cash flows is designed to provide important information about the cash that a company has received or has paid out during a certain time period. It provides a reason for the changes of cash received and paid by a company by taking into

Your current portfolio holdings have an average pre-tax return of 3.23% 3-months average, 10.9% 1-year average, and 7.6% 5-years average. Standard deviation is considered a standard risk measure to the portfolio and measures the volatility of your returns. The 3-year historical standard deviation of your portfolio is 8.15%, higher risk than our 6.65% benchmark.