Fin 515 Week 4 Weekly Problems and Midterm Exam

. Question 2 . 2 out of 2 points Which of the following statements regarding a 15-year (180-month) $125,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

Problem 1: Jonathon Barrs is a manager for Easy Manufacturing, LLC. He wishes to evaluate three possible investments. These investments are for the purchase of new machine tools from Germany, Japan, and a local US manufacturer. The firm earns 10% on its investments and they have a risk index of 5%. The chart below lays out the expected return and expected risks of the three projects.

* Inflation or deflation and the rise of COGS. * Changes in the ability to obtain favorable financing. 3. What is the financial risk of the company (the debt to total $6,068 + $1,573 - $1,787 - $1,211 in millions = $4,643. 8. What is the company’s current Marginal Tax Rate? 36% 9. What is the Cost of Debt, before and after taxes? Using the interest rate for the largest debt…cannot use the weighted interest rate for the debt since it includes capital lease obligations with no stated rate and could not find in the notes to the financials. 5.4% After tax cost is .054 x (1-.36) = 3.5%

Ryerson University CFIN300 Midterm Exam Fall 2007 There are 2.0 hours in this exam. Version A Student Name ____________________________ (Please Print) Student Number _________________________________ Notes: 1. This is a closed book exam. You may only have pens, pencils and a calculator at

B. discount rate 13. The yield to maturity on a bond is: E. the current required market rate. 14. Global Enterprises has just signed a $3 million contract. The contract calls for a payment of $.5 million today, $.9 million one year from today, and $1.6 million two years from today. What is this contract really worth if Global Enterprises can earn 12 percent on its money?

@ 5% per annum FV = PV x (1+i)n FV = 50,000 x (1+5%)1 FV = 50,000 x 1.05 FV = 52,500 at maturity after a year @15% per annum FV = PV x (1+i)n FV = 50,000 x (1+15%)1 FV = 50,000 x 1.15 FV = 57,500 at maturity after a year c. BankSouth offers CDs with 10 What annual interest rate is needed to produce $200,000 after five years if only $100,000 is invested?

24. Mobilee Oil Company accepted a $10,000, 120-day note, dated March 3, at 8.5% to settle a past due accounts receivable. Mobilee Oil discount the note to raise cash on May 10 at a discounted rate of 9%. What proceeds did Mobilee Oil receive?

FAMILY NAME: ______________________________________ OTHER NAME(S): ______________________________________ STUDENT ID: ______________________________________ SIGNATURE: ______________________________________ PAPER ID: 00615 THE UNIVERSITY OF NEW SOUTH WALES AUSTRALIAN SCHOOL OF BUSINESS SCHOOL OF BANKING AND FINANCE FINS1613: BUSINESS FINANCE SEMESTER 1 2012 FINAL EXAM 1. TIME ALLOWED – 3 hours 2. THIS EXAMINATION PAPER HAS 19 PAGES 3. TOTAL NUMBER OF QUESTIONS – 45 Multiple Choice 4. TOTAL MARKS AVAILABLE –

10. Assuming the proposed 28 year bond is callable and sells for $1,225, what is the yield to first call? The yield to call would be 8.38% Do you think it is likely that the bond will be called? The coupon rate is higher than the market rate which would give strong evidence that it will be called

a. What would Mrs. Beach have to deposit if she were to use high quality corporate bonds an earned an average rate of return of 7%.

2. PPT slide 12. Exercise Pr.28 p. 248 (a,b,c). Trade credit discount. Compute the approximate annual interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations?

User Ms Julie Ciarlante Course FIN-601-001 - FA 13-14 Test FIN 601 Final Exam Started 12/12/13 7:19 PM Submitted 12/12/13 9:25 PM Status Completed Attempt Score 126 out of 135 points Time Elapsed 2 hours, 5 minutes out of 5 hours. Question 1 3 out of 3 points A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates, the bond will present the holder with capital ________ as it matures.

CCC will be lowered by 34.0 days 2. (TCO C) Your company has been offered credit terms of 4/30, net 90 days. What will be the nominal annual percentage cost of its nonfree trade credit if it pays 120

c. The market interest rate on dollar bonds drops significantly 3. A european corporation has issued bonds with a par value of Sfr 1,000 and an annual coupon of 5 percent. The last coupon on these bonds was paid four months ago, and their current clean price is 90 percent.

Lending Rate Borrowing Rate U.S. dollar 7.0% 7.2% Singapore dollar 22.0% 24.0% Diamond Bank considers borrowing 10 million Singapore dollars in the interbank market and investing the funds in dollars for 60 days. Estimate the profits (or losses) that could be earned from this strategy. Should Diamond Bank pursue this strategy?