Describe Why Some Bonds are Risky: Default Risk: Risk Premium: Impact of Economic Conditions

Q: 9. A $12,000 car loan at 2.5% for 4 years has a monthly payment of $2E for 3 years has a monthly…

A: Loan payments are paid by the monthly payment that carry the payment for interest and payment for…

Q: In the transit business, a rule of thumb suggests that for every 1% rise in fares, ridership will…

A: Current Ridership = 3500 Current Fare = 7 1% rise in fares will reduce ridership by 0.20% Update…

Q: The final option is for Tully to complete a doctorate degree in economics after finishing his…

A: The rate at which cash flows are discounted is known as the discount rate. It can be the internal…

Q: A contract has been signed to lease a building at P50, 000 per year with an annual increase of P1,…

A: First year lease (L1) = P 50000 L2 = P 51000 L3 = P 52000 L4 = P 53000 L5 = P 54000 r = 7%

Q: Problem 1 The cash flow shown in Figure 1 is in $1000 units. With an interest rate of 10%, determine…

A: Interest rate = 10% Year Cash flow 1 500000 2 600000 3 700000 4 800000 5 900000 6…

Q: an investor, Erik, is offered the investment opportunities described in the table below. Each…

A: Risk averse means a person who takes risk for additional return. Risk loving means a person who…

Q: 30. The internal rate of return is the simple (noncompounded) interest rate that equates the present…

A: The internal rate of return (IRR) is the rate at which initial investment equals the present value…

Q: Why do firms hedge their risk and what determines the choice of contract for hedging?

A: Hedging is a risk management approach that involves acquiring an opposing position in a comparable…

Q: The component that analyzes profitability is • , and its value is The component that analyses…

A: DuPont Analysis has been developed by the DuPont Corporation for decomposing different aspects of…

Q: 5. Determine the capitalized cost of an expenditure of P 200,000 at time 0, P 25,000 in years 2…

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: Fatima recently set up a tax-deferred annuity to save for her retirement. She arranged to have BD…

A: Working Note # 1 : P= Payment per period = BD 110 R= Rate of interest per period =2%/12 =…

Q: A key feature of Kaizen is that improvements are achieved by making

A: Given statement is Features of kalzen is improvements  by making.

Q: The following information is from Dave's Sporting Goods. Dave’s is a Midwest sporting goods store…

A: Given in the question is the information regarding DAVE'S SPORTING GOODS,

Q: Your company must make a $326,000 balloon payment on a lease 2 years and 9 months from today. You…

A: Balloon payment needed = $326000 n = 2 years 9 months = 11 quarters r = 4% per year = 1% per quarter…

Q: Consider the case of Alexander Industries: Alexander Industries is considering a project that…

A: Given that: Equipment cost= $3570000 Company's Tax Rate=25% hence Equipment cost after tax =…

Q: Outline four factors that determine the choice of the best technique of risk control for a small…

A: A small business is a privately owned corporation, partnership, or sole proprietorship having fewer…

Q: 4. Find the quarterly payment inr 21 quatters to discharge an obligation of P24,500, if money is…

A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either…

Q: Deferred Annuity (please don’t use excel) 1. Find the present value of a deferred annuity of P1,250…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: A 180-day simple interest note was signed on March 15, 20xx with a face value of 65,000 at 8.25% per…

A: Here, Face value = 65,000 Interest rate = 8.25% Discount rate = 11% Time to maturity = 180 days To…

Q: Boiser deposited part of her royalty in a bank at the end of each year for 10 years. The bank paid…

A: We need to use future value of ordinary annuity formula to calculate total amount of deposited…

Q: What is the relationship between return on capital investment and the risk associated with the…

A: Return on invested capital is referred as an amount of the funds of the corporation, which helps in…

Q: When firms enter into loan agreements with their​ bank, it is very common for the agreement to have…

A: a) Current Ratio = Current Assets/Current Liabilities  = 1,907,570,000/ 1,362,550,000 = 1.40

Q: Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and…

A: a) excel formula sheet is:

Q: 5c. An elective project is currently under review. It requires an initial investment of $116,000 for…

A: In capital budgeting, the economic rate of return is used to compare or quantify the investment's…

Q: 4. A note having a face value of P9,300 was discounted at 11%. If the proceeds were 8,788.50. Find…

A: In order to calculate the term of the loan in months, where, other values viz. face value, discount…

Q: A credit card company determines a card holder's minimum monthly payment by adding all new interest…

A: Total outstanding principal = $592+$429+$120+$104Total outstanding principal = $1245 Total days till…

Q: a young woman plan to retire 30 years. She intends to contribute the same amount of money each year…

A: Annual withdrawal (P) = $100,000 Number of annual withdrawal (n) = 20 Interest rate (r) = 10%…

Q: Consider two riskless perpetuities: (i) pays $120 every year; (ii) pays $10 every month. If the…

A: Perpetuity: Perpetuity is the series of fixed payments which is incurred or received for the…

Q: Explain economic impact of the capital market?

A: Capital markets are very important for the growth and development of any country and are important…

Q: How did you calculate the depriciation expense?

A: This method also called diminishing balance method or declining balance method where the…

Q: A project has estimated annual net cash flows of $7,500 for ten years and is estimated to cost…

A: Net present value(NPV) is the difference between present value of cash inflows and initial…

Q: Stock in CDB Industries has a beta of 1.12. The market risk premium is 7.2 fercent, and T-bills are…

A: Using CAPM: Cost of equity = Risk-free rate + Beta(Market risk premium) Cost of equity = 0.042 +…

Q: The cash flows associated with a public-school building repair project are as follows: costs…

A: Annual benefit (B) = $600,000 Annual dis benefits (D) = $90,000 Annual cost (C) = $550,000

Q: Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.2%…

A: Capital Asset Pricing Model (CAPM): CAPM is the method of calculating the expected return on…

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

A: CALCULATING WEIGHTED AVERAGE COST OF CAPITAL (WACC) Cost of equity = D1P+ g where D1 is the expected…

Q: 9. Calculating Project OCF H. Cochran, Inc., is considering a new three-year expansion project that…

A: Solution : Operating Cash Flow ( OCF) means that Cash flow which was generated by entity through his…

Q: 1. Why is BPI a universal bank?? and cite one single example as evidence? 2. Why is CIMB bank a…

A: The term commercial bank receives deposits, provides check account services, issues a variety of…

Q: interest, a $20,000 payment 10 years from now is equivalent to an annual payment for 15 years. The…

A: The future value of the payment includes the amount deposited and the interest accumulated over the…

Q: We'll be holding a fundraiser over the next 5 years. Because we'll be learning how to market the…

A: The increasing payment flow which rises proportionately for a finite period and ends after lapse of…

Q: for this equipment. 6. Calculating Salvage Value Consider an asset that costs $635,000 and is…

A: Cost of assets = $635,000 Life = 8 Years Annual depreciation = 635000/8 = $79375 Life used = 5 Years…

Q: Explain what type of firms a Buyout Fund (or a Private Equity Fund) might target as part of a…

A: A leveraged buyout (LBO) is a type of business acquisition in which the vast majority of the cost of…

Q: The Hills obtain a 30-year, $144,000 conventional mortgage at a 4.5% rate on a house selling for…

A: Here, Cost of House is $180,000 Mortgage Amount is $144,000 Interest Rate is 4.5% Time Period of…

Q: (a) Patty Stacey deposits $2000 at the end of each of 5 years in an IRA. If she leaves the money…

A: Given,

Q: The expenses included in the fabrication of a wind turbine for a planned Wind Farm is $73,000…

A: Investment needed today (X) = $16000 First year cost saving (S1) = $73000 - $58000 = $15000 S2 to S5…

Q: A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y. The covariance…

A: Covariance between stock X and stock Y (CovX,Y) = 0.10 Standard deviation of stock X (SDX) = 0.50…

Q: A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross…

A: Here, Initial investment = P 120,000 Time period = 8 years Salvage value = P 20,000 Annual income =…

Q: Ms Amanda du Toit wishes to purchase the lounge suite. A furniture store offers her R1225 in hire…

A: VAT is a sales tax applicable on the sale and purchase of goods and services. It is collected by the…

Q: Assume yourself as a senior manager of a healthcare organization and you have given the…

A: A capital investment decision by a company is a long-term growth strategy. To secure future growth,…

Q: State of Economy Probability ABC Company Expected Return Expected Return XYZ Company Very Poor 0.30…

A: Solution : Co-Variance is calculated as follows. Co-Variance :   Dx * Dy / N…

Q: On 1 April 2018, Magda received a low interest loan of $40,000 from her employer, ABC Pty Ltd.  The…

A: 'Grossing up' involves increasing the taxable value of benefits you supply to reflect the gross wage…