Q: Suppose XYZ Corporation's stock price ses or falls with equal probability by $20 each month, startin...
A: Call option gives holder a right to buy a stock, but it is not an obligation to buy the stock. Optio...
Q: QI: you put $ 2500 in account bank , this bank gives interest 6.5% for the first 3 months of saving ...
A: Interest is the cost which the borrower has to bear on the loan taken. interest is of two kinds. It ...
Q: A stock has a beta of 1.1, the expected return on the market is 10.4 percent, and the risk-free rate...
A: Expected return = Risk free rate+Beta*(Market return-Risk free rate) Where Risk free rate = 4.75% Be...
Q: ndholders. areholders. areholders and the federal government.
A: Interest tax sheild is the reduced cost of capital due to the advantages of tax deductions.
Q: Given a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges?
A: Mortgage/ Borrowings: Borrowings are the loan which is taken by the individual to meet its financia...
Q: Gentrix Inc. has two major sources of financing—common stock and long-term debt. They currently have...
A: Here,
Q: Compute the Terminal cash flow. Compute the FCF for years 1 through 5 Compute the project’s NPV and ...
A: Companies only invest in positive NPV projects. NPV method is a method of project appraisal. It disc...
Q: Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, bu...
A: Concept :- Equivalent annual cost. It is annual cost of owning and maintaining asset determined by d...
Q: What principal amount is equivalent to a withdrawal of 10,600 on the 2nd year, 4,000 on the 4th yea...
A: The present value of a cash stream: A series of finite, regular or irregular cash flows is known as ...
Q: A sum of P1,000 is invested now and left for eight years, at which time the principal is withdrawn. ...
A: Invested amount or principal amount is P1,000 Effective Annual interest rate is 5% Principal is with...
Q: A fast food restaurant feels they could increase their profits by introducing ice cream. The equipme...
A: Given: Year Particulars Amount 0 Initial investment -$250,000 1 Cash inflows $125,000 2 Cas...
Q: 8. (6) If RL equals 5%, what is the preferred investment using Roy's safety-first criterion for the ...
A: Roy's safety first criterion: Roy's safety first criterion sets a threshold limit based on an invest...
Q: Diversification is often a poor motive for mergers because: vertical integration is rarely successfu...
A: Diversification in mergers and acquisitions Diversification is a business transaction in which one f...
Q: Kiara obtained a loan of $22,500 at 6% compounded quarterly. How long (rounded up to the next paymen...
A:
Q: Compare the machines below using present worth analysis be selected w year ich one should
A: The present worth of a project can be defined as net benefit of a project in current terms. It is ca...
Q: Latimore Constructions Corp has the following capital situation: Debt: The firm issued 10,000 25 yea...
A: As per the guideline, in the case of multipart questions, we are allowed to answer only the first 3 ...
Q: Increased leverage will decrease the WVACC. An increase in leverage will be offset by a decrease in ...
A: Leverage is the debt used by the company in the capital structure of company.
Q: How long will P15 000 be P24 000 if invested at 10 % simple interest?
A: Principal (P) = P 15000 Final value (F) = P 24000 r = 10% simple interest Let n = Years to accumulat...
Q: If the interest rate is 9 percent compounded monthly, what is the value today of each option?
A: Present Value: It represents the present worth of the future sum of the amount or future annuity ca...
Q: Weekly (Feb 21-27) Projected Actual Difference Food Cost $6,971 $7,842 +$871 (over) Beverage Cost $3...
A: Solution:- The financial results are measured by comparing projected profits to the actual profits. ...
Q: Present value of a perpetual tax shield will go up if the firm's tax rate O decreases; decreases O i...
A: When interest rate are higher and tax rates are also higher, it will be higher tax saving on debt am...
Q: The future value of an investment increases as the number of periods increases True or Fase
A: Future value means the value of investment after x period of time compounded at the interest rate.
Q: A credit is paid as follows: a down payment corresponding to 30% of the value of the credit, 16 equa...
A: Fist we need to calculate present value of all payments starting at 3 months after by using annuity ...
Q: Given the information in the following table, what is the expected return of the security?
A: Expected Return: It refers to the amount of gain/loss anticipated by the investor on an investment....
Q: Paco buys a bicycle that costs $4,700. Give a 30% down payment and pay with a payment of $3,627.23 n...
A: Bicycle cost = $4700 Down payment = 30% Balance amount = 4700*(1-0.30) = 4700*0.70 = $3290 Period o...
Q: Find the Present Value of the Cash Flow 1 and, using this and the previous information, calculate th...
A: The value of money changes over time. For example, the value of $1000 today will not be the same as ...
Q: Your firm has taken out a $480,000 loan with 8.1% APR (compounded monthly) for some commercial prope...
A: The loans are paid the monthly payments that carry the payment for interest and the payment for the ...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for yo...
Q: "Ten years ago, when Nigel was still a college student, he deposited 10,000 in a bank. The bank's ra...
A: Deposit amount (P) = 10,000 Period = 10 Years Quarterly period (n) = 10*4 = 40 Interest rate = 2% Qu...
Q: 1. XYZ Corporation's most recent balance sheet and income statement appear below: XYZ Corporation St...
A: To Find: Working capital Current ratio Acid-turnover ratio Accounts receivable turnover Average col...
Q: If the company requires a return of 13 percent on such undertakings, what is the NPV of the project?...
A: Net present value (NPV) refers to the variance between the present value (PV) of cash inflows and in...
Q: at 11 1 2% interest for four years. (Round your answers to the nearest cent.) (a) Find his month...
A: Fist we need to use loan amortization formula to calculate monthly payment of loan. PMT =P*r1-1(1+r)...
Q: Match the correct answer for the following questions v The present worth of $400 in year 1 and amoun...
A: 1) First year amount (A1) = $400 Increase of $30 every year till year 5 r = 12%
Q: O s28 million O $12 million O Zero
A: Cost of acquisition is the amount paid above the value of company.
Q: Discuss and evaluate the use of the payback period as an investment criterion.
A: Payback Period: It refers to the period in which a project or an investment recovers its initial cos...
Q: Assume that the population of a town (one million people) is exposed to a toxle pollutant. The envir...
A: The benefit of avoiding the chances of death or fatality helps in knowing the economic value is know...
Q: If a down payment of P600,000 is made on a house and P80,000 a year for the next 12 years is require...
A: Down payment (DP) = P600,000 Annual payment (P) = P80,000 Number of annual payments (n) = 12 Intere...
Q: What amount is needed to invest today by a man if he wants to receive quarterly cash out of Php 4962...
A: Formula Present value = P*(1-1/(1+i)n)/i Where P = Quarterly cash out i.e. Php 49623 i = Quarterly i...
Q: You want to lend $500 as a bank deposit in a private bank with an interest rate 9% per month. You pl...
A: Future Value of Ordinary Annuity refers to the concept which determines the sum total of all the cas...
Q: c) Suppose you observe the following three bonds. Assume that all bonds are denominated at $100 face...
A: Bonds are the debt securities which are issued by the corporations or the government to arrange the ...
Q: Goldman Sachs issues $10 million in three-year convertible bonds with a 8% yield to maturity and a 3...
A: A convertible bond is a fixed-income corporate financial asset that pays interest but may be exchang...
Q: 5. A $200 loan is offered with an annual simple interest rate of 6 percent. How much would the borro...
A: Solution:- When a loan is taken, the lender charges interest on it and in simple interest method, in...
Q: What is the amount of each payment?
A: A stream of equal cash flows paid or received periodically is termed as annuity. Ordinary annuity re...
Q: Consider a two period economy. You can buy stocks in period 0, and then sell them in period 1. You c...
A: Here; We have Stock price =$100 Dividend Yield is zero as stock pays no dividend Time period is 1 ye...
Q: 2
A: Step 1 The risk premium is closely linked to the risk abhorrence; The greater the abhorrence of the ...
Q: On August 1, Rachael Westlake joined a Christmas Club. Her bank will automatically deduct $105 from ...
A: Monthly Deposit is $105 First Deposit starts on 1st August Closing of Account on 1st December Deposi...
Q: Determine the present value of the following cash flows; P4,000 at the end of 4th month and every mo...
A: Given information= P4000 at the end of 4th month and every month thereafter till the 12th Month Inte...
Q: r1=0.07, r2=0.065, r3=0.06, r4=0.05, r5=0.475, r6=0.04 Find current price P(t-0) with F=5000 with an...
A: We can find the annual Y rate by taking the average of all 6-year rates. We can apply the formula to...
Q: Draw the payoff of a call option on an Apple stock with a current price of $90, a strike price of $1...
A: Given, The current stock price is $90 Strike price is $110 Cost of option is $10.
Q: A financial institution uses a loan base rate of 4.35% and sets the credit risk premium at 6.68%. Th...
A: Given: Loan origination Fee LOF = 1.5% Base loan rate = 4.35% Credit risk premium CRP = 6.68% Compen...
Explain the concept of DRIP term in finance.
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