How might capital rationing conflict with the goal of maximizing shareholders' wealth?

Q: A firm with sales of $500,000, net profits after taxes of $20,000, total liabilities of $200,000,…

A: To calculate the return on equity we will use the below formula   Return on equity = Net profit…

Q: Let’s say that you are considering an investment in the common stock of QuickFix Enterprises and are…

A: Required return is 14% To Find:  Price of the Stock

Q: At age 31 you invest $1,500 that earns 8 percent each year. At age 46 you invest $1,500 that earns…

A: Given Amount invested is $1500 rate is 8% and 11%

Q: Which two of the following options correctly give rules for portfolio theory?   A) Portfolio…

A: Due to diversification of portfolio overall return increases and but overall risk decreases due to…

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A: Trade discount is the amount which is levied on the price of the product when it is sold to the…

Q: Equal end of year payments of $263.80 each are being made on a $1,000 loan at 10% per year…

A: Effective annual rate With number of compounding in a year (n) and annual rate (i), the effective…

Q: a. Calculate the accumulated value of her investment after the first 5 years. $0.00 Round to the…

A: Compounded semi-annually When interest is compounded semi-annually means the interest is added to…

Q: The following bond list is from the business section of a financial newspaper on January 1, 2016.…

A: Given for Kumatsu Co.: Par Value “FV” = $100 Annual Coupon rate = 4.13% Semi-annual coupon “PMT” =…

Q: The company cost of capital may be an inappropriate discount rate for a capital budgeting proposal…

A: Cost of capital will be inappropriate discount rate if a proposal has different degree of risk…

Q: Question 11 How long will it take $2,000 to reach $4,600 when it grows at 10 percent per year? (Do…

A: Future Value refers to the compounded value of a single cash flow received today or multiple cash…

Q: What is the return if a share is bought for £8, a dividend is paid of 80p, and the share is sold for…

A: Rate of return is amount of percnetage profit achieved over the initial amount of investment and it…

Q: $20,500 is invested in this portfolio which consists of stocks Netflix (NFLX) and Amazon (AMZN).…

A: To Find:  Portfolio expected return Standard deviation

Q: McClelland Corporation agreed to purchase some landscaping equipment from Agri-Products for a cash…

A: We should calculate the present value of payment plan first @ 9% which will be the true cost for…

Q: Calculate the price of a $1,000, 5% bond with three years to maturity with 7.5% market interest…

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Q: You are considering investing in a savings bond that will pay $50,000 in 6 years. If the competitive…

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A: In financial decision making sometime there are only cost and there are no benefits so we have to…

Q: You’re called out of an investment committee meeting at your real estate company for an important…

A: Comparative Market Analysis (CMA) is a process in which real estate agents search of homes in…

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A: Cost of equity The cost incurred in obtaining equity finance is termed as the cost of equity. The…

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Q: What is the present value of $8,500 per year at a discount rate of 6.7 percent if the first payment…

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Q: Tried and tested Ltd. has bond issue with an after-tax YTM of 6%. 5 years from now, they have 25…

A:

Q: f a company gains 40 $ for every 1000$ in revenue for a certain product, what is the profit margin…

A: Profit Margin is the percentage of profit earned over its net sales. It can be calculated as under.…

Q: bond's current price is $650. The bond has a face value of $1000, a coupon rate of 5%, maturity in…

A: Yield to maturity is the rate of return realized on the bond when bond is held till maturity and all…

Q: Discuss the benefits and risks of financial leverage both for a business.

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

Q: could you please provide the solution for b and c without using excel?

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Q: the character T followed by the number of minutes until the order expires - why would you have it as…

A: It is limit order.                                                         B = Buy 10000 = No. of…

Q: Question 1 Review Last year, the Smith men's wear department recorded sales of $5,500 for the month…

A: If Stock valuation is based on Sales then projected stock can be calculated using the formula given…

Q: Ogren Corporation is considering purchasing a new spectrometer for the firm’s R&D department.  The…

A: Cashflow The cash which flows inward and outward from the business or the project is known as cash…

Q: Jane wants to receive yearly payments of $15,000 for 10 years. How much must she deposit at her bank…

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Q: (1) The total amount of a loan to which interest has been added is P 200,000. The term of the loan…

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A: Given,

Q: If a firm's marginal revenue is smaller than its marginal cost, then the firm should collect…

A: Answer (d) Decrease output to increase profit Marginal Revenue means Additional Revenue generating…

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A: Net present value is the main technique used in capital budgeting decision making and is the…

Q: 7. A car dealership offers financing toward the purchase of a Toyota Prius. The dealership's offer…

A: When an amount of money is borrowed by a person it becomes the principal amount of the loan on which…

Q: Suppose you inherited $100,000 and invested it at 7% per year.  What is the most you could withdraw…

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Q: Justin needs $3000 for a future project. He can invest $2000 now at an annual rate of 14%,…

A: The concept of time value of money will be used here.   A sum of money that is being invested today…

Q: Is it ethical to concentrate only on shareholder wealth, or should stakeholders as a whole be…

A: A shareholder is a person who owns shares of a company. Shareholders are also  owners of a company…

Q: What is the future value in 11  years of $1,000 invested in an account with an APR of 8.9 percent:…

A:

Q: Lydia purchased a $100,000 150-day T-bill when the prevailing yield on T-bills was 4.5%. She sold…

A: T-Bill: A Treasury Bill (T-Bill) is a short-term obligation of the United States government backed…

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A: Beta of portfolio is representative of the volatility of return of stock with respect the market…

Q: Suppose your company needs $15 million to build a new assembly line. Your target debt-equity ratio…

A:

Q: How much money must you invest today in order to withdraw P1000 per month for 10 years if the…

A: Number of payment periods = Number of years×Frequency of payment in a year = 10×12 = 120 Monthly…

Q: All else equal, a bond would be sold at __________ if its coupon rate is _________ its yield to…

A: Bonds are issued by companies to raise borrowings in exchange of interest or coupon payments at…

Q: Edgar Garcia was at his banker's trying to get a short term loan. "I need about $10,000 for three…

A: Cash flow is important for any business, as it enables the business to meet its current obligations…

Q: A lender offers you a $125,000, 30 year mortgage with monthly payments of $769.65. What’s the…

A: The lender charges the interest from the borrower in exchange for extending the loan. The borrower…

Q: Calculate the present value of an ordinary annuity providing $500 every year for 6 years. The…

A:

Q: or made deposits of $5,000 at the end of each quarter to Book Bank, which pays 8% interest…

A: As more is compounding than more is interest being accumulated due to the reason effective interest…

Q: ng the formula for the time value of money, if a sum $15,000 is invested for one year at 10%…

A: Future value money the amount being deposited and the amount of interest being accumulated over the…

Q: Windsor Tool Inc. has a $500,000 loan for a new EDM machine to be used in the tool/die production.…

A: Periodic Payment (PMT) = P * r * [(1+r)n /{(1 +r)n -1}] Where, P = Principal borrowed = $500,000 r =…

Q: Rio Coffee Shoppe sells two coffee drinks - a regular coffee and a latte.  The two drinks have the…

A: The Break-even point refers to the point at which the company is earning no profit or loss and total…

Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.