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- Define the term capital intensity. Explain how a decline in capital intensity would affect the AFN, other things held constant. Would economies of scale combined with rapid growth affect capital intensity, other things held constant? Also, explain how changes in each of the following would affect AFN, holding other things constant: the growth rate, the amount of accounts payable, the profit margin, and the payout ratio.Assume that the following ratios are constant. Total asset turnover 1.37, profit margin 6.9%, equity multiplier 1.7, payout ratio 57%. What is the sustainable growth rate?A special case of the Internal Rate of Return (IRR) is the Yield to Maturity (YTM). Explain how the YTM is used to calculate the yield curve and why investors track moves in the yield curve.
- Consider the following scenario and complete the last column and then Assess the sensitivity of the price-earnings ratio to changes in the cost of equity capital and changes in the growth rate: Table 9 Estimating price earning(P/E) ratios under various scenarios Scenario Cost of Equity Capital Growth Rate in Earnings P/E Ratio 1 0.13 0.09 2 0.13 0.11 3 0.15 0.09 4 0.18 0.09 5 0.18 0.11A special case of the Internal Rate of Return (IRR) is the Yield to Maturity (YTM). Explain how the YTM is used to calculate the yield curve and why investors track moves in the yield curve. I would appreciate a long response and the post attention to be paid on why investors track moves in the yield curve.The formula of which of the following considers the percentage change in price? a. Total expected yield b. Yield to date c. Present value yield d. Yield to maturity
- Which investment criteria answers the question: "How quickly do we recover our investment, in nominal dollars?" A) net present value B) internal rate of return C) profitability index D) payback periodWhich of the following will increase if the coupon rate increases? I. face value II. market value III. yield-to-maturity IV. current yieldThe annual growth rate of your investment can be measured by A. THE ANNUAL MEAN OF YOUR ANNUAL RETURN B. THE MAXIMUM RETURN MINUS MINUMUM RETURN C. THE ANNUAL GEOMOETRIC MEAN OF YOUR RETURN D. ALL OF THE ABOVE
- Write out and explain the valuation formula for a constant growthstock.This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero A. internal race of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value methodUse the extended DuPont equation to provide a breakdown of Computrons projected return on equity. How does the projection compare with the previous years and with the industrys DuPont equation?