Q: I have discovered an excellent investment opportunity: I buy a computer for 10,000TL, develop softwa...
A: Calculating IRR of the investment using excel IRR function
Q: 2) see picture
A: Formula to calculate current value of the stock is: P=D1/r - g Where P is the price of the stock D1 ...
Q: Example 26a (Varying Force of Interest) A fund earns interest at a force of interest 8, =kt . A depo...
A: Future Value =Present value * (1+k)^n Where, k = rate of interest
Q: Problem #2 - Chapter 13 – Preference Ranking for Investment Projects The management of Revco Product...
A: 1. profitibility index PI=present value of future cashflowinitial investment from informations give...
Q: Sales (75,000units) P 750,000 ...
A: Degree of operating leverage = Contribution margin / (contribution margin - fixed cost) Contribution...
Q: Sales (75,000units) P 750,000 ...
A: Degree of combined leverage = Contribution /EBT
Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $33 millio...
A: Original cost of equipment = $33 million Total depreciation on equipment =$33 millions * 75% = $24.7...
Q: Harmer Inc. is now a successful company. In the early days (before it became profitable), it issued ...
A: Here, The after-tax discount rate for both Harmer Inc. and its employees is 10 percent. The corporat...
Q: Is it possible for a one-year coupon bond to have a negative nominal interest rate? Explain, how?
A: YTM is that single rate which makes the worth of future cash flows and coupon amount equal to its pr...
Q: 11) see picture
A: Formulas: Horizon value = FCF3(1+g)/r - g Market value = FCF/1+R + FCF2/(1+r)^2 + FCF3/(1+r)^3 + Hor...
Q: 3) see picture
A: P0 = $24 g (growth rate) = 0.08
Q: How much would you need to deposit in an account now in order to have $2000 in the account in 5 year...
A: Given information: Future value is $2,000 Number of years is 5 Interest rate is 3%
Q: Explain the difference between the coupon rate and the required return on a bond.
A: Coupon rate : Coupon rate is the rate that is paid periodically. The coupon rate is the amount of i...
Q: 7) see picture
A: Given information: Par value of preferred stock is $100 Quarterly dividend is $1.00 Current price is...
Q: North Star is trying to determine its optimal capital structure, which now consists of only common e...
A: cost of equity = risk free rate + levered beta * market risk premium Levered Beta =Unlevered Beta *...
Q: A couple who borrow $70,000 for 15 years at 8.4%, compounded monthly, must make monthly payments of ...
A: remaining balance formula: remaining balance=pv×1+rmn-pmt×1+rmn-1rm where, pv =principal PMT = month...
Q: Select one: a. $1,449,334 b. 579,360 C. $115.594 d. $1,108,432 e. $147.332
A: interest rate =9.25 semiannual =4.625 Period =15 years Period =30 semiannual Present value FACTOR ...
Q: Oleck Inc. produces stereo components that sell at P = $100 per unit. Oleck’s fixed costs are $200,0...
A: Break-even point is the point at which there is no profit and no loss. At this level of sales, total...
Q: A two-year bond with par value $1,000 making annual coupon payments of $100 is priced at $1,000. Wha...
A: a) Computation of realized compound yield to maturity when the interest rate is 8%:Total proceeds=$1...
Q: You are trading in a market in which you know there are a few highly skilled traders who are better ...
A: The question is based on the concept of efficiency of investment and portfolio . A better informed i...
Q: a. What was the total cost to Douglas? Total cost b. If Douglas had $450 in his pocket, what does he...
A: The money value at which any good/service is available to consumers is known as Sales Price. It is t...
Q: Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first...
A: YTM is the rate of return if bond are held till maturity.
Q: Assume it is now January 1, 2000, and someone offers the following deal: starting from year 2000, yo...
A: The present value of the annuity will be PV = 20001.1 + 20011.12 + 20021.13 + … + 3000 1.11001If...
Q: Olympic Sports has two issues of debt outstanding. One is a 4% coupon bond with a face value of $34 ...
A: Formula for Before tax cost of debt: Before tax cost of debt = WA*rA + WB*rB After tax cost of debt ...
Q: Are the shareholders of Firm T better off with the cash offer or the stock offer? Cash offer is bett...
A: The ratio in which the shares of the one firm will be exchanged for the shares of other firm, it is ...
Q: Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equit...
A: Hey, since there are multiple subpart questions posted, we will answer the first three questions. If...
Q: the bond. If the current one-year interest rate on government bonds is 8 percent, then the price Tal...
A: Time Period = 2 years Face Value = 5000 Coupon = Coupon Rate * Face Value = 6%*5000 = 300 Interest R...
Q: 1. DPCL is a small-sized firm manufacturing hand tools. Its manufacturing plant is situated in Sohar...
A: NPV computes the existing value of future benefits by discounting future cash flows with a given int...
Q: 7) see picture
A: Formula to calculate stock value per share: Market value/No of outstanding shares Formula for Market...
Q: An upward sloping yield curve is a(n) _______ yield curve. A. humped B. inverted C. normal D. flat ...
A: An upward sloping yield curve is a(n) NORMAL yield curve.
Q: How long will it take my money to double at 7% p.a. compounded semi-annually? a About 10 years b. Ab...
A: Given data; 2 * Present value of money = future value of money FV / PV = 2 Interest rate = 7% compou...
Q: Bartlett Company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The a...
A: Weighted Average Cost of Capital : It is average cost of capital of all capital on the basis of weig...
Q: A stock has an expected return of 13.2% , the risk free rate is 3.5%. Market risk premium is 7.5%. W...
A: As per CAPM, Expected Return = Risk free rate + beta * Market risk premium
Q: Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T...
A: Since there are two options for the firm to carry out, either in cash offer or either through share ...
Q: A firm is considering a nine-year project that requires an initial investment in fixed assets of $63...
A:
Q: Q.What is the advantage of an ETF relative to open-end and closed-end investment company? ____ A) In...
A: ETF has quite advantages over open ended and closed ended investment company.
Q: 5) Yawl Inc. must choose between two business opportunities. Opportunity 1 will generate RO40,000 be...
A: After tax cashflow = Before tax cashflow - tax cost
Q: Suppose you put $1000 in an account today and you need to have $6727.5 in the future. If the bank p...
A: Future value = Present Value * (1+ rate )^ n Where, r = rate of interest n = no. of compounding per...
Q: State of economy Probability Rate of returns Stock A Stock B Stock C Boom 0.35 0.24 0.36 0.5...
A: Working note:
Q: Suppose that the prices of zero-coupon bonds with various maturities are given in the following tabl...
A: Note : As per the bartelby guidelines only first two parts of the question will be answered. Part A...
You have recently been appointed as the investment analyst of Investalot (Pty) Ltd.
You are given a table with a list of companies, their stocks and their possible payoffs
for every rand invested as follows:
Stock Year 1 (R) Year 2 (R) Year 3 (R)
Discovery Ltd 0.8 0.2 0.1
Foschini Group Ltd 0.7 0.75 0.55
Famous Brands Ltd 0.4 0.15 0.75
Required:
Using the Minimax regret method choose the stock that will minimise your
maximum regret.
Minimum regret can be arrived at by:
Regret = Best pay off - Payoff received
Step by step
Solved in 2 steps
- Suppose you have the following information from Muscat stock market Stock Share outstanding Base day Closing price Second day closing price Salalah company 18 3 2.8 Dhofar power company 26 2.8 3.1 Oman company 10 4.1 2.1 Dhofar bank 28 3 1.8 Calculate 1. Price weighted index 2. Value weighted index plz show stepsYou are an investment adviser. One of your clients approaches you for your advice on investing in equity sharesof Alpha Company. You have collected the following data:Earnings per share last year $5.00Payout ratio 0.30Return on equity 0.30Cost of equity capital 0.25The company plans to increase the payout ratio to 40% from year 6.Required:i) Estimate the price of an equity share of this company using an appropriate dividend discount modeland advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any positive growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriate calculations.O Below is the stock price and dividend history for No-Cameras-Allowed Inc. (NCA), a company organizing Las Vegas retreats for investment banks. Stock Price (end-of-year) Dividend (paid during the year) Year 2019 90 180 18 2020 2021 120 6. a. Compute the annual return in 2020 and 2021. b. Compute the arithmetic average return over the 2019–2021 period. c. Compute the geometric average return over the 2019–2021 period. d. You buy 2,000 shares of NCA at the end of 2019 and hold them through the end of 2021. You reinvest any dividends received (i.e., you use the dividend proceeds to buy more shares of NCA). Except for reinvestment of dividends, you neither buy nor sell any shares before the end of 2021. Which average, arithmetic or geometric, better captures your investment performance over the 2019–2021 period? Please provide a brief explanation for your answer. B Focus MacBook Pro
- 7. You invest $7,873 in stock and receive $102, $123, $121, and $155 in dividends over the following 4 years. At the end of the 4 years, you sell the stock for $11,900. What was the IRR on this investment? Review Only Click the icon to see the Worked Solution (Calculator Use). Click the icon to see the Worked Solution (Spreadsheet Use). The IRR on this investment is %. (Round to the nearest whole percent.)You are an investment adviser. One of your clients approaches you for your advice on investing in equity shares of Alpha Company. You have collected the following data: Earnings per share last year $6.00 Payout ratio 0.40 Return on equity 0.30 Cost of equity capital 0.20 The company plans to increase the payout ratio to 60% from year 5. Required: i) Estimate the price of an equity share of this company using an appropriate dividend discount model and advise your client whether they should buy a share of the company. ii) Your client is keen to know whether there are any positive growth opportunities from their investment. Explain to your client the meaning of this concept using appropriate calculations. Notes: You need to show detailed calculations in order to receive full marks for this question iii)If there are positive or negative growth opportunities, explain the reason for such opportunities.You are an investment adviser. One of your clients approaches you for your advice on investing inequity shares of Theta Company. You have collected the following data:Earnings per share last year $6.00Payout ratio 0.40Return on equity 0.30Cost of equity capital 0.20The company plans to increase the payout ratio to 60% from year 5.Required:i) Estimate the price of an equity share of this company using an appropriate dividenddiscount model and advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriatecalculations.iii) If there are positive or negative growth opportunities, explain the reason for suchopportunities.
- The common stock of Placo Enterprises had a market price of $ 9.11 on the day you purchased it just one year ago. During the past year the stock had paid a dividend of $ 1.16 and closed at a price of $ 10.42. What rate of return did you earn on your investment in Placo's stock? Question content area bottom Part 1 The rate of return you earned on your investment in Placo's stock is enter your response here %. (Round to two decimal places.)Imagine yourself as a financial manager in a company, and you are requested to provide a financial report including the calculation of the current market rate of return from the investor's perspective for each of the four investment options, taking into consideration the followings: Common stocks available for investment are: 2,500,000 shares of common stock, with a par balance of $1 per share. The current market value of the common share is $24.43 per share. Annual earnings per share $1.95. Bonds available for investment $1,750,000 bonds (A) with an interest of 6.25%, with a current market value of $104 per bond (price of $104 per $100). $2,250,000 Notes B, with an interest rate of 5.75%, with a current market value of $94.50 (price $94.50 per $100 note). The corporate tax rate is 35%. Preferred shares available for investment 950,000 outstanding preferred shares with a par value of $10 with a preferential dividend payment…You are an investment adviser. One of your clients approaches you for your advice on investing in equity shares of Alpha Company. You have collected the following data: Earnings per share last year $4.00 Payout ratio 0.40 Return on equity 0.25 Cost of equity capital 0.20 The company plans to increase the payout ratio to 50% after year 5. Required: i) Estimate the price of an equity share of this company using an appropriate dividend discount model and advise your client whether they should buy a share of the company. ii) Your client is keen to know whether there are any positive growth opportunities from their investment. Explain to your client the meaning of this concept using appropriate calculations. Note: Use two decimal places in your calculations
- You are a Financial Consultant with a share brokerage firm. You have been given the following information about a company: Share Capital : Equity Rs. 4,00,0000Current Liabilities Rs. 1,00,000 (Rs.10) 12% Preference Rs. 1,00,000Fixed Assets Rs. 9,50,000 General Reserve Rs. 1,84,000Current Assets Rs. 2,34,000 10% Debentures Rs. 4,00,000 Additional Information: market price of the share is Rs. 34 and the net profit after tax was Rs. 1,50,000, and the tax had amounted to Rs. 50,000. From the above details, calculate Return on Investment, Return on Shareholders' Funds, EPS, Book value per share and P/E ratio. Also, make your observations about the company on the basis of these ratios. A- B IK Using the data in the following table, calculate the return for investing in Boeing stock (BA) from January 2, 2008, to January 2, 2009, and also from January 3, 2011, to January 3, 2012, assuming all dividends are reinvested in the stock immediately. The realized return from January 2, 2008, to January 2, 2009 is%. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Historical Stock and Dividend Data for Boeing Dividend Date 1/3/2011 2/9/2011 5/11/2011 8/10/2011 11/8/2011 1/3/2012 Date 1/2/2008 2/6/2008 5/7/2008 8/6/2008 11/5/2008 1/2/2009 " Price $85.61 $79.69 $84.49 $66.96 $48.59 $45.42 $0.38 $0.38 $0.38 $0.00 Print Done Price $66.37 $71.74 $79.99 $56.99 $64.03 $75.65 Dividend $0.44 $0.44 $0.44 $0.44Suppose you have the following information from Muscat stock market Stock Share outstanding Base day Closing price Second day closing price Salalah company 18 3 2.8 Dhofar power company 26 2.8 3.1 Oman company 10 4.1 2.1 Dhofar bank 28 3 1.8 Calculate 1. Price weighted index 2. Value weighted index