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A couple has up to $30,000 to invest in mutual funds. The broker recommends investing in two funds based on their average annual return for the 5 years ending in December, 2012: the Xander Global Bo
An asset with an original cost of $100,000 and a current book value of $20,000 is sold for $50,000 as part of a capital budgeting project. The company has a tax rate of 30%. This transaction will h
Assess BA's balance sheet as well as any comments in its annual report about the gap between its rate-sensitive assets and its rate-sensitive liabilities. Does BA have a positive gap or a negative g
Delamont Transport Company (DTC) is evaluating the merits of leasing versus purchasing a truck with a 4-year life that costs $40,000 and falls into the MACRS 3-year class.
How much money do you need in a retirement account earning 8% annual interest compounded monthly to be able to withdraw $2,500 per month for 30 years?
Milton Corporation recently paid a dividend of $1.70 per share, is currently expected to grow at a constant rate of 5%, and has a required return of 11%. Milton Corporation has been approached to bu
The expected return on JK stock is 15.78 percent while the expected return on the market is 11.34 percent. The stock's beta is 1.51. What is the risk free rate of return?
Introducing the more efficient macine is exxpected to increase revenues by $50000 per year and reduce annual operating costs by $80000. Compute the year 2 cash flow for this project. Assume Wooldrid
If the economy is normal, Charleston Freight stock is expected to return 16.5 percent. If the economy falls into a recession, the stock's return is projected at a negative 11.6 percent.
Your car dealer is willing to lease you a new car for $319 a month for 60 months. Payments are due on the first day of each month starting with the day you sign the lease contract.
Describe what an arbitrage would do to take advantage of IRP not holding. If you engaged in a $10 million covered interest arbitrage - what would be the amount of your profits?
Annual risk-free rate is 2% and the annual dividend yield on the S&P500 is 3%. If the price of a 1-year futures contract is 1,000, what is the implied fair value of the index? What is the value
Why is the cash-and-carry strategy employed in the financial futures market not readily available in the commodity futures market?
Discuss the requirements regarding meals and lodging provided by employers to their employees. How is the minimis rule distinguished from these requirements?
How could the investment decisions of a firm depend on its financing decisions? At what point in the life of a firm is this problem greatest?
A trader buys a put option with a strike price of $35 and a call option with strike price of $50 on a stock. Both options have the same maturity. The call costs $4 and the put costs $6.
Your annual auto insurance premium is due. Instead of paying the whole amount of $1,000 all at once today, you choose to go with the insurer's financing plan that allows you to make 4 quarterly paym
Mullineaux Corporation has a target capital structure of 50 percent common stock, 5 percent preferred stock, and 45 percent debt. Its cost of equity is 8 percent, the cost of preferred stock is 6 pe
Describe the company's target market in terms of its size, competitors, and the specific needs and wants of potential customers that your product or service is likely to satisfy.
A put option sells for $1.20 per share. The current stock price is $20.00 and the exercise price is $19.00. What is the exercise value of the option? What is the option's time value?
What is the call price for an option if the stock is currently selling for $25.00 per share, the strike price is $35.00, the variance of the stock is .50, the risk free rate is 2%, and the call expi
You are a controller for a large corporation. When you present financial statements for the year to the board of directors, they are puzzled by the fact that the firm has had a very profitable year
Southern Alliance Company needs to raise $24 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future.
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 5 percent, -13 percent, 24 percent, 16 percent, and 14 percent.
A stock is expected to pay a divident of 0.75% at the end of the year (D1=$0.75) The required rate of return is rs=10.5% and the expected constant growth rate is g=6.4%.