• Q : Break-even point in units of output for the firm....
    Finance Basics :

    You are a hard -working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following costs structure information for this c

  • Q : Computation of weighted average cost of capital....
    Finance Basics :

    1. The market value of your firm's equity is $500 million, which is also the value of your total debt. Your cost of debt (rd) is 6% and your cost of equity is (re) is 10%. What is your weighted aver

  • Q : Calculation on net initial investment....
    Finance Basics :

    What is the net initial investment, the annual cash flows from the project and the terminal value?

  • Q : Debt to capitalization ratio....
    Finance Basics :

    A company changes its capital structure which increases its Debt to Capitalization Ratio, while maintaining the same operating profit margin (operating profit / sales), resulting in a higher ROCE. I

  • Q : Calculation regarding geometric average return....
    Finance Basics :

    Over the last four years, the stock of Wagner's Paints has had an arithmetic average return of 6.5 percent. Three of those four years produced returns of 9 percent, 3 percent, and 1 percent. What is

  • Q : Present value of the future amounts....
    Finance Basics :

    What is the present value of the following future amounts?

  • Q : Determining the present value of the net investment....
    Finance Basics :

    Little Giant is building a manufacturing plant that will require a cash outlay of $300,000 for the initial purchase of a building, $450,000 for remodeling the first year, and $710,00 for new equipme

  • Q : Present value of the expected dividends....
    Finance Basics :

    You plan to hold the stock for three years and then sell it. You estimate that a required rate of return of 17.5% will be adequate compensation for this investment. Calculate the present value of th

  • Q : Problem on project initial investment outlay....
    Finance Basics :

    What is the project's initial investment outlay? The company spent and expensed $50,000 on research related to the project last year. Would this change your answer. Explain.

  • Q : Assure adequate cash availability....
    Finance Basics :

    What actions can you take to minimize the cash flow problems that were identified in the simulation? Look at the problem from both the inflow and outflow of cash to determine what actions you can c

  • Q : Calculation of effective annual rate....
    Finance Basics :

    A financial institution made a $10,000, 1-year discount loan at 10% interest, requiring a compensating balance equal to 20% of the face value of the loan. Determine the effective annual rate associa

  • Q : Result of the increase in political risk....
    Finance Basics :

    Valuation of an MNC. Hudson Co., a U.S. firm, has a subsidiary in Mexico, where political risk has recently increased. Hudson's best guess of its future peso cash flows to be received has not change

  • Q : Pros and the cons of the international sales plan....
    Finance Basics :

    What are the pros and the cons of the international sales plan? What additional risks will the company face? What happens to the company's profits if the dollar strengthens? What if the dollar weakens

  • Q : Aggressive financing strategy....
    Finance Basics :

    What is an aggressive financing strategy? What are the components of aggressive finance strategies? What is difference between the aggressive and conservative financing model?

  • Q : Incremental cash flows for project....
    Finance Basics :

    Prepare a statement showing the incremental cash flows for this project over an 8-year period. Calculate the Payback Period(P/B)and the NPV for the project.

  • Q : Value of the call at expiration....
    Finance Basics :

    If the stock is trading at $35 in three months, what will be the payoff of the call? Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

  • Q : Calculation of current value of operations....
    Finance Basics :

    A company forecasts free cash flow in one year to be -$10 million and free cash flow in two years to be $20 million. After the second year, free cash flow will grow at a constant rate of 4 percent p

  • Q : What are the four elements of a firm credit policy....
    Finance Basics :

    What are the four elements of a firm credit policy? to what extent can forms set their own credit policies as opposed to having to accept policies that are dictated by " the competition"?

  • Q : After tax salvage value of old machine....
    Finance Basics :

    Blue Jay Industries is considering the purchase of a new machine. It will replace an existing but obsolete machine that will be sold for $40,000. The existing machine is 8 years old, cost $150,000,

  • Q : International diversification of the endowment fund....
    Finance Basics :

    What might be the consequences of broader International diversification of the endowment fund? Can you think about the costs and benefits that such a change of policy could bring?  

  • Q : Determining the financial needs after retirement....
    Finance Basics :

    Marcia is planning for her golden years. She will retire in 20 years, at which time she plans to begin withdrawing $60,000 annually. She is expected to live for 20 years following her retirement.

  • Q : Calculation regarding dividend discount model....
    Finance Basics :

    Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current

  • Q : Calculation of value of stock....
    Finance Basics :

    Sands Inc. is expected to pay its first annual dividend five years from now. That payment will be $3.10 a share. Starting in year six, the company will increase the dividend by 2 percent per year. T

  • Q : Standard deviation of the expected dollar returns....
    Finance Basics :

    Calculate the standard deviation of the expected dollar returns for Ditto Copier Center, given the following distribution of returns:

  • Q : Making single month cash budget....
    Finance Basics :

    Construct a single month's cash budget with the information given. What is the average cash gain or (loss) during a typical month for XYZ Corporation?

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