• Q : Calculating the value of three-month european....
    Finance Basics :

    Calculate the value of a three-month European put on that index with an exercise price of 650, using Merton's index option pricing formula.

  • Q : Current price of the bonds of grossnickle corporation....
    Finance Basics :

    Grossnickle Corporation issued 20-year, noncallable, 7.8% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current

  • Q : Calculating pre-tax profits from sales of course packs....
    Finance Basics :

    Southwest U's campus book store sells course packs for $15 each, the variable cost per pack is $9, fixed costs to produce the packs are $200,000, and expected annual sales are 49,000 packs. What are

  • Q : Aftertax cost of the interest expense....
    Finance Basics :

    Assume the company has issued 10,000 bonds with a coupon rate of 8% and a face value of 1000 per bond, and the company has a marginal tax rate of 35%. Calculate the aftertax cost of the interest exp

  • Q : Calculate the current price of bond by annual analysis....
    Finance Basics :

    Washington Corporation has a $1000 par value bond outstanding paying annual interest of 8%. The bond matures in 20 years. If the present yield to maturity for this bond is 10%, calculate the current

  • Q : Leveraging an investment....
    Finance Basics :

    You are considering leveraging an investment of $50,000. You would borrow $40,000 at 10% and provide the balance yourself. If this investment increased in value by the end of the year by 30% what is

  • Q : Determining the total nominal return on investment....
    Finance Basics :

    Hilltop Garage pays a constant annual dividend. One year ago, when you purchased shares of that stock at $12 a share, the dividend yield was 2 percent. Over this past year, the inflation rate has be

  • Q : Calculate the dividend payout....
    Finance Basics :

    Assume you own shares in Honeywell, Inc. and that the company currently earns $2.96 per share and pays quarterly dividend payments that total $1.00 a share each year. Calculate the dividend payout f

  • Q : Computing the estimated costs and expected activity....
    Finance Basics :

    NoIdea Records Company uses activity-based costing. The company produces CDs and DVDs. The estimated costs and expected activity for each of the activity pools follow:

  • Q : Calculating the internal rate of return....
    Finance Basics :

    If the cost of capital is 10 percent, what is the net present value? What is the internal rate of return? Should the project be accepted? Why?

  • Q : Determining the establishment of a new subsidiary....
    Finance Basics :

    Which of the following is not an advantage of international acquisitions over the establishment of a new subsidiary?

  • Q : Calculating the expected return and risk....
    Finance Basics :

    General Eclectic Corporation is considering three possible capital investment projects. The projected returns depend on the future state of the economy as given here.

  • Q : Encourage mergers and joint ventures....
    Finance Basics :

    Distinguish between the motives that encourage mergers and joint ventures among international firms and mergers and joint ventures among local firms.

  • Q : Portfolio analysis in a microsoft word document....
    Finance Basics :

    This assignment needs to consist of a portfolio analysis in a Microsoft Word document that is not to exceed three pages. You must also include your portfolio analysis in either Word or Excel. You mu

  • Q : Portfolio analysis in a microsoft word document....
    Finance Basics :

    This assignment needs to consist of a portfolio analysis in a Microsoft Word document that is not to exceed three pages. You must also include your portfolio analysis in either Word or Excel. You mu

  • Q : Find the value of the bond....
    Finance Basics :

    Price Industries has outstanding a $1,000 par-vaule bond with a 9% coupon intrest rate. The bond has 5 years remaining to its maturity date. If interest is paid annually, Find the value of the bond.

  • Q : Interest rate on the less expensive debt instrument....
    Finance Basics :

    The firm has the option to renew the loan at market rates. Alternatively, ABC can sell 9.5 percent coupon bonds with a 2-year maturity and $1,000 par value at a price of $950.00. How many percentage

  • Q : Evaluate the firm earnings per share....
    Finance Basics :

    A firm has a current capital structure consisting of $400,000 of 12 per cent annual interest debt and 50,000 ordinary shares outstanding. The firm's tax rate is 40 per cent on ordinary income. If t

  • Q : Calculating the amount for an emergency fund....
    Finance Basics :

    Calculating the Amount for an Emergency Fund. Beth and Bob Martin have a total take-home pay of $3,200 a month. Their monthly expenses total $2,800. Calculate the amount the couple needs to establi

  • Q : Present value of liability of prudential company....
    Finance Basics :

    Prudential, Inc. has unfunded pension liability of $650 million that must be paid in 20 years. To assess the value of the firm's stock, financial analyst want to discount this liability back to the

  • Q : Preferred stock and the rest from common equity....
    Finance Basics :

    The preferred stock has a part value of 100. The yield-to-maturity on the debt is 9 percent. The source of company capital is 25% debt, 15% preferred stock and the rest from common equity. What is t

  • Q : Projects simple-regular payback....
    Finance Basics :

    The ABC Corporation is considering a project which has an up-front cost paid today at t=0. The project will generate positive cash flows of $70,000 a year at the end of each of the next five years.

  • Q : Predicted return return for period....
    Finance Basics :

    For both companies, calculate the effect on stock values for each period (ie March 31st and June 30th) and calculate the predicted return (normal) return for each period.

  • Q : Market value of share of stock....
    Finance Basics :

    If the market interest rates, in gross bond-equivalent form, over the actual maturies of one and two years are respectively 4.54% and 8.00%, what is the market value of that share of stock today?

  • Q : Component cost of debt for use in wacc calculation....
    Finance Basics :

    Several years ago the Haverford Company sold a $1,000 par value bond that now has 25 years to maturity and an 8.00% annual coupon that is paid quarterly. The bond currently sells for $900.90, and th

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