• Q : Determine estimated effectiveness of minimum variance hedge....
    Finance Basics :

    What is the estimated effectiveness of this minimum variance hedge? What is the correlation of the change in the spot and futures cocoa price?  

  • Q : Effective annual cost of skipping....
    Finance Basics :

    What is the effective annual cost of skipping the discount and paying at the end of the net period for the following credit terms: 6/10, net 70? please show work

  • Q : Calculating aftertax cost of debt....
    Finance Basics :

    A semiannual, 6 percent bond matures in 14 years and has a face value of $1,000. The market quote on this bond is 1,027. What is the aftertax cost of debt if the tax rate is 34 percent?

  • Q : Computing pre-tax cost of debt....
    Finance Basics :

    Marvin's Interiors issued 8-year bonds 2 years ago. The bonds have a face value of $1,800, a 7.0 percent, semiannual coupon, and a current market price of $1,389. What is the pre-tax cost of debt?

  • Q : Estimating present value of lump sum....
    Finance Basics :

    What is the present value of a lump sum of $300 that will be paid at the end of the 5th year assuming an interest rate of 10%?

  • Q : Calculating present value of annuity....
    Finance Basics :

    What is the present value of an annuity due of $1500 per year that will be received for 5 years assuming an interest rate of 12%?

  • Q : Discuss the unified credit....
    Finance Basics :

    Discuss the unified credit and its impact on the titling of assets.

  • Q : Estimate of per share value of company....
    Finance Basics :

    It is industry has typically displayed a Value /EBITDA ratio of between 5x and 6x EBITDA. If Company D has 20 million shares outstanding, what is the estimate of the per share value of the company?

  • Q : Threshold for accepting capital projects....
    Finance Basics :

    A project will cost $1.9 million. The company uses a 11% discount rate as a threshold for accepting capital projects. It is expected to have a 5 year life and return the following:

  • Q : Estimated effectiveness of minimum variance hedge....
    Finance Basics :

    Chococo Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 750 metric tons of cocoa in 3 months. What is the estimated effectiveness of thi

  • Q : Conceptual analysis of real options....
    Finance Basics :

    Conceptual analysis of real options Highland properties owns two adjacent four-unit apartment buildings that are both on 20,000 square feet of land near downtown Portland, Oregon.

  • Q : Best production mix of bathtubs graphically....
    Finance Basics :

    Each model A bathtub requires a total of 125 pounds of steel and 20 pounds of zinc, and each yields a profit of $90. Each model B bathtub can be sold for a profit of $70; it in turn requires 100 pou

  • Q : Profit-maximizing level of output....
    Finance Basics :

    Given the table below, calculate the dry cleaners marginal revenue and marginal cost at each output level. Based on marginal analysis, what is the profit-maximizing level of output?

  • Q : Common stock per share in us dollars....
    Finance Basics :

    Further assume that the purchase price was equal to 54 euros per share. What was the sales price of Anheuser Busch common stock per share in U.S. dollars?

  • Q : Determining optimistic and miscalibrated....
    Finance Basics :

    You know from experience that this particular forecaster tends to be both excessively optimistic and miscalibrated. Describe how you might debias this individual. Give a numerical example

  • Q : Anaylsis and ignore macrs half-year convention....
    Finance Basics :

    Assuming each of the indicated lives has the same probability of occurring (probability = 1/3), what is the tractor's expected NPV? (Hint: Use the 5-year straight-line depreciation for all anaylsis

  • Q : Exchange rate between us dollar and canadian dollar....
    Finance Basics :

    Suppose the spot exchange rate between U.S. dollar and Canadian dollar is US$1.03/C$. The U.S. dollar risk-free rate is 2% per annum, compounded annually.

  • Q : Yield curve steepening for upward sloping curve....
    Finance Basics :

    If the anticipation was a yield curve steepening for an upward sloping curve, an effective strategy to take advantage of this would be:

  • Q : Seek protection against a possible drop in rates....
    Finance Basics :

    He is satisfied with the current yield on 20-year bonds and decides to seek protection against a possible drop in rates. He could obtain such pricing protection by:

  • Q : Extent of sar undervaluation or overvaluation....
    Finance Basics :

    USD price of BicMac in South Africa and the US are $4.50 and $3.90 respectively. PPP implied exchange rate of South African Rand is 9.50 SAR per dollar. What is the extent of SAR undervaluation or

  • Q : Spot or cash market price of a debt instrument....
    Finance Basics :

    The spot or cash market price of a debt instrument and the price of its futures:

  • Q : Break-even level of the output....
    Finance Basics :

    What is the break-even level of the output for each scale of operation? What will be the firms profit for each scale of operation if sales reach 5,000 units?

  • Q : Monthly revenues in europe average....
    Finance Basics :

    Suppose monthly revenues in Europe average 10 million Euros and monthly production and distribution costs average 8 million Euro. If the resulting profits are repatriated to the production unit in C

  • Q : Average dividend growth rate....
    Finance Basics :

    M & P has paid annual dividends of $1.05, $1.20, $1.25, $1.15, and $0.95 over the past five years, respectively. What is the average dividend growth rate?

  • Q : Amount of fixed assets required for project....
    Finance Basics :

    The fixed costs are $216,000 and the contribution margin per unit is $28. The fixed assets required for the project will be depreciated on straight-line basis to zero over the project's 5-year life.

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