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What was the prospective stock price after the issue? What was the value of one right to buy new shares?
The manager of the factory plans to buy two machines A and scrap his old machines . Is it a good idea? What other options might be better? What is the profit-maximizing decision here? The opportunit
It believes that it can reduce its average inventory to $863,000. Assume a 365-day year and that sales will not change. By how much must the firm also reduce its accounts receivable to meet its goal
It now requires 5 days on average to process the checks. A lock box system will reduce the process time by 2 days (2 days saved) and will cost $330,000. If the firm's cost of capital is 8%, should t
Your company is considering investing in a project that will cost $19,500,000 and will pay back to you $6,500,000 for the next 4 years. (These are after-tax cash flows.) If your company's cost of ca
List and describe the advantages of "going private" related to a firm that is currently a public firm.
The market risk premium is 11.5 percent, T-bills are yielding 7.5 percent, and the firm's tax rate is 32 percent. What discount rate should the firm apply to a new project's cash flows if the projec
The black box would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%
Consider an M&M world with no taxes. When a firm is 30% debt financed, it's cost of debt is 6% and cost do equity is 12%. When the firm increases debt to 50%, assuming that debt still cost 6%, w
After that, the sales should grow 10 percent per year for another two years, at which time the owners are planning on selling the company. What are the projected sales for the last year of the compa
If all current and future projects will be financed with 25 percent debt and 75 percent equity, and if the current cost of equity (based on average firm beta of 1.2 and a current risk-free rate of 4
Assume CI's variable cost ratio is 0.7 and its required pretax rate of return on current assets investment is 15%. CI also estimates that an additional investment in inventory of $850,000 is necessa
An individual wants to borrow $120,000 from a bank and repay it in six equal annual end-of-year payments, including interest. If the bank wants to earn a 7 percent rate of return on the loan, what s
Calculate the point price elasticity of demand for TV Plasma during the month of the discount. Calculate the profit maximizing price per unit if Price Mart has an average whole sale cost of $350 and
Describe the great contribution to Capital Market Theory by Harry Markowitz. Discuss how the presence of a risk-free security changes the shape of the efficient frontier
Describe the manner in which put-call parity can be used to price other types of derivative securities, such as forwards or futures contracts.
Suppose the prices of defautable and default free zero coupon bond with principal of $1, for different maturities (in years) are as follows:
What is the forward price of your contract? Suppose both the 1-year and 15-year spot rates unexpectedly shift downward by 2 percent. What is the new price of the forward contract?
AIG was effectively the largest unfunded investor in the super-senior tranches of the Abacus 2004 deal.This means that AIG: Effectively would sell the underlying subprime collateral as the mortgages b
Imagine you are the CFO of ABC Company. You have been successful over the years, but are now concerned about how many sources of funds you have, and the cost of those funds. With changing business c
What is the expected interest rate under Ima's forecast? What is the variance and standard deviation of Ima's interest rate forecast? What is the coefficient of variation of Ima's interest rate foreca
Suppose the current exchange rate for the Russian ruble is RUB 34.50. The expected exchange rate in three years is RUB 37.78. Assume that the anticipated rate is constant for both countries. What i
What are the probable effects on sales and profits of each of the following credit policies?
Search three online trading sites, and determine the requirements for trading, including the price per trade. Compare and contrast the online trading companies. (2-3 pages)
Current earnings are $3.10 per share, and the stock currently sells for $85 per share. There are 3,400 shares outstanding. Ignore taxes and other imperfections. What will be the effect on Flashback'