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Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000, respectively. The firm has a cash balance of $5,00
Given your risk tolerance and your need to diversify, explain how the selected realized returns (1926-2006) page 212 and the effects of portfolio risk for average stocks will impact your future inve
A firm has net income of $5,890 and interest expense of $2,130. The tax rate is 34 percent. What is the firm's times interest earned ratio?
What are variable costs and fixed costs? What are some examples of each? How are these costs estimated in forecasting operating expenses?
What is the difference between average tax rate and marginal tax rate? Which one should we use in calculating incremental after-tax cash flows?
What is the difference between nominal and real cash flows? Which rate of return should we use to discount each type of cash flow?
Why do we use forecasted incremental after-tax free cash flows instead of forecasted accounting earnings in estimating the NPV of a project?
If the CAPM describes the relation between systematic risk and expected returns, can both an individual asset and the market portfolio of all risky assets have negative expected real rates of return
Describe the general relation between risk and return that we observe in the historical bond and stock market data.
What are the benefits and drawbacks of the U.S capital markets - as compared to other international markets? How could trading in the US be improved from an investor's viewpoint?
What are some of the major differences between futures and forward contracts? How do these contracts differ from spot contracts? How does using options differ from using forward or futures contracts,
An investor invests 30% of his wealth in risky assets with an expected rate of return of 0.13 and variance of 0.03 and 70% in a T-bill that pays 6%. His portfolio expected return and standard deviat
You are interested in a new Ford Taurus. After visiting your Ford dealer, doing your research on the best leases available, you have three options.
The bonds make semiannual payments and currently sell for 105 percent of par. What is the current yield on the bonds? Calculate the YTM. Calculate the effective annual yield.
Calculate the operating breakeven point in units. Calculate the firm's EBIT at 9,000, 10,000, and 11,000 units, respectively. With 10,000 units as a base, what are the percentage changes in units sold
Make a reasonable estimate of the required return, starting with a 12% weighted average cost of capital for the U.S. auto manufacturer, and adding reasonable estimated percentages for each of the se
Robert paid $1,000 for a 10-year bond with a coupon rate equal to 8 percent when it was issued on January 2. If Robert sold the bond at the end of the year in which it was issued for a market price
Management is contemplating the purchase of a replacement that costs $75,000 and has an estimated salvage value of $10,000. The new machine will have a greater capacity and annual sales are expected
The appropriate real discount rate for Phillips is 10 percent. All net cash flows are received at year-end. What is the present value of the net cash flows from Phillips's operations?
A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%. What is the current stock price?
Characterize the country's inflation rate compared to the United States, the country's expected exchange rate change versus the dollar, the country's currency forward premium (or discount) versus th
The expected rate of inflation in Japan is 12% and the expected rate of inflation in Italy i 9%. In Italy the risk-free rate of interest is 6%. What does the risk-free rate of interest have to be in
If the company waits one year, there is a 56 percent probability that the contract price will generate an aftertax cash flow of $491 per ounce and a 44 percent probability that the aftertax cash flo
Discuss the impact of the current level of interest rates on capital budgeting decisions namely Net Present Value. Consider the current bond yield curve. Does the direction of interest rates affect
Find the required return according to CAPM. Do not round. Find the value of AT&T according to the constant growth dividend model, assuming that AT&T dividends will grow at 6% per year, which