• Q : What is real option analysis....
    Finance Basics :

    How do companies minimize their foreign currency exposure? What is real option analysis? Why is important in M&A activities or is it? What forces drive international M & A activity, and how a

  • Q : Computing eac....
    Finance Basics :

    You have a 1999 Nissan that is expected to run for another three year-Calculate the EAC for both Nissan and Hyundai. When should you buy the new Hyundai?

  • Q : Approximate real rate of return on investment....
    Finance Basics :

    ver the course of the year, you received $2 in dividends and inflation averaged 2.7 percent. Today, you sold your shares for $54.2 a share. What is your approximate real rate of return on this inves

  • Q : Net advantage to leasing....
    Finance Basics :

    The lease terms, which include maintenance, call for a $12,000 lease payment (4 payments total) at the beginning of each year. DTC's tax rate is 40%. What is the net advantage to leasing?

  • Q : Value of endowment in today dollars....
    Finance Basics :

    The first $2 million will start today; at the end of the 5 years, the hospital will also receive a lump sum payment of $16 M. Assuming the cost of money is 4%, what is the value of this endowment in

  • Q : Future appreciation of the euro....
    Finance Basics :

    Describe in general terms how future appreciation of the euro will likely affect the value (from the parent's perspective) of a project established in Germany today by a U.S.-based MNC.

  • Q : Explain market efficiency theory....
    Finance Basics :

    Please explain market efficiency theory? What is strong-form efficiency? Which stock exchange would be an example for this type of market efficiency? What is semistrong-form efficiency? Which stock ex

  • Q : What type of security is tax deductibility....
    Finance Basics :

    What type of security is tax deductibility a characteristic? EPS dilution is a characteristic concern with equity (stock) or debt securities? Is the cost of debt financing higher or lower than equity

  • Q : Define the hedging principle....
    Finance Basics :

    Define the hedging principle. How can this principle be used in the management of working capital?

  • Q : Computing variance and standard deviation of portfolio....
    Finance Basics :

    A portfolio is made up of 75% of stock 1, and 25% of stock 2. Stock 1 has a variance of .08, and stock 2 has a variance of .035. The covariance between the stocks is -.001. Calculate both the varian

  • Q : Computing bank before-tax cost of funds....
    Finance Basics :

    The bank has estimated that reserve requirements, deposit insurance fees, and uncollected balances reduce the amount of money available on checking deposits by 10% and on savings and time deposits b

  • Q : Computing component weight of debt-market values....
    Finance Basics :

    There were 3,000 bonds issued and similar bonds are now selling to yield 12% annually. Zimmerman does not have preferred stock and the market value of equity is $3,000,000. Calculate the component w

  • Q : Determining firm value of operations....
    Finance Basics :

    After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?

  • Q : Net investment for project....
    Finance Basics :

    The extruder will require an expediditure of $12,000 for installation and $4,000 for training new operators. The new equipment will require an increase of $5,000 in inventory, $4,000 in accounts rec

  • Q : Cash flow disposing of old machine....
    Finance Basics :

    A machine that originally cost $25,000 and was depreciated on a straight line basis has one year of its expected 5-year life remaining. Its current market value is $12,000. The corporate tax rate is

  • Q : What is forward price....
    Finance Basics :

    What is forward price? Six month later the price of the stock is $45 and risk free interest rate is still same. What are the forward prices and the value of the forward contract?

  • Q : Determining after-tax profit of firm....
    Finance Basics :

    The corporate tax rate is 40%. If the economy is strong, the firm will sell 2,000,000 gadgets. If the economy enters a recession, the firm will sell only half as many gadgets. If the economy enters

  • Q : Significant change in bond rating....
    Finance Basics :

    Today, the market rate is 10% and each single bond is trading for $844.76. If ABC Inc. wants to raise new debt today, what would be ABC's marginal cost of debt? Assume no significant change in ABC's

  • Q : Most accurate method for tracking the index....
    Finance Basics :

    List two investment products that a manager following a passive investment strategy could use to make an investment in the Standard & Poor's 500 Index. Briefly discuss which product is likely to

  • Q : Net present value of an investment....
    Finance Basics :

    Compute the net present value of an investment with 5 years of annual cash inflows of $100 and two cash outflows, one today of $100 and one at the beginning of the second year of $50. Use a discount

  • Q : Differences and similarities between npv and pi....
    Finance Basics :

    Explain the differences and similarities between NPV and PI. Given the goals of firm value and shareholder wealth maximization, we have stressed importance of NPV.

  • Q : Compound interest charts....
    Finance Basics :

    A company has a project under consideration that will generate an irregular cash flow for the next 10 years. It wants to make a decision whether to proceed with the option or not. What factors would

  • Q : Annual nominal rate of return and effective per annum rate....
    Finance Basics :

    You have deposited $12,000 ten years ago into an investment that has now grown to $46,000. This investment pays interest on a quarterly basis. What is your annual nominal rate of return and effectiv

  • Q : Main determinants of the interest rates....
    Finance Basics :

    What are the main determinants of the interest rates? Which factors are more important than the others? Why? What factors affect the demand for money?

  • Q : Objectives of the federal reserve system....
    Finance Basics :

    What are the stated objectives of the Federal Reserve System? What metrics would you use to determine the success, or failure of our central bank?

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