• Q : Finding possibilities on distribution....
    Finance Basics :

    An employer has a choice of how benefits will be distributed if it terminates its qualified plan. The plan can be designed to accommodate all of the following distribution possibilities except:

  • Q : Concerning the prohibited transaction....
    Finance Basics :

    A sale of an investment to the plan from a party in interest is a prohibited transaction unless it is exempted by a statutory, administrative, or individual exemption.

  • Q : Find bid on the treasury bills....
    Finance Basics :

    We are currently bidding on Treasury bills and have determined that we must have a 5% return for a $1,000 T-Bill that will mature in one year. How much would we be willing to bid on the Treasury bill?

  • Q : Determine non-quantitative factors....
    Finance Basics :

    Simon, a second-year business student at the University of Toronto, will graduate in two years with an accounting major and a Spanish minor. Simon is trying to decide where to work this summer.

  • Q : Calculate total asset turnover....
    Finance Basics :

     Your company's balance sheet includes the following data for 2012: Current assets = $1 million. Cash = $100,000. Inventory = $500,000. Current liabilities = $800,000.

  • Q : Tuition and living expenses....
    Finance Basics :

    'Greg and Debra Quilici own a four bedroom home in an affluent neighborhood just north of San Francisco, California. Greg is a partner in the family owned commercial painting business.

  • Q : Investment time frame and investment purpose....
    Finance Basics :

    Given an individual risk profile, be it an aversion to risk or a high tolerance for risk; and, the current relatively low level of interest rates would he invest today in an asset, like a US Governmen

  • Q : Determine the expected financial impact....
    Finance Basics :

    ABC Company is considering replacing a metal gear with a plastic one. The plastic gear will save $0.75 per unit but will require an expenditure of $40,000 for special tooling to produce the gear. Annu

  • Q : Determine stock symbol....
    Finance Basics :

    Introduction of company. What business is the company in? When was the company established? When did the company go public? Why did the company decide to go public?

  • Q : Improving production facility....
    Finance Basics :

    A company is considering building a new and improved production facility for one of its existing products. It would be built on a piece of vacant land that the firm owns. This land was acquired four y

  • Q : Estimate the total return....
    Finance Basics :

    You have owned the stock of Micro Co Ltd for the last five years. Historical data for the stock are as follows:

  • Q : Present value of an annuity formula....
    Finance Basics :

    You would like to invest in one of the following assets. Use the present value of an annuity formula and the trial and error method to estimate the Internal Rate of Return or yield for each of the fol

  • Q : Calculate the observed risk premium....
    Finance Basics :

    Calculate the observed risk premium in each year for large cap stocks vs. T-bills. What was the average risk premium over this period? What was the standard deviation of the risk premium over this per

  • Q : Corporate bond valuation....
    Finance Basics :

    A share of stock is currently selling for $31.80. If the anticipated constant growth rate for dividends is 6% and investors are seeking a 16% return, what is the dividend just paid?

  • Q : Computing portfolio weights....
    Finance Basics :

    What are the portfolio weights for a portfolio that has 145 shares of stock A that sells for $45 per share and 110 shares of Stock B that sells for $27 per share?

  • Q : Compute expected return on the stock....
    Finance Basics :

    A stock has a beta of 1.05, the expected return on the market is 10% and the risk-free rate is 3.8%. What must the expected return on the stock be?

  • Q : Find expected rates of return for each bond....
    Finance Basics :

    Here are data on $1,000 par value bonds issued by Micorsoft, Ford, and Xerox at the end of 2008. Assume you are thinking about buying these bonds as of January 2009. Answer the following questions:

  • Q : Find the expected return on a portfolio....
    Finance Basics :

    A stock has a beta of 1.25 and an expected return of 14%. A risk free asset currently earns 2.1%.

  • Q : Evaluating capital projects....
    Finance Basics :

    Of the six key methods used to evaluate capital projects, which one do you prefer? Why do you prefer this method over others? What is your second choice for an evaluation method?

  • Q : Annuity problems....
    Finance Basics :

    A retirement plan guarantees to pay you or your estate a fixed amount for 25 years. At the time of retirement you will have $100,000 to your credit in the plan.

  • Q : Determine positive npv....
    Finance Basics :

    A firm has debt with a face value of $100. Its projects will pay a safe $80 tomorrow. Managers care only about shareholders. A new quickie project comes along that costs $20, earns either $10 or $40 w

  • Q : Future expected rates of return....
    Finance Basics :

    If the P/E ratio on the S&P 500 is 10, given historical earnings growth patterns, what would be a reasonable estimate of long-run future expected rates of return on the stock market? 

  • Q : Calculate dividends and earnings per share....
    Finance Basics :

    Maynard Steel plans to pay a dividend of $3 this year. The company has an expected earnings growth rate of 4% per year and an equity cost of capital of 10%.

  • Q : Estimate the value of a share....
    Finance Basics :

    You notice that PepsiCo (PEP) has a stock price of $72.62 and EPS of $3.80. Its competitor, the Coca-Cola Company (KO), has EPS of $1.89.

  • Q : Computing discounted payback period....
    Finance Basics :

    Polk Products is considering an investment project with the following cash flows: Initial investment -$100,000 Yr 1 40,000 Yr 2 90,000 Yr 3 30,000 Yr 4 60,000.

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