Topic Corporate Finance. Please Answer Multiple Choice Question

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Corporate Finance

Topic Corporate Finance. Please answer multiple choice question:

Which of the following statements is True?
a) The debt overhang problem is part of the pecking order theory.
b) The debt overhang problem can be alleviated by issuing longer term debt.
c) The debt overhang problem can be alleviated by issuing shorter term debt.
d) The debt overhand problem can be alleviated if debt holders refuse to accept a loss
on the debt they hold.

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A Company Wants to Pay $30,000 to its Shareholders

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Shareholders

A company wants to pay $30,000 to its shareholders. It can do this either by a special dividend or a share repurchase. The current stock price is $46 a share and current earnings are $2.75 a share. There are 2700 shares outstanding. Assume that there are no taxes.

            a.    If the company pays the special dividend, what will be the new stock price?

            b,   What will be the price-earnings ratio after the dividend?

            c.    If the company does the repurchase, how many shares will it buy?

            d.   If the company repurchases shares, what will be the new stock price?

            e.    Which way will the stockholder be better off and why?

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Suppose that Amazon Bank Has $964m as Daily Average Total in Net

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Amazon Bank

Suppose that Amazon bank has $964m as daily average total in net transaction accounts over 14 days of computation period on which reserve requirement applies. His daily average vault cash has been $46m over the computation period. In addition, the reserve carry-forward (from prior period) is $2.47m million. Using above information what will be gross reserve requirement?

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Canterbury Berhad (CTB) Has Assets Worth RM 10 Million Which is Financed

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Canterbury Berhad

Canterbury Berhad (CTB) has assets worth RM 10 million which is financed by 70% equity and 30% debt. The net income is RM4.5 million. CTB has set a 30% dividend payout to its shareholders. Net income and dividend are expected to remain constant or no growth (g=0%). CTB has 500,000 outstanding stocks. Current cost of equity is 14% while before tax cost of debt is 12%. CTB is considering to recapitalize by issuing a bond worth RM2 million at a cost of 13% before tax. CTB will use this bond’s proceed to repurchase some of its stocks from the market. CTB CTB’s corporate tax rate is 28%. CTB also forecasts that the cost of equity will rise to 17% should the proposed recapitazation is accepted. ( Note: NI=(EBIT-I)(1-T)) where NI is net income, EBIT is earnings before taxes and interest, I is interest and T is taxes.

Manitowoc Crane (U.S.) Exports Heavy Crane Equipment

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Manitowoc

Manitowoc Crane (8). Manitowoc Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 10,000 units per year at the yuan equivalent of $22,000 each. The Chinese yuan (renminbi) has been trading at Yuan 7.60/$, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan 8.30/$, after which it will remain unchanged for at least a decade. Accepting this forecast as given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume Direct costs are 75% of the U.S. sales price. Additionally, financial management believes that if it maintains the same yuan sales price, volume will increase at 10% per annum through year eight. Dollar costs will not change. At the end of years, Manitowoc’s patent expires and it will no longer export to China. After the yuan is devalued to Yuan 8.30/5, no further devaluations are expected. If Manitowoc Crane raises the yuan price so as to maintain its dollar price, volume will increase at only 2% per annum through year eight, starting from the lower initial base of 9,000 units. Again, dolar costs will not change, and at the end of eight years Manitowoc Crane will stop exporting to China. Manitowoc’s weighted average cost of capital is 13%. Given these considerations, what should be Manitowoc’s pricing policy?

A $25 000, 10% Bond Redeemable at Par on December

Answer for A $25 000, 10% Bond Redeemable at Par on December 1, 2025, is Purchased for $1 Only (Instant Download)

Bond

A $25 000, 10% bond redeemable at par on December 1, 2025, is purchased on September 25, 2014, to yield 7.6% compounded semi-annually. Bond interest is payable semi-annually.

Q1) What is the Market Price?

Q2) What is the Accrued Interest?

Round your answer to 2 decimal places.

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Burnett Corp. Pays a Constant $27 Dividend on its Stock

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Dividend

Burnett Corp. pays a constant $27 dividend on its stock. The company will maintain this dividend for the next 15 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share price? Multiple Choice:

$405.00

$193.09

$180.22

$183.89

$205.96

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Answer for Previous Page Next Page Page 15 of 19 Question 15

Answer for Previous Page Next Page Page 15 of 19 Question 15 (Mandatory) in $1 Only(Instant Download)

Rental

Previous Page Next Page Page 15 of 19 Question 15 (Mandatory) (20 points) You have found a vacation home at the Rim Golf Club in Payson for sale. You think it would make an excellent investment opportunity as a short-term rental property for people from Phoenix looking to get out of the summer heat. The home is $450,000 and you would finance it with an 80% loan-to-value loan. Your mortgage lender has told you that you can borrow for 30 years at 4.25%, but you would have to pay 2 points to get that loan. Based on these terms, what is the effective interest cost?

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Calculate How Much Interest You will have Earned

Answer for Calculate How Much Interest You will have Earned for $1 (Instant Download)

Interest

Calculate how much interest you will have earned if you save $300 per month for 20 years at 8% interest compounded monthly?

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Five Years Ago, You Borrowed $280,000 to Purchase a New Duplex

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Duplex

Five years ago, you borrowed $280,000 to purchase a new duplex in north scottsdale. at the time you were able to finance it with a 5/1 ARM (fully amortizing over 30 years) that will reset to a higher interest rate in year 6. when you made the purchase, you put 25% down and financed the remainder. the initial interest rate was 4.8%. once the fixed portion was completed, the rate would adjust annually to LIBOR plus 3%. what was your initial payment?

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Susan Would Like to Set Up an Endowment Fund that Would Award

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Endowment Fund

1. Susan would like to set up an endowment fund that would award a student with a scholarship of $500 at the end of each year. The scholarship will continue in perpetuity. The interest rate is 6% compounded semi-annually, and the first award is made one year from today. How much (to the nearest dollar) should Susan invest today? d) $8210 a) $33 582 b) $16 667 c) $8334

2. John makes payments of $200 on a loan. The payments will be made at the beginning of each month starting immediately for three years. Find the present value of the loan if the interest rate is 12% compounded monthly.* Oc) $13654 O d) $12 543 O a) $6022 PO b) $6082

3. Joe has set up an investment to provide a scholarship of $750 at the beginning of each year in perpetuity starting immediately. Find the present value of this perpetuity if the interest rate is 8% compounded annually. * d) $10 125 c) $9375 a) $9200 Ob) $10 000

4. It is desired to invest $25 000 to provide for a scholarship at the end of each year in perpetuity. The interest rate is 5% compounded annually. The first scholarship will be awarded one year from today. Find the size of the annual scholarship. c) $1250 b) $2500 d) $1520 O a) $3200

5. Sally has invested $18 000 (single deposit) in an annuity that will start making payments to her in four years. After four years she will receive a monthly payment at the end of every month for 15 years. The interest rate is 6% compounded monthly. What will be the value in her account at the end of four years? a) $36 220 O d) $300 000 b) $22 869 c) $973 761 6. Carlos deposits $350 at the end of each month to save for his retirement. His money earns 4.2% compounded quarterly. How much money will Carlos have in 10 years’ time? * c. $18 258.97 O d. $14 995.63 O a $52 044.36 O b. $52 084.59

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You Want to Have 14,704 After 13 Years. How Much

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Deposit

You want to have 14,704 after 13 years. How much will you equally deposit on an account earning 19 % payable semi-annually at the end of 6 months until 13 years. Round off answers to 2 decimal places.

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Suppose that on Dec. 31, 2006, Company A and Company B

Answer for Suppose that on Dec. 31, 2006, Company A and Company B Enter into a Five-Year in $1 Only (Instant Download)

LIBOR

6. Suppose that on Dec. 31, 2006, Company A and Company B enter into a five-year swap with the following terms:

  • Company A pays Company B an amount equal to 6% per annum on a notional principal of $20 million
  • Company B pays Company A an amount equal to one-year LIBOR + 1% per annum on a notional principal of $20 million.

Assume that LIBOR is 5.5%.

Suppose the Price of a Non-Dividend Paying Stock is $100 Today

Answer for Suppose the Price of a Non-Dividend Paying Stock is $100 Today for $1 Only(Instant Download)

Non-Dividend

7. (20 pts) Suppose the price of a non-dividend paying stock is $100 today and the continuous compounding interest rate is r = 7%. (7a) Find the range for the price of an American put with strike price X = 110 and T = 2. (75) Suppose that the price of an European call with X = 110 and T = 2 is $6, find the range for the price of an American put with the same X and T.

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McKenzie Corporation’s Capital Budgeting Sam McKenzie

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McKenzie

McKenzie Corporation’s Capital Budgeting Sam McKenzie

McKenzie Corporation’s Capital Budgeting Sam McKenzie is the founder and CEO of Mckenne Restaurants, Inc., a regional company Sam is considering opening several new restaurant Sally Thornton, the company CFO, ha been put in charge of the capital budgeting analysis. She has examined the potential for the company’s expansion and determined that the success of the new restaurants will depend critically on the state of the economy over the next few years, McKenzie currently has a bond issue outstanding with a face value of 525 million that is due in one year. Covenants associated with this bond issue prolubit the issuance of any ad- ditional debt. This restriction means that the expansion will be entirely financed with equity at a cost of $9 million, Sally has summarized her analysis in the following table, which shows the value of the company in each state of the economy next year, both with and without expansion Economic Growth Low Normal High Probability 30 Without Expansion $20,000,000 $34,000,000 $11,000,000 With Expansion $24,000,000 $45.000.000 $53.000.000 20

The 1-year Interest Rates in Norway, 𝑖𝑁𝑂𝐾, is Equal to 3%

Answer for The 1-year interest rates in Norway, 𝑖𝑁𝑂𝐾, is equal to 3% in $2 Only  (Instant Download)

Norway

The 1-year interest rates in Norway, 𝑖𝑁𝑂𝐾, is equal to 3%; – The 1-year interest rates in the US, 𝑖𝑈𝑆 is equal to 1%; – Spot exchange rate is equal to 𝑆 ( 𝑁𝑂𝐾 𝑈𝑆𝐷) = 𝑁𝑂𝐾 𝑈𝑆𝐷 8; – The 1-year forward rate is 𝐹 ( 𝑁𝑂𝐾 𝑈𝑆𝐷) = 𝑁𝑂𝐾 𝑈𝑆𝐷 8.5

Observing the data, you discovered an arbitrage opportunity. Show how to realize a certain profit via covered interest arbitrage. Assume that you can borrow either USD 1,000,000 or NOK 1,000,000 for one year. (Hint: In order to perform a covered interest arbitrage, you borrow in one country and you invest in the other. Thus, you need to decide in which country you borrow, then invest in the other.)

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You are Preparing an Invoice for a Customer Whose Purchase Lists

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woman grocery shopping

31. You are preparing an invoice for a customer whose purchase lists for $337.50. The customer is entitled to a trade discount of 10/5; the payment terms are 3/15, n/45; and the sales tax rate is 6%. What should be the total amount of the invoice?

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The Project’s Free Cash Flow to Equity (FCFE) Shows

Answer for The Project’s Free Cash Flow to Equity (FCFE) Shows for $1 Only(Instant Download)

cutout paper composition of human and money under dome

Please answer multiple choice question:

Which of the following statements is False?
a) The project’s free cash flow to equity (FCFE) shows the expected amount of additional cash the firm will have available to pay dividends but not to buy back shares each year.
b) The NPV of the project’s FCFE should be identical to the NPV computed using the WACC and APV methods.
c) The value of the project’s FCFE represents the gain to shareholders from the project.
d) None of the above.

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