QUESTION PLEASE SHOW ALL WORK. THANK YOU !!2. a. A $1,000 bond has a 7.5 percent coupon and matures after 10 years. If current interest rates are 10 percent, what should be the price of the bond?b. If after six years interest rates are still 10 percent, what should be the price of the bond?c. […]
Date: September 2nd, 2020
QUESTION If the Fed decides to raise interest rates next year, what effect would rising rates have upon corporate earnings? 1. When the Fed decides to raise interest rates, bonds will be issued with a much higher interest rate. This will encourage investors to purchase bonds, and as investors sell their stocks, stock prices will […]
Date: September 2nd, 2020
QUESTION Luther is a successful logistical services firm that currently has $5billion in cash. Luther has decided to use this cash to repurchase shares from its investors, and has already announced the stock repurchase plan. Currently, Luther is an all-equity firm with 1.25 billion shares outstanding. Luther¦ Ans: $20 billion Since the capital markets are […]
Date: September 2nd, 2020
QUESTION Suppose the demand for good X is given by Qd = 60 -2Px + 0.01M + 7 PR where Qd = quantity of X demanded; Px price of X; M = (average) consumer income; PR = price of a related good R.Assume that M = $40,000 and PR = $20. Assume that the supply […]
Date: September 2nd, 2020
QUESTION Consider the following projects:CASH FLOWS ($)PROJECT C_0 C_1 C_2 C_3 C_4 C_5A  ¦ Part A Calculation of payback period: For project A: Pay back period means the period at which all earnings are pay back itself is known as payback period. Year Cash flows($) Cumulative cash flows($) 0 -1,000 -1,000 1 1000 0 2 […]
Date: September 2nd, 2020
QUESTION WHAT IS THE NPV CALCULATION FOR PROBLEM BELOW:During the Carter administration, long-term US Treasury yields exceeded 15%, and short-term T-Bills yielded near 20%. After Reagans inauguration, interest rates began to fall as Fed Chairman Volckers restrictive monetary policy succeeded in containing ¦ Raising interest rates next year would have the following effects on each […]
Date: September 2nd, 2020
QUESTION Langley Clinics, Inc buys $400,000 in medical supplies each year (at gross prices) from its major suppliers, consolidated services, which offers Langley terms of 2.5/10, net 45. Currently, Langley is paying the supplier the full amount due on day 45 but it is considering taking the discount paying o¦ 2.5/10 Net 45 means a […]
Date: September 2nd, 2020
QUESTION Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In or¦ Net income = sales operating costs depreciation […]
Date: September 2nd, 2020
QUESTION Question DetailsYou are a local Ford dealership and you did really well last year. Your dealership has a net worth of $1,800,000.00. You are going to exceed your $8.5 million dollar sales goal for the year. Your cost of merchandise sold is expected to average 88% of sales, and your fixed operating c¦ 1. […]
Date: September 2nd, 2020
QUESTION Current Market Data:Market Risk Premium 4.50%Long Term Treasury -Bond Rate 6.00%Regarding ABC Company:Stocks Beta 1.2Dividend paid yesterday $2.75Dividend Growth Rate 5% (Constant)Calculate the stocks required rate of return using CAPM. The required return using CAPM is found with the equation: R(E) = Rf (B)x(Rm) where R(E)= required rate of equity return (we must solve […]
Date: September 2nd, 2020
