QUESTION Stock Prices and Returns Suppose you expect Walgreen Company (a drugstore chain) to pay dividends of $0.44 per share and trade for $33 per share at the end of the year. If investments with equivalent risk to Walgreens stock have an expected return of 8.5%, what is the most you would pay today for […]
QUESTION Hyperion, Inc. currently sells its latest high-speed color printer, the Hyper 500, for $350. It plans to lower the price to $300 next year. Its cost of goods sold for the Hyper 500 is $200 per unit, and this years sales are expected to be 20,000 units. a. Suppose that if Hyperion drops the […]
QUESTION Suppose you are given the following information about the default-free, coupon-paying yield curve: Maturity (years) 1 2 3 4 Coupon rate (annual payments) 0.00% 10.00% 6.00% 12.00% YTM 2.000% 3.908% 5.840% 5.783% a. Use arbitrage to determine the yield to maturity of a two-year, zero-coupon bond. b. What is the zero-coupon yield curve for […]
QUESTION Your firm is considering the purchase of a new office phone system. You can either pay $32,000 now, or $1000 per month for 36 months. a. Suppose your firm currently borrows at a rate of 6% per year (APR with monthly com- pounding). Which payment plan is more attractive? b. Suppose your firm currently […]
QUESTION You have an outstanding student loan with required payments of $500 per month for the next four years. The interest rate on the loan is 9% APR (monthly). You are considering making an extra payment of $100 today (that is, you will pay an extra $100 that you are not required to pay). If […]
QUESTION You realize that the plan in Problem 41 has a flaw. Because your income will increase over your lifetime, it would be more realistic to save less now and more later. Instead of putting the same amount aside each year, you decide to let the amount that you set aside grow by 3% per […]
QUESTION Statistics are numerical statements of facts but all facts numerically stated are not statistics. Explain Statistics refers to systematic and organised collection of numerical facts. It tells information in terms of numerical facts or numbers such as employment rate, literacy rate or population data. An important point to note is that mere numbers or […]
QUESTION You would like to invest $18,000 and have a portfolio expected return of 12.3 percent. You are considering two securities, A and B. Stock A has an expected return of 15.6 percent and B has an expected return of 10.3 percent. How much should you invest in stock A if you invest the balance […]
QUESTION Mulligan, Inc. is currently considering an eight-year project that has an initial outlay or cost of $140,000. The cash inflows from its project for years 1 through 8 are the same at $35,000. Mulligan has a discount rate of 12%. Because there is a shortage of funds to finance all good projects, Mulligan wants […]
QUESTION the finnce mnger spends most of his time mking mngeril finnce decisions s opposed to routine functions.DISCUSS The finance manager spends most of the time on the making managerial finance decisions such as like budgeting, working capital analysis, cost analysis and risks and uncertainty analysis, which are just opposite to the routine functions of […]
