QUESTION A firm has a profit margin of 5.5% and an equity multiplier of 2.4. Its sales are $140 million and it has total assets of $84 million. What is its ROE? Round your answer to two decimal places. The ROE is calculated using Du-Pont analysis: ROE = Profit margin * Total asset turnover ratio […]
Date: September 2nd, 2020
QUESTION A convertible bond is currently selling for $855. It is convertible into 15 shares of Capri INC. common which presently sell for $63 per share. The conversion premium is? Conversion Premium: The amount by which the price of a convertible security exceeds the current market value of the common stock into which it may […]
Date: September 2nd, 2020
QUESTION A project requires an initial investment of 20,000 dollars. The lifetime of the project will be 13 years with a cashflow stream of 2,000 per year and an interest rate of 3. Compute the Savings/investment ratio. PV of investment and future earnings of a project is given by : PV = -I a*r (1 […]
Date: September 2nd, 2020
QUESTION CME Group has the following data for the year ending 12/31/07: Net income = $600; Net operating profit after taxes (NOPAT) = $750; Total assets = $2,500; Short-term investments = $200; Stockholders equity = $1,800; Total debt = $700; and Total operating capital = $2,100. Newcrests weighted a Economic Value Added (EVA) =[NOPAT (Capital […]
Date: September 2nd, 2020
QUESTION You are considering a 10-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually. If you require an effective annual interest rate(not a nominal rate) of 8.16%, how much should you be willing to pay for a bond? Calculating the present value of teh bond using excel sheet: Step1: […]
Date: September 2nd, 2020
QUESTION Please helpIf an HMO covered 150,000 lives, expected 25 myocardial infarctions (MI) to occur each year within the covered lives, would expect a length of stay of 4.5 days for each MI, and had to pay an average of $950 per day for each day the MI patient was in the hospital, what would […]
Date: September 2nd, 2020
QUESTION The ABC Company had crime coverage in the amount of $5,000. Following a covered crime loss of $10,000. the insurance company recovered $8,000. Describe how the recovered amount would be distributed between the parties involved. ABCs Crime Insurance= $5000 Actual Loss : $10000 Amt Recovered : $8000 1. Required amount of insurance : $5,000 […]
Date: September 2nd, 2020
QUESTION project K costs $52125 its expected net cash inflows are $12000 per year 8 year and its WACC is 12% I guess payback period is to be calculated. in calculation of payback period present value of money is not considered.The Pay back period is the length of time required for an investment to pay […]
Date: September 2nd, 2020
QUESTION 2) (Ch5.7) Would you rather receive $1000 a year for 10 years or $800 a year for 15 years ifa.) The interest rate is 5%b.) the interest rate is 20% Here we are looking at comparing PV of Annuities. Option 1: PMT = 1000 1. PVAn=PMT*PVIFAn,i = PVAn = PMT*[1/i 1/(i*(1 i)^N)] PVA10 = […]
Date: September 2nd, 2020
QUESTION Companys shares have a market value of 120 million and a beta of 1.5. It currently has risk-free debt as well. The firm decides to change its capital structure by issuing 30 million in additional risk-free debt, and then using this 30 million to repurchase stock.a) With perf A) The current beta is 1.5, […]
Date: September 2nd, 2020
