QUESTION The Western Railway Company (WRC) has been offered a 100-year contract to haul a fixed amount of coal each year from Wyoming to Illinois. Under the terms of the agreement, WRC will receive $4,200,000 now in exchange for its hauling services valued at $360,000 at the end of year (EOY) one, $375,000 a Here […]
Date: September 2nd, 2020
QUESTION The Ewing Distribution Company (EDC) is planning a $100 million expansion of its chain of discount service stations to several neighboring states. This expansion will be financed with debt, preferred stock and equity. The firms has 20,000 bonds with a $1,000 face value of current debt. The de Here we have to findout the […]
Date: September 2nd, 2020
QUESTION A U.S. government bond matures in 10 years. Its quoted price is now 97.8, which means the buyer will pay $97.80 per $100 of the bonds face value. The bond pays 5% interest on its face value each year. If $10,000 (the face value) worth of these bonds is purchased now, what is the […]
Date: September 2nd, 2020
QUESTION The Feds have kept interest rates low in an effort to stimulate economic growth. How does this affect a companys use of long-term debt? How does this affect “you” as a consumer? This reduces the cost of debt to a borrower and encourages him to borrow to make investments that will stimulate demand and […]
Date: September 2nd, 2020
QUESTION (Two-period dividend discount model) New England Electric has projected dividends of$2.72 in one year and $3.10 in two years. If the stock is projected to sell for $48.00 in twoyears, what is the value of the stock today if the required return is 10%? D1 = 2.71. D2=3.10. P2=48 & Ks=10% what is P0 […]
Date: September 2nd, 2020
QUESTION Two alternatives are being considered to finance the acquisition of a new vehicle. The purchase price is assumed $20,000 for all scenarios. (no discount for “cash” purchase). The investors minimum rate of return is a nominal 10.0% compounded monthly.Alternative A is to accept the dealer finance pac Flat rate: Total cost = $20,000 Flat […]
Date: September 2nd, 2020
QUESTION 1.A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all those projects that appear to have positive NPVs. Briefly explain why such a firm would tend to b First let […]
Date: September 2nd, 2020
QUESTION Year Cash Flow1 $7252 9803 04 1,360If the appropriate discount rate for the following cash flows is 11 percent compounded quarterly, the present value of the cash flows is? .(Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16)).Ive been trying to solve this prob You need to […]
Date: September 2nd, 2020
QUESTION x. x.x=sp; (1) Calculating Pay-back Period: System A Year Cash flows Net Cashflows 0 -120,000 -120,000 1 65,000 -55,000 2 55,000 0 3 35,000 4 15,000 5 25,000 Pay-back Period = 2 Years System B Year Cash flows Net Cashflows 0 -100,000 -100,000 1 45,000 -55,000 2 35,000 -20,000 3 35,000 15,000 4 25,000 […]
Date: September 2nd, 2020
QUESTION an investor is in the 33% tax bracket and pays long ter m capital gains taxes of 15%.what are the taces owed ( or saved in the case of losses) in the current tax year for each of followin situations?net short term capital gains of $3000, net long term capital gains of $4000net short […]
Date: September 2nd, 2020
