QUESTION A stock is currently selling for $61 per share. A call option with an exercise price of $65 sells for $4.12 and expires in three months. If the risk-free rate of interest is 2.6 percent per year, compounded continuously, what is the price of a put option with the same exercise price? A put […]
Date: September 2nd, 2020
QUESTION The Winky Corporation, maker of electronic components, is considering replacing a hand-operated machine used in the manufacture of electronic components with a new fully automated machine. Find the Payback Periodthe Net Present Value and the Internal Rate of Return of the proposalxisting: One full-time machine operator $20,000 per year Cost of maintenance 5,000 per […]
Date: September 2nd, 2020
QUESTION A person who prefers being a creditor to being an owner would invest in A. common stock. C. bonds. B. preferred stock. D. IPO. You can invest in Bonds or IPO. If the company raises money through bonds then it has to offer a fixed coupon payment to the bond investor for a fixed […]
Date: September 2nd, 2020
QUESTION Discuss the four types of costs that might be relevant when considering alternative projects. All projects incur costs. Project costing is a key factor in making project decisions. As a project manager, you need to be aware of the type of costs that impact your project. PMP Exam Tip : There may be some […]
Date: September 2nd, 2020
QUESTION cyclone software co. is trying to establish its optimal capital structure. its current capital structure consists of 25% debt and 75% equity; however, the ceo believes thsat the firm should use more debt. the risk-free rate Rrf, is 5%; the market risk premium, RPm, is 6% and the firms tax rate¦ Cost of Equity […]
Date: September 2nd, 2020
QUESTION Kwikdeal.com uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year end A) Calculate the total estimated bad debts based on the above information 253,500 x 3% = 7,605 135,200 x 4% = 5,405 55,700 x 5% = 2,785 13,000 x 6% = […]
Date: September 2nd, 2020
QUESTION Problem 5 (The CAPM and the cost of capital)Sisyphean Industries is seeking to raise capital from a large group of investors to fund a new project. Suppose that the tangent portfolio has an expected return of 14% and a volatility of 20%. Sisypheans new project is expected to have a volatility¦ (a) (4) 1.75 […]
Date: September 2nd, 2020
QUESTION Hi below is a case study. I just need a few pointers to help me craft an answer to this.You are a VP for business development at a major mining consortia based in the US. You are charged with leading the companys efforts to diversify its product-base and gain entry into new and potentially […]
Date: September 2nd, 2020
QUESTION A 2-year Treasury security currently earns 6.37 percent. Over the next two years, the real interest rate is expected to be 1.2 percent per year and the inflation premium is expected to be 2.6 percent per year.Required:Calculate the maturity risk premium on the 2-year Treasury security. r = r* IP DRP LP MRP Where […]
Date: September 2nd, 2020
QUESTION During the current year, Stan sells a tract of land for $800,000. The property was received as a gift from Maxine on March 10, 1995, when the property had a $310,000 FMV. The taxable gift was $300,000 because the annual exclusion was $10,000 in 1995. Maxine purchased the property on April 12, 1980, ¦ […]
Date: September 2nd, 2020
