QUESTION Define each of the following terms:a. Option; call option; put optionb. Exercise value; strike pricec. Black-Scholes Option Pricing Model Option: is a financial derivative which gives the holder (purchaser) a right (not an obligation) to buy or sell the underlying asset at a predetermined price on or before the decided date. For option seller, […]
QUESTION Data for Barry Computer Co. and its industry averages follow.a. Calculate the indicated ratios for Barry.b. Construct the DuPont equation for both Barry and the industry.c. Outline Barrys strengths and weaknesses as revealed by your analysis.d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2008. […]
QUESTION BPC has decided to evaluate the riskier project at a 12 percent rate and the less risky project at a 10 percent rate.a. What is the expected value of the annual net cash flows from each project? What is the coefficient of variation (CV)? (Hint: =B = $5,798 and CVB = 0.76.)b. What is […]
QUESTION At year-end 2008, total assets for Ambrose Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2008 were $2.5 million, are expected to increase by 25% in 2009. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same […]
QUESTION Answer the following questions:a. Assuming a rate of 10% annually, find the FV of $1,000 after 5 years.b. What is the investments FV at rates of 0%, 5%, and 20% after 0, 1, 2, 3, 4, and 5 years?c. Find the PV of $1,000 due in 5 years if the discount rate is 10%.d. […]
QUESTION At December 31, 2011, Marquis Corporation had 100,000 shares of common stock issued and outstanding, 60,000 of which had been issued and outstanding throughout the year and 40,000 of which had been issued on October 1, 2011. Income before income taxes for the year ended December 31, 2011, was $636,400. In 2011 and 2012, […]
QUESTION All are true/false except 8 and 9[1] An option is a contract that gives its holder the right to buy or sell an asset at a predetermined price within a specified period of time.[2] The exercise value is the positive difference between the current price of the stock and the strike price. The exercise […]
QUESTION Sandwich State Bank has followed the practice of capitalizing certain marketing costs and amortizing these costs over their expected life. In the current year, the bank determined that the future benefits from these costs were doubtful. Consequently, the bank adopted the policy of expensing these costs as incurred. How should the bank report this […]
QUESTION ?oThe cost of capital always depends on the risk of the project being evaluated. Therefore the company cost of capital is useless.?? Do you agree? ting the company cost of capital for the risk complexion of the projects and their capital structure. The projects that have the same risk complexion as the current projects […]
QUESTION Nancy Castle Company purchased a computer system for $60,000 on January 1, 2006. It was depreciated based on a 7-year life and an $18,000 salvage value. On January 1, 2008, Castle revised these estimates to a total useful life of 4 years and a salvage value of $10,000. Prepare Castles entry to record 2008 […]
