Financial literacy

3. Suppose a firm relies exclusively on the payback method when making capital b

3. Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things he…

3. Suppose a firm’s production function is given by Q = 10 (E w + E B ) 1/2 wher

3. Suppose a firm’s production function is given by Q = 10 (Ew + EB)1/2 where Ew and Eb are the number of white and black workers employed by the firm, respectively, and Q refers …

3. Suppose bond A has 20 years left to maturity, an 8% coupon rate, pays interes

3. Suppose bond A has 20 years left to maturity, an 8% coupon rate, pays interest semi-annually, and has a 6% yield to maturity and bond B has 25 years left to maturity, a 5% coup…

3. Suppose that FirstBank has the following simplified balance sheet. Assume tha

3. Suppose that FirstBank has the following simplified balance sheet. Assume that all other components of the balance sheet are equal to zero. (numbers in millions) Assets reserve…

3. Suppose that U.S $ interest rates is 9% per annum and the euro interest rate

3. Suppose that U.S $ interest rates is 9% per annum and the euro interest rate is 7% per annum. The current value of the U.S. $ is €0.62. Consider a financial institution engag…

3. Suppose that a company’s dividends are expected to grow at a constant rate gd

3. Suppose that a company’s dividends are expected to grow at a constant rate gd forever, and the price of the stock of the company is expected to grow at a constant rate of gp fo…

3. Suppose that the S&P 500, with a beta of 1.0, has an expected return of 13% a

3. Suppose that the S&P 500, with a beta of 1.0, has an expected return of 13% and T-bills provide a risk-free return of 4%. a). What would be the expected return and beta of …

3. Suppose that today the one-year Treasury note yields 0.13% (0.0013), the two-

3.  Suppose that today the one-year Treasury note yields 0.13% (0.0013), the two-year note yields 0.38% (0.0038), the three-year note yields 0.70% (0.0070), the five-year note yie…

3. Suppose that your job is to hire portfolio managers and let each one of them

3. Suppose that your job is to hire portfolio managers and let each one of them run his own investment strategy independently. Unfortunately, you know little about these managers,…

3. Suppose you are given the following information for Bayside Bakery: sales $30

3. Suppose you are given the following information for Bayside Bakery: sales $30,000; costs $15,000, addition to retained earnings-$4,221 ; dividends paid $469; interest expense $…

3. Suppose you have purchased a bond with a coupon rate of 8% that makes interes

3. Suppose you have purchased a bond with a coupon rate of 8% that makes interest payments semi-annually, a yield to maturity (hint: this is the annual figure) of 6.5%, and a par …

3. Suppose you have the following investment opportunities, but only $90,000 ava

3.Suppose you have the following investment opportunities, but only $90,000 available for investment. Which projects should you take? Project                   NPV                …

3. Sustainable Food Corp (SFC) has $20 million in assets that is funded by $12 m

3. Sustainable Food Corp (SFC) has $20 million in assets that is funded by $12 million in debt and $8 million in equity, which matches their target capital structure. SFC pays 7% …

3. Swift Airlines must liquidate some equipment that is being replaced. The equi

3. Swift Airlines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated. The equipment can be sold tod…

3. Swift Airlines must liquidate some equipment that is being replaced. The equi

3. Swift Airlines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated. The equipment can be sold tod…

3. Table 1 The firm has following financial information: December 2010 December

3. Table 1 The firm has following financial information: December 2010 December 2011 Net income $2,000 $3,500 Accounts receivable 850 850 Accumulated depreciation 2,125 2,500 Comm…

3. Taiwan Semiconductor Manufacturing Co.\'s stock is trading at NT$181 per shar

3. Taiwan Semiconductor Manufacturing Co.'s stock is trading at NT$181 per share. Based on your analysis, you estimate it will earn after-tax cash profits of NT$309,865M, NT$341,2…

3. The Cooper Electronics Company has developed the following schedule of potent

3. The Cooper Electronics Company has developed the following schedule of potential investment projects that may be undertaken during the next six months: Project Cost (in Million…

3. The Corner Grocer has a 7-year, 6 percent annual coupon bond outstanding with

3. The Corner Grocer has a 7-year, 6 percent annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. What is the percentage change…

3. The Equity Fund cells Class A shares with a front-end load of 4% and Class B

3. The Equity Fund cells Class A shares with a front-end load of 4% and Class B shares with 12b-1 fees of 0.5% annually as well as back-end load fees that start at 5% and fall by …

3. The FCIu for a small expansion to an existing facility is M$20. The expansion

3. The FCIu for a small expansion to an existing facility is M$20. The expansion was completely built by the end of year 0 and operating immediately thereafter. Other estimated co…

3. The Greck Connection had sales of $28.7 million and a cost of goods sold of S

3. The Greck Connection had sales of $28.7 million and a cost of goods sold of S11.5 million in 2013 A simplified balance sheet for the firm appears below a. Calculate The Greek C…

3. The Green-line Co. produces 1,500 batteries per day at a cost of $6 per batte

3. The Green-line Co. produces 1,500 batteries per day at a cost of $6 per battery for materials and labor. It takes the firm 22 days to convert raw materials into a battery and m…

3. The NBA Corporation is comparing two different capital structures, an all-equ

3. The NBA Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, NBA would have 200 shares of stock ou…

3. The analysis period is infinite at the annual interest rate of 5%. Initial ma

3. The analysis period is infinite at the annual interest rate of 5%. Initial machine cost S1M Annual maintenance costs 50,000 Annual benefits 150,000 Life 10 years It is assumed …

3. The average price of new homes is $138,500. If new home prices are increasing

3. The average price of new homes is $138,500. If new home prices are increasing at a rate of 15% per year, how much will a new home cost in 12 years? 4. You deposit $3,500 into a…

3. The beta of stock Golden is 1.25. The risk free rate of interest is 2.5% and

3. The beta of stock Golden is 1.25. The risk free rate of interest is 2.5% and the expected return on the market is 10%. According to the capital asset pricing model, which of th…

3. The chemical company IMC is considering a new line of fertilizer. IMC has alr

3. The chemical company IMC is considering a new line of fertilizer. IMC has already paid $200,000 for a detailed economic study of the project. The study made the following forec…

3. The common stock of Company A pays an annual dividend of $1.65 a share. The c

3. The common stock of Company A pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much …

3. The company is choosing between machine A and B (they are mutually exclusive

3. The company is choosing between machine A and B (they are mutually exclusive and the company can only pick one). The initial cost of machine A is $200,000 and it will last for …

3. The components that comprise a nation\'s gross domestic prod¬ uct were identi

3. The components that comprise a nation's gross domestic prod¬ uct were identified and discussed in this chapter. Assume the follow¬ ing accounts and amounts were reported by a n…

3. The current price of a non-dividend paying stock is So = $25 and its future p

3. The current price of a non-dividend paying stock is So = $25 and its future price st is governed by the following equation: with = 0.06 and = 0.3. The riskfree interest rate is…

3. The current stock price of Alpha airlines is $80. If Alpha issues equity, Alp

3. The current stock price of Alpha airlines is $80. If Alpha issues equity, Alpha’s management anticipates that the market will react negatively and that Alpha will only be able …

3. The following inentory data have been established to for the adler corp: (1)

3. The following inentory data have been established to for the adler corp: (1) Orders must be placed in multiples of 100 units (2) Annual sales are 338,000 units (3) The purchase…

3. The following information is from 2013 statement of stockholders\' equity for

3. The following information is from 2013 statement of stockholders' equity for Dynegy, Inc. 2013 Stockholders' eguity n millions, except shares 2012 Common stock, par value $0.01…

3. The following is information on current spot and forward term structures (ass

3. The following is information on current spot and forward term structures (assume the corporate debt pays interest annually) Spot 1 Year Spot 2 Year (1-year maturity) Forward 1-…

3. The following table gives actual data on the U.S. CPI and the S&P; 500 total

3. The following table gives actual data on the U.S. CPI and the S&P; 500 total return index (SPTR. A. (20) Use this data to compute the average annual nominal return and real…

3. The following table gives the information of the stocks of two prominent Virg

3. The following table gives the information of the stocks of two prominent Virginia compa- nies. Price per share Shares outstanding Blair Systems $40 5 million Ewell Financial $1…

3. The following table listed 25 subgroups of measurement data with group size 3

3. The following table listed 25 subgroups of measurement data with group size 3 c1 49.431950.1432 49.2045 0.378950.2715 50.5952 48.6722 49.1436 49.1306 49.5332 50.4829 50.0007 49…

3. The following table summarizes prices of various default - free zero - coupon

3. The following table summarizes prices of various default - free zero - coupon bonds (expressed as a percentage of face value): Maturity (years) 1 2 3 4 5 Price (per $100 face v…

3. The group product manager for ointments at American Therapeutic Corporation w

3. The group product manager for ointments at American Therapeutic Corporation was reviewing price and promotion alternatives for two products: Rash-Away and Red-Away. Both produc…

3. The income statement from Ford\'s annual report appears as follows in summary

3. The income statement from Ford's annual report appears as follows in summary form. (This information was obtained from the company's Web site, http://www.ford.com.) (1.1, 1.2 F…

3. The initial margin maintenance margin for 2018 COMEX gold futures contract is

3. The initial margin maintenance margin for 2018 COMEX gold futures contract is $8,500 and $7,500, respectively. The size of the COMEX gold futures contract is 100 ounces. Suppos…

3. The international Fisher effect (IFE) Aa Aa The international Fisher effect (

3. The international Fisher effect (IFE) Aa Aa The international Fisher effect (IFE) states that the expected changes in the exchange rate between two currencies in a certain time…

3. The international Fisher effect (IFE) The international Fisher effect (IFE) s

3. The international Fisher effect (IFE) The international Fisher effect (IFE) states that the expected changes in the exchange rate between two currencies in a certain time perio…

3. The market price of a 4-year 6% coupon non-Treasury issue is $102.4083. a. Ca

3. The market price of a 4-year 6% coupon non-Treasury issue is $102.4083. a. Calculate the current yield b. Calculate the yield to maturity c. Compute the zero-volatility spread …

3. The necessary adjustment(s) to the operating expenses amount shown on the inc

3. The necessary adjustment(s) to the operating expenses amount shown on the income statement to arrive at cash paid for operating expenses is(are): a. subtract the change in oper…

3. The net income of the year that just ended, prior to paying a dividend, for N

3. The net income of the year that just ended, prior to paying a dividend, for Novis Corporation is $32,000. They have 10,000 outstanding shares and a 100% payout policy. They are…

3. The relationship between \"yield\" on securities (eg: bonds) and their respec

3. The relationship between "yield" on securities (eg: bonds) and their respective "maturity" is know as the and is graphically illustrated by a A. Required Rate of Return (RRR)..…

3. The residual dividend model Aa Aa The residual dividend policy approach is ba

3. The residual dividend model Aa Aa The residual dividend policy approach is based on the theory that a firm's optimal distribution policy is a function of the firm's target capi…