Your father is about to retire, and he wants to buy an annuity that will provide him with $85,000 of income a year for 25 years, with the first payment coming immediately. The discount rate on such annuities is 5.15%. How much would it cost him to buy the annuity today?



Q14) On January 1, 2009, your brother’s business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for 2009?


Q15)The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 13%. What is the best estimate of the current stock price?




Q16) ABC Inc.’s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $35 semi-annual coupon and have a 15-year maturity, but they can be called in 10 years at $1,100. What is their yield to call (YTC)?


Q18) ABC Inc.’s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm’s expected rate of return?


ABC Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company’s stock?


Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market’s required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund’s assets are as follows:
StockInvestmentBetaWeight    
A$200,0001.50.1000.15   
B$300,000-0.50.150-0.075   
C$500,0001.250.2500.3125   
D$1,000,0001.750.5000.875   


Q22) ABC Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders’ required return, rs, is 14.00%; and the firm’s tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?


Barry Company is considering a project that has the following cash flow and WACC data. What is the project’s NPV? What is IRR? What is MIRR? Should this project be accepted? Why?
WACC: 13.00%
Year 0 1 2 3 4 5
Cash flows -$1,100 $400 $390 $380 $370 $360
Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?
Depreciation
Year Rate
1 0.20
2 0.32
3 0.19
4 0.12
5 0.11
6 0.06
Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, some new working capital would be required, but it would be recovered at the end of the project’s life. Revenues and other operating costs are expected to be constant over the project’s 3-year life. What is the project’s NPV?
Q26) Your company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $18,500 the first year, $21,000 the second year, $25,000 the third year, -$10,000 the fourth year, $31,000 the fifth year, $37,000 the sixth year, $39,000 the seventh and eighth year, and -$9,000 the ninth year. The project would cost the firm $145,000. If the firm’s cost of capital is 11%, find NPV, IRR and MIRR for the project. Do you accept this project? Why?
Q27) XYZ Corporation is considering an expansion project. To date they have spent $65,000 investigating the viability of the project and have decided to proceed. The CEO of XYZ spent $20,000 last year on his business trip to New York where he discussed about the proposed new project with the board members. The company spent $50,000 on a marketing study before its current analysis regarding whether to accept or reject the project. The proposed project will cost $550,000. The project will be depreciated over a 3 year MACRS class life. XYX would use the 3-year MACRS method to depreciate the machine and equipment which are 33% 45%, 15% and 7%.
If the project is undertaken the company will need to increase its inventories by $45,000, and its accounts payable will rise by $10,000. The company will realize an additional $750,000 in sales over each of the next four years. The company’s operating costs (not including depreciation) will increase by $540,000 a year. Both sales and the operating cost are expected to grow 4.5% annually during the life of the project. The company’s tax rate is 35%. At t = 3, the project’s economic life is complete, but it will have a salvage value (before-tax) of $55,000 after three years. The project’s WACC is 10.5%. What is the project’s net present value (NPV)? What is the IRR? Should the project be accepted? Why or why not?
Using the following information, find the Expected Return, Variance, and Standard Deviation for the returns on Stock 1 and Stock 2. Also, find the Covariance and Correlation Coefficient between the returns on Stocks 1 and 2. If you invest $10,000 in stock X and $25,000 in stock Y, what would be the expected return and risk on your portfolio?


Q29) An investment pays $2,500 per year for the first 6 years, $3,000 per year for the next 8 years, and $5,000 per year the following 10 years (all payments are at the end of each year). If the discount rate is 7% compounding quarterly, what is the fair price of this investment?


Q30) The required return on ABC Corporation’s stock is 10.4%, beta is 1.7, and a risk-free asset is 5%. What would be the required rate of return on the stock if the stock’s beta increased to 2.15 while the risk-free rate and market return remained unchanged?
Punctual Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.