What is the value on 1/1/13 of the following cash flows: Date Cash Received Amount of Cash 1/1/14 $14,000 1/1/15 $20,000 1/1/16 $30,000 1/1/17 $43,000 1/1/18 $57,000 Use a 7% discount rate
Luther Industries has a market capitalization of $23 billion, no debt, and $4 billion in cash. If ...
Luther Industries has a market capitalization of $23 billion, no debt, and $4 billion in cash. If Luther's estimated equity beta is 1.32, then the beta of Luther's underlying business enterprise is closest to: A) 1.09 B) 1.3
Suppose that you have $100,000 invested in the market portfolio and that the stock price of Taggart ...
Suppose that you have $100,000 invested in the market portfolio and that the stock price of Taggart Transcontinental suddenly drops to $7.80 per share. Which of the following trades would you need to make in order to maintain your investment in
The following date is for the coming year. Fincorp net income is reported as $195 million. Depreciation expense is $20 million, account receivable decreased by $20 million, account payable decreased by $10 million, and inventories increased by $10 mi
The market consensus is that Analog electronic corporation has an ROE=10% and a beta of 1.2 it plans to maintain indefinitely its traditional plow back ratio of 2/3. This year earnings were $3 per share. The annual dividend was just paid. The consens
Baker Corp. is required by a debt agreement to maintain a current ratio of at least 2.5, and ...
Baker Corp. is required by a debt agreement to maintain a current ratio of at least 2.5, and Baker's current ratio now is 3. Baker wants to purchase additional inventory for its upcoming Christmas season, and will pay for the inventory with short-ter
After your grandmother retired, she purchased an annuity contract for $250,000 that will pay her ...
After your grandmother retired, she purchased an annuity contract for $250,000 that will pay her $25,000 at the end of every year until she dies. The appropriate interest rate for this annuity is 8%. The number of years that your grandmot
The Delta Co. owns retail stores that market home building supplies. Largo, Inc. builds single ...
[html]The Delta Co. owns retail stores that market home building supplies. Largo, Inc. builds single family homes in residential developments. Delta has a beta of 1.22 and Largo has a beta of 1.34. The risk-free rate of return is 4 percent and the ma
You are looking for a new truck and see the following advertisement. "Own a new truck! No ...
You are looking for a new truck and see the following advertisement. "Own a new truck! No money down. Just five easy annual payments of $8000." You know that you can get the same truck from the dealer across town for
Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The initial ...
[html]Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The initial margin is 70%. The maintenance margin is 30%. How low can the price of each share of DEF be before Justin will have to add equity to his account?
In order to create value, a corporation must earn a rate of return on its invested capital that is ...
In order to create value, a corporation must earn a rate of return on its invested capital that is higher than the market's required rate of return on that invested capital. [True or False]
Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it can increase sales over ...
Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it can increase sales over the next year by 30% to 130,000 units. The incremental impact of this price drop on the firms EBIT is closest to: A) a decline of 1.5 million
The volatility of a portfolio that consists of a long position of $10,000 in Wal-Mart and a short ...
The volatility of a portfolio that consists of a long position of $10,000 in Wal-Mart and a short position of $2000 in Microsoft is closest to: A) 9% B) 14% C) 11% D) 12%
Windy City Kite Company has prepared sales forecasts for the beginning of Year 3 as shown in the top ...
[html]Windy City Kite Company has prepared sales forecasts for the beginning of Year 3 as shown in the top row of the table. Half of Windy City's kite sales are cash and the other half are credit. Windy City collects credit sales the month following
Windy City Kite Company has prepared sales forecasts for the first quarter of Year 3 as shown in the ...
[html]Windy City Kite Company has prepared sales forecasts for the first quarter of Year 3 as shown in the top row of the table. Half of Windy City's kite sales are cash and the other half are credit. Windy City collects credit sales the month follow
Suppose that d'Anconia Copper retained the $200 million in cash so that it would not need to raise ...
Suppose that d'Anconia Copper retained the $200 million in cash so that it would not need to raise new funds from outside investors for an expansion it has planned for next year. If it did raise new funds, it would have to pay issuance fees. Ass
Trucks R' Us has a market capitalization of $142 billion, $78 billion in BB rated debt, and $10 ...
Trucks R' Us has a market capitalization of $142 billion, $78 billion in BB rated debt, and $10 billion in cash. If Trucks R' Us' equity beta is 1.68, then their underlying asset beta is closest to: A) 1.00 B) 1.20 C) 1.
Suppose Luther Industries is considering divesting one of its product lines. The product line is ...
Suppose Luther Industries is considering divesting one of its product lines. The product line is expected to generate free cash flows of $2 million per year, growing at a rate of 3% per year. Luther has an equity cost of capital of 10%, a
Of the following different types of securities, which is typically considered most risky?
Of the following different types of securities, which is typically considered most risky? A) long-term corporate bonds B) long-term government bonds C) common stocks of large companies D) common stocks of small companies
Wyatt Oil has 25 million shares outstanding and has a marginal corporate tax rate of 40%. Wyatt Oil ...
Wyatt Oil has 25 million shares outstanding and has a marginal corporate tax rate of 40%. Wyatt Oil announces that it will payout $40 million in cash to investors through a special dividend. Shareholders had previously assumed that Wyatt Oil would re
Harry bought 100 shares of stock at a price of $48 a share. He used his 60% margin account to make ...
[html]Harry bought 100 shares of stock at a price of $48 a share. He used his 60% margin account to make the purchase. Harry sold his stock after a year for $40 a share. Ignoring margin interest and trading costs, what is Harry's return on investor's
Dagny Taggart is a graduating college senior and she is considering the costs of going to medical ...
Dagny Taggart is a graduating college senior and she is considering the costs of going to medical school. Beginning next fall, Dagny expects medical school tuition to run $45,000 for the first year and she estimates that tuition will increase by 6% e
The common shares of the Chevrotin Ltd have a book value of $43.20 and a market value of $57.20 The ...
The common shares of the Chevrotin Ltd have a book value of $43.20 and a market value of $57.20 The company pays $0.56 in dividends each quarter. What is the dividend yield?
Supersites that accumulate tremendous amounts of investing information that typically includes price ...
[html]Supersites that accumulate tremendous amounts of investing information that typically includes price history, investment screening tools and other personal finance features are known as
Which of the following statements regarding the Law of One Price is INCORRECT?
Which of the following statements regarding the Law of One Price is INCORRECT? A) At any point in time, the price of two equivalent goods trading in different competitive markets will be the same. B) One useful consequence of the Law of One
The Associated Dry Goods Corp. zero coupon bond has 7 years to maturity and a face value of $1,000. ...
[html]The Associated Dry Goods Corp. zero coupon bond has 7 years to maturity and a face value of $1,000. The bond trades for $759.92 to yield 4%. What are the cash flows from the bond?
If Alex Corporation takes out a bank loan to purchase a machine used in production and everything ...
If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same, its equity multiplier will ________, and its ROE will ________. A) increase; increase B) decrease; decrease C) incr
Taggart Transcontinental currently has a bank loan outstanding that requires it to make three annual ...
Taggart Transcontinental currently has a bank loan outstanding that requires it to make three annual payments at the end of the next three years of $1,000,000 each. The bank has offered to allow Taggart Transcontinental to skip making the next two pa
Distant Thunder, Inc. paid a dividend of $5.00 per share on its common stock yesterday. Dividends ...
Distant Thunder, Inc. paid a dividend of $5.00 per share on its common stock yesterday. Dividends are expected to grow at a constant rate of 10% for the next two years, at which point the dividends will begin to grow at a constant rate indefinitely.
Wyatt Oil is contemplating issuing a 20-year bond with semiannual coupons, a coupon rate of 5%, and ...
Wyatt Oil is contemplating issuing a 20-year bond with semiannual coupons, a coupon rate of 5%, and a face value of $1000. Wyatt Oil believes it can get a AAA rating from Standard and Poor's for this bond issue. If Wyatt Oil is successful in get
Interest on James Taggart's credit card balances are compounded daily at an effect annual rate of ...
Interest on James Taggart's credit card balances are compounded daily at an effect annual rate of 14.91%. The APR on his credit card is closest to: A) 13.90% B) 13.95% C) 14.91% D) 16.08%
Josh purchased 200 shares of HAR stock at $25.30 per share and sold it 9 months later for $27.20. ...
[html]Josh purchased 200 shares of HAR stock at $25.30 per share and sold it 9 months later for $27.20. HAR does not pay a dividend. At the same time, he bought 500 shares of WIG for $9.15 a share. He sold WIG for $9.65 one year later. During the
A home insurance company anticipates the following pattern of claims, based on historical data. What ...
[html]A home insurance company anticipates the following pattern of claims, based on historical data. What is the expected claim on the next policy sold by the company?
To raise funds for Gravina Island Bridge, the Government of Alaska issued bonds. The bonds have a ...
[html]To raise funds for Gravina Island Bridge, the Government of Alaska issued bonds. The bonds have a face value of $1,000, 15 years to maturity and a 7% coupon rate (annual coupons with the first coupon due in one year). The bonds are priced to yi
