Showing 604–612 of 1959 results

  • FIN 515 WEEK 4 HOMEWORK ASSIGNMENT

    $5.00

    (7–2)
    Constant Growth Valuation
    Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm’s stock?

    (7–4)
    Preferred Stock Valuation
    Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock’s required rate of return?

    (7–5)
    Nonconstant Growth Valuation
    A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock’s current price?

    (9-1)
    After-Tax Cost of Debt
    Calculate the after-tax cost of debt under each of the following conditions:

    • a. Interest rate of 13%, tax rate of 0%
    • b. Interest rate of 13%, tax rate of 20%
    • c. Interest rate of 13%, tax rate of 35%

    (9-4)
    Cost of Preferred Stock with Flotation Costs
    Burnwood Tech plans to issue some $60 par preferred stock with a 6% dividend. A similar stock is selling on the market for $70. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock?

    (9-5)
    Cost of Equity: DCF
    Summerdahl Resort’s common stock is currently trading at $36 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 5% a year. What is its cost of common equity?

    (9-6)
    Cost of Equity: CAPM
    Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM?
    (9-7)
    WACC
    Shi Importer’s balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi’s tax rate is 40%, rd = 6%, rps = 5.8%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?

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  • FIN370 Week 2 Individual Assignment Chapter Study Questions

    $3.00

    14.1 What are financial markets? What function do they perform? How would an economy be worse off without them?

    14.3 Distinguish between the money and capital markets

    14.4 What major benefits do corporations and investors enjoy because of the existence of organized security exchanges?

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  • FIN/370 Week 1 Individual Assignment

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    FIN/370
    Week 1 Individual Assignment
    Resource: Financial management: Principles and applications

    Define the following terms and identify their roles in finance:

    • * Finance
    • * Efficient market
    • * Primary market
    • * Secondary market
    • * Risk
    • * Security
    • * Stock
    • * Bond
    • * Capital
    • * Debt
    • * Yield
    • * Return on investment
    • * Rate of return
    • * Cash flow
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  • Week 1 Assignment: Mini Case (p.45) Problems (p.79)

    $17.50

    a) Why is corporate finance important to all managers?

    b) Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.

    c) How do corporations go public and continue to grow? What are agency problems? What is corporate governance?

    d) What should be the primary objective of managers?

    • 1) Do firms have any responsibilities to society at large?
    • 2) Is stock prices maximization good or bad for society?
    • 3) Should firms behave ethically?

    e) What three aspects of cash flows affect the value of any investment?

    f) What are free cash flows?

    g) What is the weighted average cost of capital?

    h) How do free cash flows and the weighted average cost of capital interact to determine a firm’s value?

    i) Who are the providers (savers) and users (borrowers) of capital? How is capital transferred between savers and borrowers?

    j) What do we call the price that a borrower must pay for debt capital? What is the price of equity capital? What are the four most fundamental factors that affect the cost of money, or the general level of interest rates, in the economy?

    k) What are some economic conditions (including international aspects) that affect the cost of money?

    l) What are financial securities?

    m) List some financial institutions.

    n) What are some different types of markets?

    o) How are secondary markets organized?

    • 1) List some physical location markets and some computer/ telephone networks.
    • 2) Explain the differences between open outcry auctions, dealer markets, and electronic communications networks (ECNs).

    p) Briefly explain mortgage securitization and how it contributed to the global economic crisis.

    2-6. In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the year?

    2-7. The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3)dividends paid of $25,000, and (4) income taxes. What are the firm’s income tax liability and its after-tax income? What are the company’s marginal and average tax rates on taxable income?

    2.9 The Shrieves Corporation has $10,000 that it plans to invest in marketable securities. It is choosing amomng AT&T bonds, which yield 7.5%, state of Florida muni bonds, which yield 5% (but are not taxable), and AT&T preferred stock, with a dividend yield of 6%. Shrieves’s corporate tax rate is 35% and 70% of the dividends received are tax exempt. Find the after-tax rates returns on all three securities.

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  • FIN 515 Homework #1

    $7.50

    1-1. What is the most important difference between a corporation and all other organizational forms?

    1-2. What does the phrase limited liability mean in a corporate context?

    1-3. Which organizational forms give their owners limited liability

    1-4. What are the main advantages and disadvantages of organizing a firm as a corporation?

    1-5. Explain the difference between an S corporation and a C corporation.

    1-6. You are a shareholder in a C corporation. The corporation earns $2 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 40% and the personal tax rate on (both dividend and

    non-dividend) income is 30%. How much is left for you after all taxes are paid?

    1-7. Repeat Problem 6 assuming the corporation is an S corporation.

    2.8 In early 2009, General Electric (GE) had a book value of equity of $105 billion, 10.5 billion shares outstanding, and a market price of $10.80 per share. GE also had cash of $48 billion, and total debt of $524 billion. Three years later, in early 2012, GE had a book value of equity of $116 billion, 10.6 billion shares outstanding with a market price of $17 per share, cash of $84 billion, and total debt of $410 billion. Over this period, what was the change in GE’s:

    1. market capitalization?
    2. market-to-book ratio
    3. enterprise value?

    2-11.  Suppose that in 2013, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their operating margin falls from 5.57% to 4.50%. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2012.

    1. What is Global’s EBIT in 2013?
    2. What is Global’s net income in 2013?
    3. If Global’s P/E ratio and number of shares outstanding remains unchanged, what is Global’s share price in 2013?

    2-24.  Suppose your firm receives a $5 million order on the last day of the year. You fill the order with $2 million worth of inventory. The customer picks up the entire order the same day and pays $1 million upfront in cash; you also issue a bill for the customer to pay the remaining balance of $4 million in 30 days. Suppose your firm’s tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following:

    1. Revenues
    2. .Earnings
    3. Receivables
    4. Inventory
    5. Cash
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  • FIN-516 WEEK 1 – HOMEWORK ASSIGNMENT

    $10.00

    Problem Based on Chapter 14, Residual Dividends
    Middlesex Plastics Manufacturing had 2011 Net Income of $15.0 Million. Its 2012 Net Income is forecast to increase by 8%. The company’s capital structure has been 35% Debt and 65% Equity since 2010, and the company plans to maintain this capital structure in 2012. The company paid $3.0 Million cash dividends in 2011. The company is planning to invest in a major capital project in 2012. The capital budget for this project is $12.0 Million in 2012. Given:

    2011 Net Income = $15,000,000
    2012 Net Income = increased by 8% = ($15,000,000) + ($15,000,000 * 8%) = $16,200,000 2012 Target Equity Ratio = 65%
    2011 Dividend Payout = $3,000,000
    2012 Capital Budget = $12,000,000

    1. If Middlesex increases its cash dividends in 2012 at the same rate of growth as its Net Income rate, what will be the total 2012 dividend payout in Dollars?
    2. What is 2012 dividend payout ratio if the company increases its dividends at 8%?
    1. If the company follows a residual dividend policy, and maintains its 35% Debt level in its capital structure, and invests in the $12.0 Million capital budget in 2012, what would be the Residual Dividend level (in Dollars) in 2012? What would be this Residual Dividend payout ratio?

    4.How much additional capital (Debt and/or Equity) will the company have to raise from outside sources in 2012 if it invests in this capital project, and follows a residual dividend policy?

    1. What would be the prudent dividend policy for 2012?: Pay dividends at the current dividend growth rate of 8%, or pay the residual dividend amount.

    Problem 19-3 (Chapter 19) on Warrants
    This problem is posted on page 781 of the textbook.

    (19–3) What effect does the trend in stock prices (subsequent to issue) have on a firm’s ability to raise funds through (a) convertibles and (b) warrants?

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  • Econ Week 1 Assignment

    $15.00

    Week 1 Assignment

    Chapter 1 – 3 & 7

    1. a. What method is used to ration goods in a market economy? How does this rationing method influence the incentive of individuals to supply goods, services, and resources to others?
    2. 3. How are grades rationed in your economics class?  How does this rationing method influence student behavior?  Suppose the highest grades were rationed to those whom the teachers liked best.  How would this method of rationing influence student behavior?
    3. A restaurant offers an “all you can eat” lunch buffet for $10. Shawn has already eaten three servings, and is trying to decide whether to go back for a fourth. Describe how Shawn can use marginal analysis to make his decision.

    Chapter 2 – 6, 7, 13

    1. If you have a private-ownership right to something, what does that mean? Does private ownership give you the right to do anything you want with the things that you own? Explain. How does private ownership influence the incentive of individuals to a) take care of things, b) conserve resources for the future, and c) develop and modify things in ways that are beneficial to others? Explain.
    2. What is the law of comparative advantage? According to the law of comparative advantage, what should be the distinguishing characteristics of the goods a nation produces?  What should be the distinguishing characteristics of the goods the nation imports?  How will international trade influence people’s production levels and living standards?  Explain.
    1. Two centuries ago, there were more buffalo than cattle in the United States. Even though millions of cattle are killed for beef consumption each year, the cattle population continues to grow while the buffalo are virtually extinct.  Why?
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  • Econ545 – Project 1 Neighbor Cindy

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    Situation B

    Your neighbor Cindy wants to start a contracting business for installing solar panels. She has heard of the cost savings that households and businesses can make each year by installing solar panels on their roofs. Cindy has also heard of government incentives for installing solar panels. Being concerned about the environment and wishing to reduce pollution, Cindy thinks installing solar panels also serves a good social purpose. But she does not want to risk her life savings on a venture that might not succeed or become profitable enough. After hearing from you about taking this course in business economics, she decides to ask you for advice.

    At first you are hesitant to give investment advice. Then you read the piece “US boosts ‘game-changer’ solar technology in bid for global market share” on page 374 of the textbook. You realize there are more pieces to the decision than Cindy is considering. You decide to research the market in terms of supply and demand, elasticity, costs of production, pricing, and economic or normal profit or loss. You want to provide Cindy with the most informed advice possible.

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  • ECON 545: Microeconomic Analysis – Need for physicians in today’s marketplace

    $12.50

    ECON545: Project 1—Microeconomic Analysis

    The Microeconomic Paper tests your ability to apply economic principles to a business decision. Select one situation from the items outlined below: A to D. Complete the paper on the selected situation as specified below. The completed paper is a professional report and is due in Week 3 (230 points). See the grading rubric at the end of this document. Be sure to use the DeVry library for finding data; avoid questionable sources, such as Wikipedia.

    The following is a list of the specific required information, research, graphs, and math to be included in each answer regardless of the scenario chosen.

    1. Demand Determinants:
    a. Each individual determinant analyzed for your situation, with examples applicable to your situation (5 points each) and research (3 points each) showing current Demand data or most recent past data, except for the Expectations Determinant in which you need to use data estimating future market conditions.
    b. (20 points) Price Elasticity of Demand facing you in your scenario, including actual calculation of it using the midpoint formula. If you can’t find data, then determine the Price Elasticity from the Characteristics and make up numbers to use. Be sure to identify this if you use this approach. This will help you in deciding the slope of your Demand curve below.
    c. (10 points) Graph the Demand facing your situation. Note that this requires information from the Supply Determinant analysis before deciding how to draw the curve(s), as you may need a separate MR curve.
    2. Supply Determinants:
    a. Each individual determinant analyzed for your situation, with examples applicable to your situation (5 points each) and research (3 points each) showing current Supply data or most recent past data, except for the Expectations Determinant in which you need to use data estimating future market conditions.
    i. (40 points) You need to be very specific in the Cost of Production Determinant to identify Fixed, Variable, and Marginal Cost in order to derive your Supply curve for the graphing component. You will need to explain and show how Profit Maximization or Loss Minimization output and price are determined. You will need to do the math using actual figures [cited] or your own estimated figures [identified as such] and explain why you expect Short Run Economic or Normal Profits, Acceptable Loss or temporary Shut Down and how you will know which it is.
    ii. The Number of Sellers determinant must contain your analysis of the kind of market structure in which your firm or labor service will be sold.
    b. (20 points) Price Elasticity of Supply you have based on the Cost of Production changes as output changes, including actual calculation of it using the midpoint formula. If you can’t find data, then determine the Price Elasticity from the Characteristics and make up numbers to use. Be sure to identify this if you use this approach. This will help you in deciding the slope of your Supply curve.
    c. (10 points) Graph your Supply situation using the numbers from your earlier Cost of Production analysis.
    3. Recommendations—(40 points) what are your recommendations explained by your analysis?
    4. Paper presentation—(10 points) good format, citations, lack of spelling errors, etc.

    Situation A

    Jenny, your niece, is a smart high-school student who wants to make intelligent choices for her future. Hearing of your course in business economics, she has e-mailed you asking for advice on whether to become a doctor and on the best location to practice it. She recognizes the high costs of tuition and the years of study involved in becoming a doctor. She wants to evaluate if that career choice is an optimal decision for her, so she has asked you for advice.

    Having read the piece “Fewer Physicians Move, a Sign of Career Caution” on page 20 of the textbook, you recognize the significance of such a career decision for Jenny. You decide to educate yourself about the market for physicians in terms of supply and demand, elasticity, costs of production, pricing, and economic or normal profit or loss. You want to provide Jenny with the most informed advice possible.

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