Reference no: EM132395281
MBA6010 Managerial Finance
South University
PROJECT
Instructions
Your probationary period at the Cosmo K Manufacturing Group continues. Your supervisor, Gerry, assigns you a project each week to test your competence in finance. This week, Gerry has asked you to evaluate several investment opportunities available to the company. Your instructions are to consider each situation independently of the others, unless otherwise indicated.
Evaluating Investment Opportunities
Consider the following situations and answer the related questions:
• Your company has the opportunity to make an investment that promises to pay $24,000 after 6 years. If your company has a required return of 8.5% on this type of investment, what is the maximum amount that the company should pay for the investment? Explain your answer.
• In the previous scenario, assume that your company negotiated a deal where it would pay $12,000 for the investment and receive a payment of $24,000 at the end of 7 years. What is the IRR on this investment? Should the company make the investment? Explain your answer.
• Another investment opportunity available to your company involves the purchase of some common stock from Zorp Corporation. The company has asked you to evaluate the stock, which paid a dividend of $4.25 last year and is currently selling for $36 per share. If your company decides to buy the stock, the stock will be held for 5 years and then sold. The growth rate on the stock is constant at 3% per year, and your company's required return on the stock would be 11%. What is the maximum price per share that your company should pay for the stock?
• Zorp Corporation also has some bonds for sale that your company is considering. These bonds have a $1,000 par value and will mature in 16 years. The coupon rate on the bonds is 5% paid annually, and they are currently selling for $987 each. The bonds are call protected for the next 4 years, and after this period, they are callable at 105. On the basis of this information, answer the following questions:
o What is the YTM on these bonds?
o If the bonds are called immediately after the call protection period, what would be the yield to call (YTC)?
o If the bonds paid interest semiannually instead of annually, would the YTC, the YTM, or both change? Explain your answers.
Attachment:- PROJECT.rar
|
What is the expected return and risk of each stock
: Assume that your uncle holds just one stock, East Coast Bank (ECB), which he thinks has very little risk. You agree that the stock is relatively safe
|
|
Discuss methods to assess the quality of simulations
: Chapter 3 discusses methods to assess the quality of simulations. You learned about three different views of simulation quality.
|
|
Who are your stakeholders in the project
: Who are your stakeholders in the project and how can they be useful to you in answering the question of whether or not they would use the program?
|
|
Standard deviation of the estimated returns
: Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns
|
|
MBA6010 Managerial Finance Assignment Problem
: MBA6010 Managerial Finance Assignment Help and Solution, South University, Homework Help - what is the maximum amount that the company should pay for investment
|
|
Explain how sn can be used as an it asset
: Social networking, used strategically, can be viewed as an information resource. Select a firm to analyze. Explain how SN can be used as an IT Asset.
|
|
What should the longer-term approach for collecting the data
: This module covers the concepts of data redundancy and the need for an organization to avoid the duplication of data within the database system.
|
|
Techniques like value stream mapping
: The opportunity to Improve service productivity varies depending on degree of customisation and the degree of labour, so techniques like value stream mapping
|
|
Differences in compensation structure
: Discuss the role of the country in explaining differences in compensation structure between CEO's of these two companies.
|