One-year Treasury bills currently earn 2.25 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 2.45 percent and that two years from now, 1-year Treasury bill rates will increase to 2.95 percent. The liquidity prem..
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You are a banker who has been approached by this company to borrow a sum of money (you decide how much, and why). Based on the company's financials and its future business prospects, would you loan the money? Why or why not.
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You own a portfolio that has $1,900 invested in Stock A and $3,000 invested in Stock B. Assume the expected returns on these stocks are 8 percent and 14 percent, respectively. Required: What is the expected return on the portfolio? (Do not round inte..
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You have just made your first $5,700 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions. What will your account be worth when you retire in 38 years?What if you wait 10 years ..
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Did you ever stop to think about the importance of the finance function for a successful, multinational company (i.e, McDonalds, Apple, Johnson & Johnson, etc)? Someone has to manage the cash flow, bank relations, payroll, purchases of plant and equi..
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The Onboard Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 24.8 percent a year for the next 3 years and then decreasing the growth rate to 3.2 percent per year. The company just paid its ..
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Stormy Weather has no attractive investment opportunities. Its return on equity equals the discount rate, which is 10%. Its expected earnings this year are $2 per share. Find the stock price, P/E ratio, and growth rate of dividends for plowback ratio..
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Valence Electronics has 217 million shares outstanding. It expects earnings at the end of the year of $760 million. Valence pays out 40% of its earnings in total. 15% paid out as dividends and 25% used to repurchase shares. If Valence's earnings are ..
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Broussard Skateboard's sales are expected to increase by 15% from $8.6 million in 2013 to $9.89 million in 2014. Its assets totalled $6 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as pro..
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Trigen Corp. management will invest cash flows of $331,000, $616,450, $212,775, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years. If the appropriate interest rate is 6.75 percent, what is the future value of th..
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General Motors (GM) declared bankruptcy in 2009 after years of declining sales. The federal government 'bailed out' GM, helping GM emerge from chapter 11 in a short time. Was this the only option available to GM? Was this an appropriate use of taxpay..
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BDJ Co. wants to issue new 22-year bonds for some much-needed expansion projects. The company currently has 8.7 percent coupon bonds on the market that sell for $1,127, make semi-annual payments, and mature in 22 years.
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