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1. The spot market price for West Texas intermediate crude oil is $53.01 per barrel. Crude oil storage costs are $0.90 per year payable in advance. If the 6-month risk free interest rate is 1.65%, what is the 6-month forward price for oil? (Assume that storage costs are pro-rated for periods of storage less than one year.)
2. The spot market price for corn is $3.56 per barrel. Storage costs for corn are $0.08 per bushel for the first three months payable in advance, and $0.028 per month payable at the beginning of each additional month. Corn shrinks in storage due to a decline in its moisture content. Total expected shrinkage in 6-months is 0.35%. What is the 6-month forward price for corn?
Explain, with examples, the key factors to be considered when formulating a working capital funding policy?
ABC Company has annual sales of $166,396 and cost of goods sold of $40,514. The average accounts receivable balance is $25,839. How many days on average does it take the firm to collect its accounts receivable? That is, what is the AR Period?
Absalom Motors's 15% coupon rate, semi annual payment, $1,000 par value bonds that mature in 30 years are callable 4 years from now at a price of $750. The bonds sell at a price of $1,300, and the yield curve is flat. Assuming that interest rates in ..
An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $6,400,000 and will be sold for $1,530,000 at the end of the project. what is the after tax salvage value of ..
A firm plans to build a plant on land it owns. The firm paid $200,000 for the land 30 years ago. Its current market value is $2,000,000. Construction costs, including machinery, will require an initial outlay of $20,000,000. The tax rate is 40%. The..
A bond has a $1,000 par value, 12 years to maturity, and a 8% annual coupon and sells for $980. What is its yield to maturity (YTM)? Assume that the yield to maturity remains constant for the next 2 years. What will the price be 2 years from today? R..
Which of the following would be a core competency commonly associated with successful people?
Critically evaluate the following statement: “In recent years, it has been common for companies to experience significant stock price changes in reaction to announcements of massive layoffs. Critics charge that such events encourage companies to fire..
Consider an asset that costs $635,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $125,000. If the relevant tax rate is 35..
DaimlerChrysler completed its first year of production of the Jeep Liberty in 2001.- How would the county account for its $2 million expenditure?
Stock Y has a beta of .85 and an expected return of 15.90 percent. Stock Z has a beta of .60 and an expected return of 10 percent. If the risk-free rate is 6.0 percent and the market risk premium is 10.2 percent, what are the reward-to-risk ratios of..
Assume interest rate parity holds, and the current six-month risk-free rate in the United States is 1.43 percent. The six-month risk-free rate in Great Britain, Japan, and Switzerland must be ___percent, ___percent, and ___percent, respectively.
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