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Art Winkler is trying to decide whether to lease or purchase a new car costing $31,000. If he leases, he will have to pay a $800 security deposit, $1,000 down payment, and monthly payments of $480 over the 36-month term of the closed end lease (at the end of the lease he can simply turn in the car assuming he does no exceed the mileage limit or abuse the car). On the other hand, if he buys the car then he will have to make a $3,100 down payment and will finance the balance with a 36-month loan with 2% APR; he’ll also have to pay a 8% sales tax on the purchase price, and he expects the car to have a residual value of $20,500 at the end of the 3 year. Art can earn 3% interest on his savings. Use the automobile lease versus purchase analysis to find the total cost of both the lease and the purchase and then recommend the best strategy for Art.
What is the payback period for the cash flows?
The Berndt Corporation expects to have sales of $12 million. What is Berndt's expected net cash flow? What is Berndt's expected net income?
The Federal Reserve intends to increase nominal interest rates by reducing money supply.
Evaluate the potential gains and losses for forwards, futures, call options, put options, and swaps. Outline and describe the different risks that each type of derivative contract faces. Describe different methods of valuing derivatives. Assess the s..
Fairway Golf Corporation has a beta of 1.2. If the three-month Treasury bills currently yield 2.9 percent and the market risk premium is estimated to be 5.2 percent, what is Fairway’s cost of equity capital?
A fund manager manages a portfolio of mid-cap stocks. She anticipates receiving $30 million in cash four months from today to be invested in the portfolio in a manner that maintains the current relative proportions invested in each stock. what is the..
Deltona issued preferred shares four years ago at $60 per share, with a promised dividend of $5 per share. The company's tax rate is 35%, and its common stock beta is 0.80. Yields on comparable risk preferred stocks are 7%. The floatation expense per..
The bond has a coupon rate of 6 percent paid annually and matures in 16 years. What is the yield to maturity of this bond?
Determine the payback period for this project. Should the company accept the? project?
The Framingham Company expects to grow at 4% indefinitely. Economists are currently asserting that investment opportunities in short term government securities (Treasury bills) are readily available at a risk free rate of 5%. The firm recently paid a..
Triangular Arbitrage. You are given these quotes by the bank: You can sell Canadian dollars (C$) to the bank for $.70. You can buy Canadian dollars from the bank for $.73. The bank is willing to buy dollars for 0.9 euros per dollar. Estimate your pro..
what is minimum amount X should bid per share?
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