Reference no: EM133113358

Question 1 -

a) What goal should always motivate the actions of the firm's financial manager?

b) Why would an investor be willing to pay $80.45 today in exchange for a promise to receive $100 in the future?

c) Explain the effects depreciation has on both the cash flows and the statement of comprehensive incomes of a firm.

d) Consider that you are a finance manager, and one of your junior staff wanted an explanation of the term internal growth rate. Provide a definition that conveys what the term means from a finance perspective.

e) What happens to the future value of a perpetuity if interest rate increases?

Question 2 - a) Alaska Bears Inc. has an unfunded pension liability of $575 million that must be paid in 20 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 6.8%, what is the present value of this liability?

b) Suppose you are committed to owning a $190,000 Ducati Heavy Bike. If you believe your mutual fund can achieve a 12% annual rate of return and you want to buy the bike in nine years on the day you turn 30, how much must you invest today?

c) You are looking at an investment that has an effective annual rate of 14%.

a. What is the effective semiannual return?

b. What is the effective quarterly return?

c. What is the effective monthly return?

Question 3 - Earl Grey Golf Corp. has 20,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2018 was $21.

a) What is the price-earnings ratio?

b) What are the dividends per share?

c) What is the market-to-book ratio at the end of 2018?

d) If the company's growth rate is 8 %, what is the PEG ratio?

Question 4 - a) Ford Corp. had additions to retained earnings for the year just ended of $248,000. The firm paid out $187,000 in cash dividends, and it has ending total equity of $5.42 million. The company currently has 150,000 shares of common stock outstanding.

a. What are the earnings per share?

b. What are the dividends per share?

c. What is the book value per share?

d. If the stock currently sells for $80 per share, what is the market-to-book ratio?

e. What is the price-earnings ratio?

f. If the company had sales of $4.74 million, what is the price-sales ratio?

b) In 2019, the automobile industry announced the average vehicle selling price was $34,958. Five years earlier, the average price was $27,641. What was the annual percentage increase in vehicle selling price?