Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $96, $315, and $114, respectively. If Able undergoes a 2-for-3 reverse stock split, what is the new divisor?
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Your sending your daughter to a prestigious private college starting next year. She will attend for four years. The current cost for one year is $60,000, but is expected to rise 2% per year over the next 10 years. If your investments earn 6% per year..
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A proposed $2.5 million investment at a 70 MGY (million gallons per year) facility will save the facility $1.1 million/ year in energy costs. The equipment needs maintenance every 3 years (year 3, 6, 9), costing $300,000 and the equipment has a usefu..
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Tech Industries, a contract manufacturer of circuit boards, is evaluating an investment in a new production line to handle the growing demand from its customers, who produce consumer electronic products. Based on reasonable growth assumptions, the NP..
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Miller's Hardware plans on saving $42,000, $54,000, and $58,000 at the end of each year for the next three years, respectively. How much will the firm have saved at the end of the three years if it can earn 4.5% on its savings?
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A factory costs $800,000. You reckon that it will produce an inflow after operating costs of $170,000 a year for 10 years. If the opportunity cost of capital is 14%, what is the net present value (NPV) of the factory?
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Marco Chip, Inc just issued zero-coupon bonds with a par value of $1000. The bond has a maturity of 14 years and a yield to maturity 0f 6.96%, compound semi-annually. What is the current price of the bond? The last dividend of Delta, Inc was $2.69, t..
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Evening Story Corporation has sales of $4,488,140; income tax of $383,971; the selling, general and administrative expenses $228,905; depreciation of $377,694; costs of goods sold of $2,748,350; and interest expense of $187,174. Calculate the amount ..
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A project has an initial outlay of $1,160. It has a single payoff at the end of year 6 of $9,960. What is the profitability index (PI) of the project, if the company’s cost of capital is 11.37 percent?
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Latoya's balance on student loans is $24,000 today (first day of month). The rate on the loan is 6% NAR with monthly compounding. Latoya would like to pay off the loan in three years. The first payment would be at the end of the present month. What e..
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Explain the functions of financial markets and discuss why a dollar tomorrow cannot be worth less than a dollar the day after tomorrow.
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If a bank manager was quite certain that interest rates were going to rise within the next 6 months, how should the bank manager adjust the banks duration gap to take advantage of this anticipated rise? What would the manager do if rates were expecte..
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