(Select the best answer.) (Points : 1) Answer: The ROI percentages 8. How does an equity investor make money? (Select the best answer.) (Points : 1) Answer: Selling an investment for more than they paid for it 9.
Investors buy stock at the C. quoted ask price. 3. Which of the following statements is most correct? A. The stock valuation model, P0 = D1/ (i - g), can be used for firms which have negative growth rates.
2. a. Critique Ace Repair’s current method of estimating its before-tax cost of debt. b. Is the earnings yield (E/P) an appropriate measure of the firm’s cost of equity? 3. a.
This indicates that there is questionable long-term solvency. Is Market Values of Total Stockholder’s Equity>Book Value? Yes, Ratio is 6.4. Market Cap= 5B, Book Value- $-781B on 12/30/2011 & 5/.781= 6.4. Marriot is successful in creating value for stockholders.
What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants? (Points : 4) $28,800 $33,600 $41,600 $40,000 3. (TCO A) On January 1, 2010, Trent Company granted Dick Williams, an employee, an option to buy 100 shares of Trent Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $900. Williams exercised his option on September 1, 2010, and sold his 100 shares on December 1, 2010.
Kroger has greater ROA performance at 6.4% in comparison to 6.0%. However they do have a weaker profit margin at 2.0% vs. 2.4%. Kroger overpowers this profit margin weakness by displaying quicker asset turnover at 3.171 (Kroger) vs. 2.509 (Safeway). 3. Which company was the more profitable in 2004?
Discount rate = 11%. The Net Present Value (NPV) of an investment proposal is equal to the present value of its annual free cash flows less the investment’s initial outlay (Keown, A. J., Martin, J. D., & Petty, J. W. (2014). The rule here is that our company will accept projects with a net present value greater than zero, and decline the ones with a net present value that is less than zero. The greater the net present value, the more appropriate the investment is. Based on that, Corporation B is desirable to Corporation A as it has a greater net present value.
It is easy to see that project A would be the best decision as it will have the ability to recoup the initial investment quicker than Project B. While looking at the payback period is a good tool that offers important information it also has its drawbacks. The biggest drawback is that payback period ignores the time value of money and does not discount these free cash flows to the present (Keown, Martin, Petty, & Scott, 2005, p. 293). B. Projects Net Present Value Rate of return: 11% With using the return rate, thus will help to find the net present value.
| 20 | 20 | 19 | 19 | 15 | 3 – Best 2 – Average 1 - Worst Case Background The case pertains to Target Corporation and $300 million in capital expenditures it is considering directed at Target’s future store growth and expansion. Five of the ten projects under consideration by Target’s Capital Expenditure Committee (CEC), representing approximately $200 million, will demand the majority of the CEC’s attention when it meets to decide which of the 5 projects are funded. Leading the CEC is Mr. Doug Scovanner, Target’s Chief Financial Officer (CFO), who has had a successful track record leading the CEC in its efforts to choose projects fueling Target’s rapid growth and financial success. CFO Scovanner’s Guidance Mr. Scovanner, in preparation for the CEC meeting, has asked me to prepare a recommendation ranking the 5 projects in order to assist him and the CEC in deciding which projects to accept or reject. Mr. Scovanner provided the following key guidance to assist in ranking the 5 projects for CEC’s meeting.
What is the rate of return on your account? 4. You opened an account to short sell 500 shares of Flipcorp. The initial margin requirement was 50%. A year later, the price of Flipcorp has risen from $30 to $40.