2a. What is the shortest loan (36 months, 48 months, 60 months or 72 months) that has a monthly payment within your $500 budget that will allow you to buy the $30,000 car? Answer: Through Bank of America, I found a rate of 2.99% for the 36, 48 and 60 month loans. We are able to put down 20% and will need to finance $24,000. The shortest loan period for the $30,000 car that would be under our $500 limit is the 60 month loan at a rate of $431.13 per month.
What is the maturity risk premium for the 2-year security? r = r* +IP+DRP+LP+MRP 6.2=%3% + 3% + 0 + 0 + MRP 5-7 Bond Valuation with Semi-Annual Payments Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds? FV 1,000 PMT 50 N 16 R 4.25% Present Value = $1,085.80 5-13 Yield to Maturity and Current Yield You just purchased a bond that matures in 5 years.
Gladstone will not make any payouts to investors during the year. Suppose the risk-free interest rate is 5% and assume perfect capital markets. a. What is the initial value of Gladstone’s equity without leverage? Now suppose Gladstone has zero-coupon debt with a $100 million face value due next year.
2. I utilized an “Acid Test Ratio” which shows us whether the entity could pay all its current liabilities if they became due now or sooner than expected. In 2011, the acid test ratio was 0.64. By 2012, it decreased to 0.43. Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities.
,Sarah L. G January 6, 2013 Written Assignment #1 1. A) $1,000 with 5% interest after 10 years gives you $1,628. Therefore, you would gain $628 in interest. B) If the interest is withdrawn each year, a total of $500 would be earned because the $1,000 investment would earn $50 of simple interest each year. C) The answers are different because if the interest is left untouched, it makes the principal amount higher each year, giving more money after 10 years.
The net cash inflow and cash outflow are calculated using sales and production figures for the next 8 years. The unit cost from the first year is £0.89 which is the cost per mashing without depreciation and divided by 13,000 bottles. From this information provided, the cost will increase by 3.5% and also the selling price will increase by 4% every year (reference 4). These figures are based on the current rate inflation of 4% which is shown in appendix 9 The capital allowances are worked out on cased of 20% (Reference 5) and the annual investment allowance is £100,000 is available (Reference 6) in the first year which is restricted to £87,359. This figure is substrated from the acquisition giving a result of £332,641 which is the written down value.
The combined taxes are lower under part b because the majority of the corporation's earnings are only subject to one level of tax (the individual tax on the salary). In part a the taxable income after salary is $200,000 but in part b it is $50,000 since the deduction of $150,000 is taken and this leads to only $50,000 that is taxed twice in part b. 66. [LO 3] In its first year of existence (year 1), Willow Corp. (a C corporation) reported a loss for tax purposes of $30,000. In year 2 it reports a $40,000 loss.
Thus, the $11,000 distribution reduces the new $10,000 stock basis to zero, with a $1,000 LTCG. | Question 3 | | 1 / 1 point | A calendar year C corporation reports a $41,000 NOL in 2013, but it elects S status for 2014 and generates an NOL of $30,000 in that year. At all times during 2014, the stock of the corporation was owned by the same 10 shareholders, each of whom owned 10% of the stock. Kris, one of the 10 shareholders, holds an S stock basis of $2,300 at the beginning of 2014. How much of the 2014 loss, if any, is deductible by Kris?
* $18 M purchase price * $1.8 M selling price * Investment in PPE (2007) was $16 M * Investment in PPE (2008) was $2 M * $4 M in Sales (2008) * $10 M in Sales (2009-2013) * COGS: 75% of Sales * SG&A: 5% of Sales * $2 M Operating Savings (2008) * $3.5 M Operating Savings (2009-2013) * Depreciation was on a straight-line basis for 6 years beginning in 2008 * $18 M / 6 years = $3 M * 40% tax rate * NWC: 10% of Sales * Salvage value was zero * The FCF per year was determined using the following: * Net Income + Depreciation Expense - ∆ Net Working Capital + Investment in PPE After generating the FCF for each year, I had to solve for NPV and IRR to value the investment. I calculated 2 NPVs—one using Excel’s NPV equation and the other by discounting each year’s FCF using the WACC I calculated earlier. Both methods gave me negative NPVs. * Excel NPV: ($489,344.33) * Discounted FCF NPV: ($538,153.89) Lastly, I used Excel to
For $510.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $83.00 per share. If you bought a 100-share contract for $510.25 and Du Pont's stock price actually dropped to $63.00, you would make a. $1,950.00 b. $1,439.75 c. $1,489.75 d. $2,000.00 e. $2,435.00 4. On its 2008 balance sheet, Sherman Books showed a balance of retained earnings equal to $510 million.