...Task 1: Assess Loan Options 1. National First Bank Prime Rate + 6.75%, Compounded Semiannually [1+ (6.75+3.25) /2]^2-1 = .1025 a EAR of 10.25% Regions Best [1+ ( .1317/12)^12-1 = .014 a EAR of 14 % 2. After calculating the EAR for both banks, I would recommend National First Bank because its EAR is 10.25% which is lower than Regions Best EAR of 14%. The best choice for Air Jet Best Parts Inc., should be the lower EAR of 10.25%. 3. Air Jet Best Parts Inc $6,950,000 loan with APR of 8.6% for 5 years. Monthly 6,950,000*8.6%/ 5%= $597,700/5 = $119,540/60 =$1992.33 monthly I would have to disagree with this move. National First Bank calculation with a 6.75% rate would yield a smaller monthly payment with a lower interest rate, which would save the company money. Task 2: Evaluate Competitors Stock 1. Lockheed Martin Price: 85.21 Dividend: 4.00 Rate of Return: 4*[(1+.05)/85.21+.05] =.1204=12.04% 2. Current Share Price 12.04% [1.50*(1+.01)]/ (.1204-.01) = $13.72 3. Preferred Stock Price 1.50/.1204= $12.46 In Review of the two Prices, I would have to say that this is a good thing. A company current share price should be over its Preferred Price. Meaning that stock pricing is better currently than what the pricing was projected to be. 4. Paying Dividends decreases the value of a stock. The amount of a dividend is subtracted from the Stock Price. In other words, subtracting from the stock price yields a negative change. Adding to the stock...
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...1. | Question: | (TCO 1) The money markets deal with | | Your Answer: | | | short-term securities | | CORRECT | | | securities with a life of more than one year | | | | | securities such as common stock | | | | | none of the above | | | | | Instructor Explanation: | Chapter 1, Page 15 | | Points Received: | 2 of 2 | 2. | Question: | (TCO 1) One major disadvantage of the sole proprietorship is | | Your Answer: | | | simplicity of decision-making | | INCORRECT | | | unlimited liability | | CORRECT ANSWER | | | low operational costs | | | | | none of the above | | | | | Instructor Explanation: | Chapter 1, Page 8 | | Points Received: | 0 of 2 | 3. | Question: | (TCO 1) The appropriate firm goal in a capitalist society is | | Your Answer: | | | profit maximization | | | | | shareholder wealth maximization | | CORRECT | | | social responsibility | | | | | none of the above | | | | | Instructor Explanation: | Chapter 1, Page 12 | | Points Received: | 2 of 2 | 4. | Question: | (TCO 1) The agency problem will occur in a business firm if the goal of ____________ and shareholders do not agree. | | Your Answer: | | | investors | | | | | the public | | | | | management | | CORRECT | ...
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...HUMAN GROWTH AND DEVELOPMENT MATTHEW ROBISON 10-28-2010 NOTES FOR INFORMATION ON CHAPTER TWELVE C. Adolescence - - Psychosocial Development (Chapter 12) What are some components of the adolescent’ search for identity? Erickson believes that cognitive development enables them to construct a theory of the self because as adolescents they have a “kind of maturational malice” that is vital to a process that builds on achievements of early stages. What are examples of immature thoughts? Here are several. Trust, autonomy, initiative and industry lay the groundwork for coping with challenges of adulthood; however an identity crisis is seldom fully resolved in all of these factors in the short time of adolescence, as issues concerning identity come up again and again throughout adult life. What is the psychosocial conflict of identity vs Identity confusion and the resulting virtue of fidelity? It is explained as becoming a unique individual adult with coherent sense of self and valued role in society. Identity crisis is based on Eriksson’s life experience. His struggle and confusion caused him to find any identity the leading him to the immigrant status as his identity where he saw and experienced many things that he struggled with and worse yet decided to change and have news thoughts and actions that he had to consciously considered successful in his identity to himself. An adolescent who resolves the identity crisis satisfactorily develop the virtue of fidelity...
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...Course Project – Part I Task 1: Assessing loan options for Air Jet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank APR Number of Times Compounded National First Prime Rate + 6.75% Semiannually Regions Best 13.17 Monthly 1. Assuming that Air Jet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two banks? Hint for National Bank: Go to the St. Louis Federal Reserve Board’s website (http://research.stlouisfed.org/fred2/). Select “Interest Rates” and then “Prime Bank Loan Rate”. Use the latest MPRIME. Show your calculations. (25 pts.) Bank Prime Loan Rate as of Jan 26, 2013 – 3.25% according to the Federal Reserve Bank of St. Louis. National First - EAR EAR = (1+(Prime Rate +6.75%)/2)^2-1 EAR = (1+(3.25% + 6.75%)/2)^2–1 EAR = (1+.10/2)^2–1 EAR = (1.05)^2-1 EAR = 1.1025-1 EAR = .1025 EAR = 10.25% Regions Best - EAR EAR = (1+13.17%/12)^12-1 EAR = (1+0.010975)^12-1 EAR = (1.010975)^12-1 EAR = 1.13995-1 EAR = 0.13995 EAR = 13.995% EAR = 14% 2. Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale. (25 pts.) I would suggest that Jet Air go with National First to get their loan. I say this because of the lower...
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...BUSN379 Course Project Part 1 Task 1: Assessing loan options for AirJet Best Parts, Inc. 1. Regions Best (1+ .1317/12)^12 -1 =0.14 EAR = 14% National First (1+ (6.75+3.25)/2)^2 -1 =.1025 EAR = 10.25% 2. Based on my calculations I would choose the National First loan because the EAR is only 10.25%. The EAR for the Regions Best loan is 14%. The ideal EAR for the company would be the smallest rate. 3. (1+8.6/12)^12 -1 = 8.95%. Monthly payment 8.95% of $6,950,000 = $622,025. By taking a smaller amount loan will save them money that they will need to pay back in the end. If they don’t borrow enough they may end up closing because they ran out of money to get their feet off the ground. It all comes down to saving money now and taking that chance of starting quickly, or spending money now to get the factory set up and make money later. Task 2: Evaluating Competitor’s Stock 1. Lockheed Martin Corporation as of May 12, 2012 Price: 85.21 Dividend: 4.00 Rate of Return 4*(1+.05)/85.21 + .05 =.1204 =12.04% 2. Current Share Price Rate of Return = 12.04% 1.50*(1+.01) / (.1204-.01) =$13.72 3. Preferred Stock Price 1.5 / .1204 =$12.46 I would assume that the stockholder would want the current price to be higher than the preferred price because that would mean the stock is doing better than projected to be...
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...Course Project Part II Busn379 AirJet Best Parts Financial Analysis A financial decision for the purchase of new equipment will be based on the projects IRR and NVP. Below I have included the IRR and NPV to help assist in the financial decisions for the project. Capital budgeting for a new machine 1.) The IRR is 22.38% 2.) The NVP is $450,867.00 NVP formula is as followed: Year 1 = 1100000/(1+0.15)^1 = 1100000/1.15 = 956521.74 Year 2 = 1450000/(1+0.15)^2 = 1450000/1.3225 = 1096408.32 Year 3 = 1300000/(1+0.15)^3 = 1300000/1.52087 = 854771.1 Year 4 = 950000/(1+0.15)^4 = 950000/1.74901 = 543165.58 Year Cash flow x15% Present Value 1 1,100,000 0.8696 $956,522 2 1,450,000 0.7561 $1,096,408 3 1,300,000 0.6575 $854,771 4 950,000 0.5718 $543,166 Total (3,000,000) NVP $450,867.00 3.) In my opinion the company should accept the project based on the financial gain of the project. 4.) Depreciation can have varying affects on different projects. In the case of this project depreciation would actually be a positive thing. Deprecation in an accounting income typically does not reduce cash flows. In fact, they can have a significant positive impact on cash flows, if they affect the tax liability of the firm. In this case it would be positive for the company because it would save on taxes while increasing present value. 5.) Examples as related to the project: a. Sunk cost- A cost that cannot be recovered because the funds are...
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