Running head: PROBLEM SET I Problem Set I Problem Set I 4-20 Juan’s Taco Company has restaurants in five college towns. Juan wants to expand into Austin and College Station and needs a bank loan to do this. Mr. Bryan, the banker, will finance construction if Juan can present an acceptable three-month financial plan for January through March. The following are actual and forecasted sales figures: Table 1 Actual November $120,000 December 140,000 Forecast January $190,000 February
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Problem Set 2 International Finance Shrikhande Fall 2006 SUGGESTED SOLUTIONS TO CHAPTER 4 PROBLEMS 1. From base price levels of 100 in 1987, West German and U.S. price levels in 1988 stood at 102 and 106, respectively. If the 1987 $/DM exchange rate was $0.54, what should the exchange rate be in 1988? In fact, the exchange rate in 1988 was DM 1 = $0.56. What might account for the discrepancy? (Price levels were measured using the consumer price index.) Answer. If e1981 is the dollar
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Problem set 2 1) PA=FV(1+y1) 95.24=100(1+y1) Y1=5% PB=c(1+y1) +c+FV(1+y2)2 107.42=10(1+0.05) +10+100(1+y2)2 Y2=6% PC=c(1+y1) +c(1+y2)2+ c+FV(1+y3)3 140.51=20(1+0.05) +20(1+0.06)2+ 20+100(1+y3)3 Y3=5% PD=FV(1+y4)4 85.48=100(1+y4)2 Y4=4% 2) PE=c(1+y1) +c+FV(1+y2)2 FV=100 C=25 PE=25(1+0.05) +25+100(1+0.06)2=135.06 Build a replicating portfolio because arbitrage opportunity only available when selling bonds E and buying a replicating portfolio
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sensitivity of a bond and its time to maturity are positive correlated. (c) To a zero-coupon bond Typically, the negative sign is ignored. This expression implicates that the elasticity of a zero-coupon bond is equal to its time to maturity (t). 2. Duration and elasticities (a) The higher the coupon payments, the ‘heavier’ the left hand side. To get the ‘system on balance’, we have to move the fulcrum to the left. This would lead to a shorter distance and hence a lower duration. And vice versa
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•5. Suppose a Midwest Telephone and Telegraph (MTT) Company bond, maturing in 1 year, can be purchased today for $975. Assuming that the bond is held until maturity, the investor will receive $1,000 (principal) plus 6 percent interest (that is, 0.06 × $1000 = $60). Determine the percentage holding period return on this investment. INTERMEDIATE 6.•a. National Telephone and Telegraph (NTT) Company common stock currently sells for $60 per share. NTT is expected to pay a $4 dividend during the coming
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Supervision costs vary with direct labor costs in each department. 1. Calculate the budgeted cost of trophies and plaques based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs. 2. Calculate the budgeted cost of trophies and plaques based on department overhead rates, where forming department overhead costs are allocated based on direct labor costs of the forming department , and assembly department overhead
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Problem Set II P2-6A A. Earnings per share. | | Earnings per share = Net income/Average No. of outstanding shares | | 2011-$2.00 = 60,000/30,0002012- $2.12=70,000/33,000 | | B. Working capital. | | Working capital = current assets - current liabilities | | 2011- 85,000 = 155,000-70,0002012- 113,000 = 188,000- 75,000 | | C. Current ratio. | | Current ratio = Current assets/Current liability | | 2011 :2.2 =155,000/70,0002012: 2.5 = 188,000/75,000 | | D. Debt to total
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1. Refer to Problem 1.8 on page 59 of the Hubbard/O’Brien textbook. To answer questions a, b, and c, carefully study the graph and identify the points that are unattainable, efficient, and inefficient. Be sure to explain how you identified the points in each case. To answer question d, note that the graph shows the trade-off between producing capital goods (machines, tools, and factories) and producing consumption goods (food, clothing, and movies); which of these will add to an economy’s ability
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Text Problem Sets - Week Two Vaughan Thompson FIN/571: Corporate Finance April 22, 2013 Text Problem Sets: FIN/571 - Week Two Chapter Five Question # 4 Define the following terms: bond indenture, par value, principal, maturity, call provision, and sinking fund. Bond indenture. Bond indenture is a legal contract for a publicly traded bond. The structure of this contract outline incentives explicitly by detailing responsibilities, constraints, penalties, and oversight required. For example
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571 Week 2 Individual Assignment Text Problem Sets Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser https://hwguiders.com/downloads/fin-571-week-2-individual-assignment-text-problem-sets/ For More Courses and Exams use this form ( http://hwguiders.com/contact-us/ ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar (http://hwguiders.com/ ) FIN 571 W2 Ch 5 Problem A1 (Bond Valuation) FIN 571 W2 Ch 5 Problem A10 (Dividend
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