a. A firm has fixed cost of $100,000. It charges a price of $25 per unit, has variable cost per unit of $15, and seeks to make $50,000 in profit. What output must the firm produce and sell to achieve this profit? 150,000/10 = 15,000 units output b. B..
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Suppose 2-year Treasury bonds yield 5.9%, while 1-year bonds yield 6.8%. r* is 1.75%, and the maturity risk premium is zero. Using the expectations theory, What is the yield on a 1-year bond, one year from now? Calculate the yield using a geometric a..
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You need to accumulate $10,000. To do so, you plan to make deposits of $1,750 per year, with the first payment being made a year from today, in a bank account which pays 6 percent annual interest. How many years will it take you to reach your $10,000..
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Your portfolio allocates equal funds to the DW Co, and woodpecker, inc, DW Co, stock has an annual return mean and standard deviation of 10 percent and 33 percent, respectively. The return correlation between DW Co. and Woodpecker, inc., is zero. Wha..
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You would like to have enough money saved to receive a $50,000 per year perpetuity , after retirement so that you and your family can lead a good life . How much would you need to save in your retirement fund to achieve this goal (assume that the per..
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Adam Marcs, who graduated from high school last year and could not go to college for lack of funds, has just inherited $60,000 dollars from a distant relative. If we assume that Adam can earn 6% per year on his investments and savings, how much shoul..
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Quiz Instructions: Term Structure Models I Questions 1-6 should be answered by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0=5%, u=1.1, d=0.9 and q=1−q=1/2. 1. Quiz instructions Compute the price of..
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Competition in a line of sporting goods limits the selling price on a certain item to $25. If the store owner feels a margin of 35% is needed to cover expenses and return a reasonable profit, what is the most the owner can pay for this item?
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A company issued 10%, 10-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 8%. Interest is paid semiannually. At what price did the bonds sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of..
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Place yourself in the role of one of the following stakeholders in a company: an investor, a creditor, or a manager. Summarize the information you would look for on each of the four basic financial statements, and explain why that information is pert..
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Which of the following cash flows are incremental cash flows that need to be considered when evaluating a capital project?
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Calculate Palmer's inventory turnover using beginning of year inventory, end of year inventory, and a monthly average inventory. Which method do you feel is most appropriate? Why?
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