### Performing the analysis from the perspective of an investor

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Imagine that you have $100,000 to invest. You are going to invest it all in one investment for the next 5 years at which point you will revaluate both your investment and personal situations. You will invest it all in one of the following investments. These are your only 2 options. A) Bank account earning 5% per year. B) Common stock of an assigned company. You will be performing the analysis from the perspective of an investor who is 25 years from retirement and the investor’s income is greater than living expenses. The investor has a liquid net worth of$1,000,000 of which 40% is invested in the S&P 500 index, 40% in a medium-duration, high quality bond fund and 20% in a savings account earning 5% interest per year. You are to determine if the investor should take $100,000 from the savings account and purchase$100,000 of this company’s common stock.

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 Diagram showing cash flows from your perspective as lender : Consider the following problem. You lend your friend $10 today, which s/he promises to repay you in two instalments of$5.25 each. The first instalment is to be paid in two weeks from today; and the second—in four weeks from today. Sketch a diagram s.. What is the financial break-even point for the project : L.J.’s Toys Inc. just purchased a $450,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its six-year economic life. Each toy sells for$27. The variable cost per toy is $12, and the firm incurs f.. Use straight-line depreciation to zero over projects life : You are evaluating two different silicon wafer milling machines. The Techron I costs$216,000, has a three-year life, and has pretax operating costs of $55,000 per year. The Techron II costs$380,000, has a five-year life, and has pretax operating co.. Compared with other debt instruments and common stocks : Indicate why you agree or disagree with the following statement: “Investing in the junk bond market offers the opportunity to realize superior investment returns compared with other debt instruments and common stocks.” Performing the analysis from the perspective of an investor : Imagine that you have $100,000 to invest. You are going to invest it all in one investment for the next 5 years at which point you will revaluate both your investment and personal situations. You will be performing the analysis from the perspective o.. Interest rates have increased since bond k was issued : Multiple Choice: Bond K is selling at par with a 5% coupon. Bond L is selling for$1,030. Bond M is selling for $960 and has a YTM of 5.5%. Bonds K, L, and M are of similar quality and all mature in 6 years. Bonds K and L are noncallable, but Bond M .. Prepare cash budget : Prepare cash budget for the months of January, February and March. The difference between receipts and payments, net cash flow, for each month is: 5,000; (2,900); 7,200. Beginning and desired cash balance is$2,000. What is the current share price : Estes Park Corp. pays a constant $8.75 dividend on its stock. The company will maintain this dividend for the next 10 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share pr.. Expect the trust fund to earn an average return : You would like to establish a trust fund that would pay annual payments to your heirs of$95 thousand a year forever. You expect the trust fund to earn an average return of 7.12 percent. How much do you need to deposit into this trust fund today to a..

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