Calculate the profit or loss from the following long/short strategy: You short sell 600 shares of ABC stock at $95 per share and immediately buy the S&P 500 index for half of the value of the short sale. After 1 year, ABC stock has declined to $70 pe..

The total book value of the firm’s equity is $17 million; book value per share is $34. The stock sells for a price of $45 per share, and the cost of equity is 15%. The firm’s bonds have a face value of $6 million and sell at a price of 120% of face v..

Suppose your company needs $18 million to build a new assembly line. Your target debt−equity ratio is .8. The flotation cost for new equity is 11 percent, but the flotation cost for debt is only 8 percent. What is your company’s weighted average flot..

Metallica Bearings, Inc., is a young startup company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $14 per share dividend 10 years from today ..

Use oneperiod binomial model to find the value of a oneyear American Put option on £ with an exercise price of $1.58/£. The current spot rate is $1.53/£. Oneyear forward rate is $1.52/£. Oneyear U.S. interest rate is 3.5%. Annual exchange rate vo..

What are the industry averages for retail business superstores (Walmart, Costco, ext) for these ratios? The time period can be 2016, 2015, 2014, 2013, or an average over those years. Current Ratio, Quick Ratio, Cash flow liquidity, Average Collection..

Joe secured a loan of $10,000 four years ago from a bank for use toward his college expenses. The bank charges interest at the rate of 3%/year compounded monthly on his loan. Now that he has graduated from college, Joe wishes to repay the loan by amo..

Based on Citibank's direct American quotes of $1.841928 in New York, at what price may you purchase US Dollars in London based on European terms? State your answer in GBP (British pound sterling) to four decimal points (e.g. 0.5020).

A corporate bond with a 7.550 percent coupon has fourteen years left to maturity. It has had a credit rating of BB and a yield to maturity of 9.8 percent. The firm has recently become more financially stable and the rating agency is upgrading the bon..

Smith Corporation’s income statement for the year 2012 is given below: Sales $17,000,000 Operating costs excluding depreciation 9,000,000 EBITDA $ 8,000,000 Depreciation 1,000,000 EBIT $ 7,000,000 Interest 1,000,000 EBT $ 6,000,000 Taxes. Calculate S..

Calculate the net present value of the strip mine if the cost of capital is 5, 10, 15, 30, 71, and 80 percent. What is unique about this project?

Using the following assumptions, develop a budget in pesos and dollars for this project: Explain why there is uncertainty surrounding the cash flows of this project.
