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Elliot makes $250,000 a year and pays 30% taxes on $150,000 and 35% on his remaining salary. His expenses are $110,000 (per year). He wants to invest a fixed amount EVERY day into an investment fund for 5 years and he hopes to get a 12% return.
A. What is the maximum amount he can invest every day? (Find the annual investment amount and divide by 365).
B. What will be the worth of his portfolio after 5 years?
C. After 5 years, Kassidy’s income increases to $300,000. He wants to reinvest for another 5 year, but this time, his return will be 10% and his expenses have increased by 15%. What will be the worth of his portfolio after 5 years (total of 10 years)?
D. What will the Present Value of his portfolio, assuming a 6% discount rate and NPER is 10 years?
William Chris opened a steak house a few years ago with his sister, Ruth. In going through their financial records they found an old amortization schedule that their lender had prepared when they took out a loan to start the business.
The liquidity premium theory of the term structure helps explain why on average, the Treasury yield curve typically slopes upward. The liquidity premium theory relies on the fact that the longer the maturity, the less liquid the bond and thus, the hi..
PK Software has 9.2 percent coupon bonds on the market with 23 years to maturity. The bonds make semiannual payments and currently sell for 112.25 percent of par. a.) What is the Current yield on PK's bonds? b.)What is the YTM c.) What is the effecti..
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 1.6% + 0.70RM + eA RB = –1.8% + 0.9RM + eB σM = 22%; R-squareA = 0.20; R-squareB = 0.15 what is the standard deviation of each stock?
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $100,000 and sell its old low-pressure glueball, which is fully depreciated, for $18,000. The new equipment has a 10-year useful life and will sa..
A company has $6.00 per unit in variable costs and $4.40 per unit in fixed costs at a volume of 50,000 units. if they company marks up total costs by 0.59, what price should be charged if 61,000 units are expected to be sold?
What major factors should the company be aware of as it evaluates possible investment projects in the future? Would you be interested in investing in this company? Why or why not? Are there additional factors that aren't a part of this case that you..
If Lenberg has $12 million of investment projects having expected returns greater than 14 percent, what total amount of dividends should Lenberg pay?
If a firm has $7.4 million in debt, $22.4 million in equity, a tax rate of 34%, and pays interest on debt, what is the firm's PV of the interest tax shields?
A firm’s dividends have grown over the last several years. 10 years ago the firm paid a dividend of $2. Yesterday it paid a dividend of $7. What was the average annual growth rate of dividends for this firm? Round answer to two decimal places.
Your car dealer is willing to lease you a new car for $379 a month for 84 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 4.8 percent, what is the current value of th..
Joe Meat Corp. is considering replacing its old freezer with a new one that has more capacity. The company estimates that it can sell more meat products with and estimated increase of $15,000. What is the net present value of the freezer if the requi..
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