A restaurant owner has hired a manager to run the daily operations of her restaurant. Restaurant profits depend on both the manager’s unobservable effort level and random fluctuations in demand. The expected value of restaurant profits if the manager exerts effort, e, is given by e/2. Effort costs the manager 0.25e2. If the risk neutral manager’s salary is a percentage, c, of restaurant profits, how much effort should we expect the manager to exert? What is the optimal value of c from the owner’s perspective? How does the level of effort compare with the optimal level if the manager was also the owner of the restaurant?

Principal types of financial institutions : Briefly discuss the purpose and role that each the three principal types of financial institutions (depositary, contractual, and investment) play in the U.S. economy. How do each of these institutions intersect with the various types of markets, i.e... |

A two-for-one stock split will result in : A two-for-one stock split will result in: Based on the following information, make an estimate of the stock's beta: |

Major global crisis-insolvency process : There has been a major global crisis, and your company’s board of directors has announced that the company is going bankrupt. No one could have seen this one coming. Your CEO has called you in to his office to start the insolvency process. As your co.. |

What is the price of the second bond : Two $1000 face value bonds are both redeemable at par, with the first having a redemption date 3 years prior to the redemption date of the second. Both are bought to yield 11.1% convertible semiannually. The first bond sells for $803.63 and pays coup.. |

What is the optimal value of c from the owner perspective : A restaurant owner has hired a manager to run the daily operations of her restaurant. Restaurant profits depend on both the manager’s unobservable effort level and random fluctuations in demand. The expected value of restaurant profits if the manager.. |

Maturity risk premium on these bonds is zero : Suppose the yield on a two-year Treasury bond is 5 percent and the yield on a one-year Treasury bond is 4 percent. If the maturity risk premium (MRP) on these bonds is zero (0), what is the expected one-year interest rate during the second year (year.. |

Best interest of your company to accept of decline project : If the firm you work for has a WACC of 8%. You have the ability to accept or decline a project that costs $50,000 initially, producing cash flows of $10,000 a year for three years after that, and then $8,000 for five years after that. Would it be in .. |

How can the american parent decrease this risk : Verizon Phone Company, an American firm, is estimating their profit in Germany for next year. They are predicting sales in Germany of 200,000 units at 89 euros per unit. Their variable costs are 35 euros per unit and their fixed costs are 6,000,000 e.. |

According to constant growth dividend discount model : According to constant growth dividend discount model, we compute the intrinsic value of stock at time 0 (today’s computed stock price), P0=D1/(k-g), where D1 is the expected dividend next year, and k is the required return or discount rate. |

## Deciding whether to add bard publishing to your portfolioYou are deciding whether to add Bard Publishing to your portfolio, but you are concerned about your projection for their growth rate. Bard's cost of equity capital (the discount rate for equity) is known to be 9% and they just paid a dividend of $4.7.. |

## Cost of equity capital with the new capital structureA firm has 0 debts in its capital structure. Its overall cost of capital is 9%. The firm is considering a new capital structure with 40% debt. The interest rate on the debt would be 4%. Assuming that the corporate tax rate is 34%, what would be its c.. |

## The return on long-term corporate bondsSuppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 5.3% and a standard deviation of 8.1%. How likely is it that such a high retur.. |

## What is future value of what amys parents currently saveAmy is 12 years old now and will attend college at age 18. Her parents plan to fund her college for four years. College costs $20,000 per year today. If her parents have saved $10,000 for this goal. Assume they can invest for 10% per year and inflati.. |

## What is intrinsic value of equity and value of operationsBayani Bakery's most recent FCF was $50 million; the FCF is expected to grow at a constant rate of 6%. The firm's WACC is 12% and it has 15 million shares of common stock outstanding. What is the value of operations? How many shares will be repurchas.. |

## Decided to use the money for college educationAdam 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.. |

## Difference in interest rates in corporate and treasury bondsAssume that r* = 1.0%; the maturity risk premium is found as MRP = 0.1%(t - 1) where t = years to maturity; the default risk premium for Corporate bonds is found as DRP = 0.06% (t - 1); the liquidity premium is 0.80% for corporate bonds; and inflatio.. |

## Balance method to depreciate property-plant and equipmentAssume Mallard uses the 125% declining balance method to depreciate property, plant and equipment. On June 30, 2012, Mallard purchased equipment in exchange for a $40,000 note payable due 6/30/15. The equipments had an estimated life of 8 years and s.. |

## Should the change to wire transfers be madePronet has an annual sale of $724 million from its 600 retail stores. Pronet can reduce its mail float by 2 days through the use of wire transfers. The annual cost of the wire transfers is expected to be $105,610. If Pronet's cost of short term funds.. |

## Hedging currency risks at aifs harvard business school casehedging currency risks at aifs harvard business school case 9-205-026 2007.instructions this case should be done |

## Evaluate a generation project with the cash flowsLight Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$ 38,900,000 1 62,900,000 2 – 11,900,000 a-1 What is the NPV for the project if the company requires a return of 11 percent? This.. |

## What is its sustainable rate of growthStop and Shop Supermarkets has a 4.5% profit margin and a 15% dividend payout ratio. The total asset turnover is 1.6 and its debt-equity ratio is 0.6. What is its sustainable rate of growth? |

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd