Homework Help for Finance

A company has a cash dividend policy of paying 0% (i.e. no cash dividends issued).Would this dividend policy have any bearing on the likelihood of the company splitting its stock?

3. Suppose the September CBOT Treasury bond futures contract has a quoted price of 89-09. What is the implied annual interest rate inherent in this futures contract? a. 6.32% b. 6.65% c. 7.00% d. 7.35% e. 7.72%

What is the solution to this problem?

Vino Veritas Company, a U.S.–based importer of wines and spirits, placed an order with a French supplier for 1,500 cases of wine at a price of 250 euros per case. The total purchase price is 375,000 euros. Relevant exchange rates for the euro are as follows:

The cash dividends of Stephanie Corporation have been growing at a rate of 25 percent for the last few years. Analysts expect this rate to continue for five more years and then fall to a more normal growth rate of 5 percent thereafter. The risk free rate of return is 4%. The market rate of return is 8.5%. The beta for the stock is 1.25. If the Stephanie Corporation has a current cash dividend of 25 cents per share per quarter, what is the present value of one share of its common stock?

2. (13 points) Assume that a firm pays taxes on revenue and is allowed some deductions. a. (3 points) Derive and explain the user cost of capital if the firm's nominal interest payments are tax deductible. b. (2 points) Derive and explain the user cost of capital if the firm's real interest payments are tax deductible. c. (3 points) Derive and explain the user cost of capital if the depreciation of capital is tax deductible. d. (2 points) Derive and explain the user cost of capital if the firm's real interest payments and the depreciation of capital are tax deductible. e. (3 points) What is the impact of the tax on the firm's desired level of capital in the last case?

Ken Smith wants to start a deck and fence company called Heritage Design. Ken will run the business for three years and then retire. Assume that his investment outlays will occur immediately and all operating cash flows occur at​ year-end with the first ​year's cash flows occurring one year from now. Ken plans to buy two​ pick-up trucks at a cost of $44,100 per vehicle. He also expects to purchase $21,400 worth of tools and equipment. The trucks and the equipment are classified as a​ 5-year property​(MACRS depreciation rates are shown in the table).

Ken is forecasting that he will build 145 decks in the first year and 155 decks in years 2 and 3. He anticipates that the average deck will be priced at $6,400. Ken estimates that the cost of lumber for the typical deck is $2,000. Ken will rent an office and a garage.​ Rent, office ​expenses, and vehicle expenses are expected to be $50,000 per year. Ken will hire a​ salesman, a​ receptionist/bookkeeper and two installers to help with deck construction. Total wages and salaries are expected to be $290,000 per year. The corporate tax rate is 30%.

At the end of three years, Ken expects that he will be able to sell each of the trucks for $8,000, but he expects that he tools and equipment will be worthless.

Calculate the depreciation expense in year 2.

Calculate the accumulated depreciation in year 3.

Calculate the book value of the asset at the end of year 1.

Calculate the operating cash flow in year 2.

Calculate the net salvage value on the assets in year 3.

Calculate the terminal cash flow including OCF.

MACRS Table

Year 5-Year 7-Year 10-Year

1 20.00% 14.29% 10.00%

2 32.00% 24.49% 18.00%

3 19.20% 17.49% 14.40%

4 11.52% 12.49% 11.52%

5 11.52% 8.93% 9.22%

With steps please

9) For the three year, 5% car loan in the previous problem #15, how much of your first payment is the repayment of principal? (Keep two decimal numbers. Don't put $ in your answer)

Q 2. Gens Enterprises is studying the replacement of some equipment that originally cost R74,000. The equipment is expected to provide six more years of service if R8,700 of major repairs are performed in two years. Annual cash operating costs total R27,200. Gens can sell the equipment now for R36,000; the estimated residual value in six years is R5,000.

New equipment is available that will reduce annual cash operating costs to R21,000. The equipment costs R103,000, has a service life of six years and has an estimated residual value of R13,000. Company sales will total R430,000 per year with either the existing or the new equipment. Gens has a minimum desired return of 12% and depreciates all equipment by the straight-line method.

Required:
1. By using the net-present-value method, determine whether Gens should keep its present equipment or acquire the new equipment. Round all calculations to the nearest Rand and ignore income.

2. Gens's management feels that the time value of money should be considered in all long-term decisions. Briefly discuss the rationale that underlies management's belief.

Foreign Capital Budgeting

The South Korean multinational manufacturing firm, Nam Sung Industries, is debating whether to invest in a 2-year project in the United States. The project's expected dollar cash flows consist of an initial investment of $1 million with cash inflows of $700,000 in Year 1 and $600,000 in Year 2. The risk-adjusted cost of capital for this project is 10%. The current exchange rate is 1,060 won per U.S. dollar. Risk-free interest rates in the United States and S. Korea are:

If this project were instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value generated by this project? Round your answer to the nearest cent.
$

What would be the rate of return generated by this project? Round your answer to two decimal places.
%

What is the expected forward exchange rate 1 year from now? Round your answer to two decimal places.
won per U.S. $

What is the expected forward exchange rate 2 years from now? Round your answer to two decimal places.
won per U.S. $

If Nam Sung undertakes the project, what is the net present value and rate of return of the project for Solitaire? Round your answers to two decimal places.