Explain the concept of cost of capital
Explain the concept of cost of capital
Finance Basics
Explain the concept of cost of capital. How may cost of capital affect long-term
financial decisions? Would a company prefer to have a high or low cost of capital?
Why? What was the effect of cost of capital on long-term financial decisions for
your company?
Evaluating two competing investments
Evaluating two competing investments
Financial Management
A company is evaluating two competing investments. Investment X has a cost of
$100,000 and a NPV estimated at $35,000. Investment Y has a cost of $220,000 and a
NPV estimated at $35,500. Taking everything into account, you would recommend the
company undertake which investment and why?
a. Neither investment is acceptable.
b. Not sure. Need additional information.
c. Take investment X, since it has almost the same value creating potential, but
costs a fraction of Y. Do something else with the $120,000 saved up front.
d. Undertake investment Y as it produces more shareholder value.
Credit scores-credit cards-cars-mortgages-mutual funds
Credit scores-credit cards-cars-mortgages-mutual funds
Financial Management
1) Pick a country you wish to focus on
2) Compare and contrast any (three) of the following topics relating to anything we
learned this term. (credit scores, credit cards, cars, mortgages, mutual funds,
student loans, stocks, retirement)
For example, are credit scores used and what companies do these, what are the
ranges, is there any difference? Does the county you chose employ credit cards? if
so as much, less or more than the U.S. Give me data. What stock markets are in the
country you chose? Name companies trading there that are not in the U.S.. Do
mortgages exist? What are the lending rates? Are the terms still 15 or 30 years or
are they shorter?
3) Just write it up, no length requirement, just find out some cool stuff and you
get points. easy peasy.
What principal remains to be paid after the third payment
What principal remains to be paid after the third payment
Financial Management
A $10,000 loan is to be repaid at the rate of $200 per month, with an annual
effective interest rate of 19.56% charged against the unpaid balance. What
principal remains to be paid after the third payment?
Achieve without having to raise funds externally
Achieve without having to raise funds externally
Financial Management
Pierce Furnishings generated $2 million in sales during 2012, and its year-end
total assets were $1.3 million. Also, at year-end 2012, current liabilities were
$500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable,
and $100,000 of accrued liabilities. Looking ahead to 2013, the company estimates
that its assets must increase by $0.65 for every $1.00 increase in sales. Pierce’s
profit margin is 6%, and its retention ratio is 35%. How large of a sales increase
can the company achieve without having to raise funds externally? Write out your
answer completely. For example, 25 million should be entered as 25,000,000. Round
your answer to the nearest cent.
Find the risk-neutral probabilities
Find the risk-neutral probabilities
Financial Management
Q1. A bullish call spread is bullish on direction. Is it also bullish on
volatility? Let’s assume the payoff diagram with exercise price is $95 and $100 for
a call bull spread. Explain your answer.
Q2. Assume KBC stock is currently at S = $100. After one period, the price will
move to one of the following two values: [uS and dS], where [u = 1.2; d = 0.9]. A
$1.00 investment in the risk-free asset using continuous compounding will return
$1.10 at the end of the period.
(a) Find the risk-neutral probabilities governing the movement of the stock price.
(b) For a strike price of 100 for call, find the delta of the call.
(c) For a strike of 100 for put, find the delta of the put.
(d) Compute the difference between the call delta and the put delta and explain the
answer you get
Identify the sources of finance available to a business
Identify the sources of finance available to a business
Financial Management
Identify the sources of finance available to a business. (Try to answer why
business needs finance and hat are the availablesources of finance to a business.
Use the long term and the shorrt/medium term financing options for your answer. by
explaining the meaning of finance,state the reasons why businesses need finance and
explain the different sources of finance)
Determine cutoff score which normally distributed with mean
Determine cutoff score which normally distributed with mean
Statistics
To qualify for a special training, soldiers are tested for endurance. The scores
are normally distributed with a mean of 165 and a standard deviation of 17. If only
the top 20% of the soldiers are selected, what would the cutoff score be?
Determine the distance traveled by the train
Determine the distance traveled by the train
Physics
Problem: A train traveling at v0 = 24.0 m/s begins to brake by applying a
velocity-dependent instantaneous acceleration a(v) = al (v + u) m/s2, where a = –
19.0 m2/s3, v is the instantaneous velocity of the train, and u = 0.2 m/s.
A- Determine the distance traveled by the train until it comes to a complete stop.
Which isotherm fits this data best langmuir and freundlich
Which isotherm fits this data best langmuir and freundlich
Physics
The following data were obtained for the extent of adsorption, s, of acetone on
charcoal from an aqueous solution of molar concentration, c, at 18°C.
c/(mmol dm-3)
15.0
23.0
42.0
84.0
165
390
800
s/(mmol acetone/g charcoal)
0.60
0.75
1.05
1.50
2.15
3.50
5.10
Which isotherm fits this data best, Langmuir, Freundlich, or Temkin?