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1) What is the expected market return if the expected return on asset

1) What is the expected market return if the expected return on asset A is 16% and the risk free rate is 7%? Asset A has a beta of 1.2.2) Asset A has an expected return of 22% and a beta of 1.8. The expected market return is 14%. What is the risk free rate?

On February 2, 2016, an investor held some Province of Ontario strippe

On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self administered RRSP at Scotia McLeod, an investment dealer. Each coupon represented a promise to pay $100 at the maturity date on January 13, 2022, but the investor would receive nothing until then. The value of the coupon showed as $76.04 on the investor’s screen. This means that the investor was giving up $76.04 on February 2, 2016, in exchange for $100 to be received just less than six years later.Based upon the $76.04 price, what rate was the yield on the Province of Ontario bond? (3 points)Suppose that on February 2, 2017, the security’s price was $81.00. If an investor had purchased it for $76.04 a year earlier and sold it on this day, what annual rate of return would she have earned? (4 points)If an investor had purchased the security at market on February 2, 2017, and held it until it matured, what annual rate of return would she have earned?

1.) In the decision-making process, you must take into account severa

1.) In the decision-making process, you must take into account several cultural variables. Describe one of the variables associated with risk tolerance and one of the variables associated with internal/external focus of control. Why are these important factors to consider?Your response must be at least 500 words in length.2.) List four nonverbal characteristics of culture that you must understand when engaging in negotiations overseas. Explain how an understanding of each characteristic will help you negotiate successfully.3.) Describe the five stages of the negotiation process. Explain how the negotiation can be unsuccessful if you leave out one of the steps.4.) You are a businessperson noted for your ability to complete negotiations in the U.S. within 24 hours. You have been sent to Mexico to negotiate a lucrative joint venture. Discuss the decisions you will have to make and the strategies you will have to use in order to ensure a positive outcome.Your response must be at least 500 words in length. Each Question

Your gallery can borrow at 8% in order to upgrade your computers. New

Your gallery can borrow at 8% in order to upgrade your computers. New computers will cost $15,000. Your estimate that this upgrade will increase your gallerys cash flow by $7,000/yr. for the next three years. Calculate the NPV of this acquisition. If you decide that you should this project (if the NPV is positive), show that you can make interest and principal payments with the increased cash flows generated by these new computers.

In Marriott Corporation: The cost of capital case study, to determine

In Marriott Corporation: The cost of capital case study, to determine asset betas for each division, we need to unlever betas from the firms in the same industry.a) What are the assumptions of interest tax shield respectively for Hamada equation and portfolio equation? Accordingly when should we use Hamada equation and when to use portfolio equation? Show the calculation of equity beta for each division when we use Hamada and Portfolio equation. Explain the difference of the results.

Assume you start working at 20 years old and plan to retire at age 50.

Assume you start working at 20 years old and plan to retire at age 50. You contribute $125 per month to your retirement plan and the company matches it. If you could earn 12.6% annual return over the 30 years, how much money would you have when you retire?Suppose you worked until you were 60, then how much would you have when you retire (make sure you adjust the formula for monthly compounding)? Calculate and comment on your findings. Include the FV of an annuity formula in your discussion.

1. Liberty Tax is one of the fastest growing franchises in America. A

1. Liberty Tax is one of the fastest growing franchises in America. A Liberty Tax franchise costs about $40,000. The owner at the Wheaton Mall franchise was charged $50,000 for rent annually and $110,000 for marketing and employees expenses each year. Liberty Tax charges its clients about $250 per tax return. How many returns does this Liberty Tax office need to have to break even? Would you invest in this business? Explain your answer.

Would you buy a modern sculpture that costs $10,000 today and would ge

Would you buy a modern sculpture that costs $10,000 today and would generate rent revenues of $3,000, $4,000, and $5,000 at the end of the next three years respectively if the correct annual discount rates for this transaction are 4%, 5%, and 6% in each of those years? Prove your answer but showing your cash holdings at the end of three years if you buy the sculpture and alternatively if you invested the $10,000 at those annual rates.

Mark and Todd the co-owners of CA Air Inc. were impressed by the work

Mark and Todd the co-owners of CA Air Inc. were impressed by the work Chris had done on financial planning. Using Chriss analysis, and looking at the demand for light aircraft, they have decided that their existing fabrication equipment needs replacement. Mark and Todd have identified suitable new equipment for sale, for about $20 Million. Mark, Todd and Chris are now ready to meet with AV, the Loan officer for the National Bank. The purpose of meeting is to discuss the loan options available to the company to finance the new equipment.AV begins the meeting by discussing a 30-year loan. The loan would be repaid in equal monthly installments. Because of the previous relationship between CA and the bank there would be no closing costs for the loan. AV states that the APR of the loan would be 6.2 percent. Todd asks if a shorter loan is available. AV says that the bank does have a 20-year loan available at the same APR.Mark decides to ask AV about a smart loan he discussed with a mortgage broker when he was refinancing his home loan. A smart loan works as follows: Every two weeks a payment is made that is exactly one-half of the traditional monthly loan payment. AV informs him that the bank does have smart loans. The APR of the smart loan would be the same as the APR of the traditional loan. Mark nods his head. He then states this is the best loan option available to the company since it saves interest payments.AV agrees with Mark, but then suggests that a bullet loan or balloon payment, would result in the greatest interest savings. At Todds prompting she goes on to explain a bullet loan. The monthly payments of a bullet loan would be calculated using a 30-year traditional loan. In this case, there would be a 5-year bullet. This would mean that the company would make the payments for the traditional 30-year loan for the first five years, but immediately after the company makes the 60thpayment, the bullet payment, the bullet payment would be due. The bullet payment is the remaining principal of the loan. Chris then asks how the bullet payment is calculated. AV tells him that the remaining principal can be calculated using an amortization table, but it is also the present value of the remaining 25 years of payments for the 30-year loan.Todd has also heard of an interest only loan and asks if this loan is available and what the terms would be. AV says that the bang offers an interest only loan with a term of 10-years and an APR of 3.5 percent. She goes on to further explain the terms. The company would be responsible for making interest payments each month on the amount borrowed. No principal payments are required. At the end of the 10-year term, the company would repay the $20million. However, the company can make principal payments at any time. The principal payments would work just like those on a traditional loan. Principal payments would reduce the principal of the loan and reduce the interest due on the next payment.Mark and Todd are satisfied with AVs answers, but are still not sure of which loan they should choose. They have asked Chris to answer the following questions to help them choose the correct financing arrangements.1. What are the monthly payments for a 30-year traditional loan? What are the payments for a 20-year traditional loan? (Show calculations)2. Prepare an amortization table for the first 6 months of the traditional 30-year loan. How much of the first payment goes toward principal? (Show calculations)3. How long would it take for CA Air to pay off the smart loan, assuming 30-year traditional loan payments? Why is this shorter than the time needed to pay off the traditional loan? How much interest would the company save? (Show calculations)4. Assume CA Air takes out a bullet loan under the terms described. What are the payments on the loan? (Show calculations)5. What are the payments for the interest only loan? (Show calculations)6. Which loan is the best for the company? Are there any potential risks in this action? (Show calculations)

We need your input! As the CFO of IPS, you are responsible for managi

We
need your input!
As the CFO of IPS, you
are responsible for managi

We
need your input!
As the CFO of IPS, you
are responsible for managing the IPS employee pension fund. Like any pension
fund, yours has physical and financial assets, and liabilities. You must decide
how the pension fund money will be invested. Your decisions will affect the well-being
of your firm and its employees. As a successful fund manager, you know that an
understanding of the time value of money is key.
You urge your staff to
investigate the investment potential of a variety of financial products and
services including money markets, real estate, stocks, and insurance products.
Your goal is to realize the maximum benefit for your clients.
Since IPS is still a
relatively small company, you are also responsible for decisions on product
viability and financing. While your staff is investigating pension fund
investments, you get the following email message from the CEO.
Remember the
production analysis you did on the Android01? I need you to put together an
analysis of the suitability of the project. Crunch the numbers and give me an
idea of the value of the project. Thanks for your help!
You’ve barely had time
to think about what you’ve read when you get another message from the CEO.
Meant to ask you
about the cost of capital. If we do decide to move forward with the Android01
project, we’ll need to determine our best source of capital. As far as I can
tell, we have three options:

a loan from the bank
collaboration with another firm
liquidation of securities owned
by IPS

Compare the three
financing options and estimate NPVs and IRRs from the costs and expected cash
flows. Just include that in your analysis. Thanks again!
This project will
require you to determine the suitability of a candidate project using capital
budgeting techniques based on time value of money, and taking care to
distinguish between different forms of costs and revenues. You will determine
the long-term capital requirements needed to support the organization and
analyze different methods of financing.
Begin with Step 1:
Time Value of Money Calculations
When you submit your
project, your work will be evaluated using the competencies listed below. You
can use the list below to self-check your work before submission.

3.1 Identify numerical or
mathematical information that is relevant in a problem or situation.
3.2 Employ mathematical or
statistical operations and data analysis techniques to arrive at a correct
or optimal solution.
3.3 Analyze mathematical or
statistical information, or the results of quantitative inquiry and
manipulation of data.
3.4 Employ software
applications and analytic tools to analyze, visualize, and present data to
inform decision-making.
10.3 Determine optimal
financial decisions in pursuit of an organization’s goals.
10.4 Make strategic managerial
decisions for obtaining capital required for achieving organizational
goals.

When you submit your
project, your work will be evaluated using the competencies listed below. You
can use the list below to self-check your work before submission.

As the manager of the
pension fund, considering different investment options will help you make
better decisions for your company and your clients. Please respond to the
following questions, providing supporting data and showing your calculations.
Before starting your
calculations, review the following materials:

time value of money analysis
valuing perpetuities and
annuities
amortizing a loan

Question
1:If the pension plan
invests $95 million today in 10-year US Treasury bonds (riskless investment
with guaranteed return) at an interest rate of 3.5 percent a year, how much
will it have by the end of year 10?
Question
2:If the pension plan
needs to accumulate $14 million in 13 years, how much must it invest today in
an asset that pays an annual interest rate of 4 percent?
Question
3:How many years will it
take for $197 million to grow to be $554 million if it is invested in an
account with a quoted annual interest rate of 5 percent with monthly
compounding of interest?
Question
4:The pension plan also
invests in physical assets. It is considering the purchase of an office
building today with the expectation that the price will rise to $20 million at
the end of 10 years. Given the risk of this investment, there should be a yield
of 10 percent annually on this investment. The asking price for the lot is $12
million. What is the annual yield (internal rate of return) of the investment
if the purchase price is $12 million today and the sale price 10 years later is
$20 million? Should the pension plan buy the office building given its required
rate of return?
Question
5:The pension plan is
also considering investing $70 million of its cash today at a 3.5 percent
annual interest for five years with a commercial bank. The bank in return will
pay an annuity due at the beginning of year 6 for the next 15 years. How much
will the annual payments be from years 6 to 21, if the rate at which these
payments are discounted is also 3.5 percent?
Question
6:The pension plan is
about to take out a 10-year fixed-rate loan for the purchase of an information
management system for its operations. The terms of the loan specify an initial
principal balance (the amount borrowed) of $4 million and an APR of 3.75
percent. Payments will be made monthly. What will be the monthly payment? How
much of the first payment will be interest, and how much will be principal? Use
the Excel PMT function to provide the answers to these questions.
Submit your Time Value
of Money Report and Calculations to the dropbox below. Be sure to show your
calculations in Excel and provide a narrative analysis in PowerPoint. Your
narrative analysis should summarize the results of your analysis and make
recommendations for the benefit of the company.

Before you submit your
assignment, review the competencies below, which your instructor will use to
evaluate your work. A good practice would be to use each competency as a
self-check to confirm you have incorporated all of them in your work.

As the manager of the
pension fund, you are frequently targeted by software companies peddling
investment simulation software. You have finally narrowed down your choice to
two applications. You need to analyze the options by calculatingNPV, IRR and Payback Periodbased on their purchase price and savings to
your company over time. Your staff has prepared a cash-flow table to help you.
Year zero shows the purchase price of each application, and the figures listed
for years 1-3 represent the savings to the company in successive years.

Year

Application I

Application II

0 (today)

-$1.5 million

-$1 million

$0.8 million

$0.5 million

$0.7 million

$0.24 million

$0.3 million

$0.6 million

You are considering
three possible scenarios.
Question
7:If the payback period
is two years, which application should be selected?
Question
8:If the required rate
of return is 15 percent, which application should be selected?
Question
9:If the selection
criterion is IRR, which application should be selected?
Respond to the
questions 7, 8, and 9 above by submitting a single, integrated report that
shows your supporting data and calculations. Finally, provide a recommendation
and rationale for purchasing either Application I or Application II.
Submit your Basic
Capital Budget Analysis Report and Calculations to the dropbox below. Be sure
to show your calculations in Excel and provide a narrative analysis in
PowerPoint. Your narrative analysis should include your recommendation and
rationale for purchasing either Application I or Application II.

Another one of your
responsibilities as CFO is to determine the suitability of new and current
products. Your CEO has asked you to evaluate Android01. That task will require
you to combine data from your production analysis from Project 2 with data from
a consultant’s study that was done last year. Information provided by the
consultant is as follows:

initial investment: $120
million composed of $50 million for the plant and $70 million net working
capital (NWC)
yearly expenses from year 1 to
year 3: $30 million
yearly revenues from year 1 to
year 3: $0
yearly expenses from year 4 to
year 10: $55 million
yearly expected revenues from
year 4 to year 10: $95 million
yearly expenses from year 11 to
year 15: $60 million
yearly expected revenues from
year 11 to year 15: $105 million
Revenues will vary between $80
million (minimum) and $105 million (maximum) for years 4 to 10, and
between $90 million (minimum) and $110 million (maximum) for years 11 to
15.

This concludes the
information provided by the consultant.
You also have the
following information:

The asset beta of the project
is 1.5. The expected return to the market is 8 percent, and the market
risk premium is 5 percent.
Assume that both expenses and
revenues for a year occur at the end of the year. NWC pays the bills
during the year, but has to be replenished at the end of the year.
Android01 is expected to
cannibalize the sales of Processor01 while also reducing the variable
costs for the production of Processor01. From years 4 to 10, revenues are
expected to fall by $5M, whereas variable costs will go down by $1
million. Processor01 is to be phased out at the end of the 10th year.
At the end of the 15th year,
the plant will be scrapped for a salvage value of $10 million. NWC will be
recovered.

Question
10:Calculate the expected
cash flows from the Android01 project based on the information provided.
Question
11:Calculate the NPV for
a required rate of return of 6.5 percent. Also calculate the IRR and the
Payback Period.
Before starting your
calculations, review the following materials onNPV, IRR and Payback Period.
Submit your Cash Flow
Report and Calculations to the dropbox below. Be sure to show your calculations
in Excel and provide a narrative analysis in PowerPoint. Your narrative
analysis should summarize the results of your analysis and make recommendations
for the benefit of the company.

The firm decides to
raise $30 million by selling equity and debt. The investment bankers hired by
your firm contact potential investors and come back with the following numbers:

Debt that pays $1 million
coupons a year and $18 million maturity value after 10 years will sell for
$20 million.
Equity that pays expected
dividends of $1.2 million starting next year and growing at a rate of 3
percent per year thereafter sells for $10 million.

Question
12:Calculate the cost of
debt, equity, and the WACC.
Before starting your
calculations, review the following materials:

cost of capital and choice of
financing
equity, debt, and preferred
stock

Submit your Cost of
Debt Report and Calculations to the dropbox below. Be sure to show your
calculations in Excel and provide a narrative analysis in PowerPoint. Your
narrative analysis should summarize the results of your analysis and make
recommendations for the benefit of company.

Your firm has decided
to spin off Android01 and Processor01 as a separate firm. The owners of the new
firm will be equity holders and debt holders. After speaking with potential
investors, investment banks have identified two possible capital structures
(structure of equity and debt ownership):

Debt holders receive debt that pays them coupons of $2
million a year, and $30 million after 20 years (these are expected values
as the coupons and principal payments are not riskless, the debt buyers
realize the firms could default). They price the debt using a discount
rate of 4 percent. Equity holders receive expected dividends of $3 million
starting from year 5, and growing at a rate of 4 percent per year (a
growing perpetuity). They price the equity using a discount rate of 7.5
percent.
Debt holders receive debt that pays them coupons of $1
million a year, and $12 million after 20 years (these are expected values
as the coupons and principal payments are not riskless, the debt buyers
realize the firms could default). They price the debt using a discount
rate of 3.5 percent. Equity holders receive expected dividends of $3.9
million starting from year 5, and growing at a rate of 4.5 percent per
year (a growing perpetuity). They price the equity using a discount rate
of 7 percent.

Your firm receives all
the proceeds from the sale debt and equity.
Prepare a Capital
Budgeting and Cost of Capital report that answers the following Question 13.
Question
13:Which particular
capital structure should be chosen for the spin-off?
Before starting your
calculations, review the following materials:

cost of capital and choice of
financing
equity, debt, and preferred
stock

Submit your Capital
Budgeting and Cost of Capital Report to the dropbox below.

QUICK QUOTE

Academic Level

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