If Company offers preferred stock with a current market price of $18 per share. The preferred stock pays an annual dividend of 4% based on a par value of $100. Flotation costs for preferred stock equals $1.50 per share. The corporate tax rate is 40%. Therefore, the cost of preferred stock would be?

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Cost of capital

  1. a) The preferred stock of Triple-Play Corporation is currently priced at $21 per share, pays an annual dividend of 3.5% based on a par value of $100. Flotation costs associated with the sale of preferred stock equal $1.25 per share. The company’s marginal tax rate is 35%. Therefore, the cost of preferred stock would be

 

  1. b) If Company offers preferred stock with a current market price of $18 per share. The preferred stock pays an annual dividend of 4% based on a par value of $100. Flotation costs for preferred stock equals $1.50 per share. The corporate tax rate is 40%. Therefore, the cost of preferred stock would be?

 

  1. c) GNB Inc. is investing in a major capital budgeting project that will require funding of $16 million. The money will be raised by issuing $2 million of bonds, $4 million of preferred stock, and $10 million of new common stock. The company estimates is after-tax cost of debt to be 7%, its cost of preferred stock to be 9%, the cost of retained earnings to be 14%, and the cost of new common stock to be 17%. What is the weighted average cost of capital for this project?

 

  1. d) The LMK Company is planning a $64 million expansion. The expansion is to be financed by selling $25.6 million in new debt and $38.4 million in new common stock. The before-tax required rate of return on debt is 9 percent and the required rate of return on equity is 14 percent. If the company is in the 35 percent tax bracket, what is the firm’s cost of capital?

 

  1. e) Given the following capital structure, compute the company’s weighted average cost of capital.

 

Type of Capital Percent of Capital Structure Before-Tax Component Cost
Bonds 40% 7.5%
Preferred Stock   5% 11%
Common Stock (Internal Only) 55% 15%

 

Solve for the company’s marginal tax rate is 40%.

 

  1. f) Painter Pro has a capital structure that consists of $7 million of debt, $2 million of preferred stock, and $11 million of common equity, based upon current market values. The firm’s yield to maturity on its bonds is 7.4%, and investors require an 8% return on the firm’s preferred and a 14% return on common stock. If the tax rate is 35%, calculate the WACC

 

  1. g) Princeton Technology has the following capital structure.

 

Debt………………………………..         40%

Common equity………………         60

 

The after-tax cost of debt is 6 percent; and the cost of common equity is 13 percent.

 

  1. What is the firm’s weighted average cost of capital?
  2. An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. Under this new and more debt-oriented arrangement, the aftertax cost of debt is 7 percent, and the cost of common equity (in the form of retained earnings) is 15 percent. Recalculate the firm’s weighted average cost of capital.
  3. Which plan is optimal in terms of minimizing the weighted average cost of capital?

Prepare a 2,000-word essay critically evaluating the impact of a financial technology on an area of the financial industry.

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Financial technologies

Prepare a 2,000-word essay critically evaluating the impact of a financial technology on an area of the financial industry. As part of this, you will assess the potential for business and economic disruption within your chosen financial subsector resulting from technological innovation. You should address the key opportunities, practical implications and risks posed by the adoption of the new technology and give an opinion as to the degree of disruption that widespread adoption of this technology may have on your chosen subsector.
You have been provided with an initial reading list of five sources to stoke your curiosity and lay the foundation for further research (see below). To successfully complete this assignment, you will need to draw on a wider range of references through independent research.
Your writing should be in the third person and any assertions you make should be supported with evidence. The essay must be written in an appropriate style and provide evidence of an ability to engage in critical discussion and thoughtful examination of the issues raised.

Suppose that Emily and Paul purchase a $200,000 home in 5 years and make $40,000 down payment immediately. Find the monthly mortgage payment assuming that the remaining balance is financed at a 3% fixed rate for 15 What if its mortgage term is 30 years?

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Finance Question

Critical Thinking Skills Assignment

  • Evaluation skill: Evaluation is associated with the ability to judge the value of material for a given purpose. The judgements are to be based on definite criteria. These criteria may be determined by relevance, purpose, statements, and numerical values or calculations. Please watch the video clips provided on Evaluating Logic Part 1,2 and 3

Read the following vignette carefully and answer questions using the evaluation skill.

Emily Smith just received a promotion at work that increased her annual salary to $42,000. She is eligible to participate in her employer’s 401(k) retirement plan to which the employer matches, dollar for dollar, workers’ contributions up to 5% of salary. However, Emily wants to buy a new

$25,000 car in 3 years, and she wants to have enough money to make a $10,000 down payment on the car and finance the balance. Fortunately, she expects a sizable bonus this year that she hopes will cover that down payment in 3 years.

A wedding is also in her plans. Emily and her boyfriend, Paul, have set a wedding date two years in the future, after he finishes medical school. In addition, Emily and Paul want to buy a home of their own in 5 years. This might be possible because two years later, Emily will be eligible to access a trust fund left to her as an inheritance by her late grandfather. Her trust fund has $80,000 invested at an interest rate of 5%.

  1. Justify Emily’s participation in her employer’s 401(k) plan using the time value of money concepts by calculating the actual annual return on her own contributions. She will contribute $1,000 per year to her 401(k) for 25 years and the employer will match dollar for dollar. Assume that her 401(k) earns 6% per year for 25 years and all contributions are made at the end of each year.

 

  1. Calculate the amount of money that Emily needs to set aside from her bonus this year to cover the down payment on a new car, assuming she can earn 4% on her What if she could earn 10% on her savings?

 

  1. What will be the value of Emily’s trust fund in 36 years, assuming she takes possession of $20,000 in 2 years for her wedding, and leaves the remaining amount of money untouched where it is currently invested?

 

  1. Suggest at least two conditions that Emily and Paul could take to accumulate more for their retirement.

 

  1. Suppose that Emily and Paul purchase a $200,000 home in 5 years and make $40,000 down payment immediately. Find the monthly mortgage payment assuming that the remaining balance is financed at a 3% fixed rate for 15 What if its mortgage term is 30 years?

 

  1. What can you conclude about the relationship between the mortgage term and the amount of the monthly payment? From Question 5, is the monthly payment with the 30-year term half as large as the monthly payment with the 15-year term? Explain.

 

 

  • Deductive reasoning skill: Deductive reasoning is a logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true. Please watch the video clip provided on Deductive Reasoning

 

Do the following problems (Q1 – Q5) and then, answer the last question (Q6) using the deductive reasoning skill.

Use the following information to answer the following questions.

ABC, Inc. Income Statement (in thousands)

December 31, 2014

Sales $200,000
Cost of goods sold 140,000
Gross profit on sales 60,000
Operating expenses 56,000
Operating income (EBIT) 4,000
Interest expense 1,000
Earnings before tax 3,000
Income tax  1,050
Net income available to common stockholders $1,950

Number of shares outstanding

  

1, 500
Market price per share $22

ABC, Inc. Balance Sheet (in thousands)

December 31, 2014

Assets

Cash $2,000
Accounts receivable 17,800
Inventories   8,700
Total current assets 28,500
Gross fixed assets 70,000
Accumulated depreciation 26,500
Net fixed assets 43,500
Total assets $72,000
Liabilities and Equity  
Accounts payable $18,000

 

Accruals   13,350
Total current liabilities 31,350
Long-term debt      8,250
Total liabilities 39,600
Common stock (par value and paid in capital) 2,000
Retained earnings  30,400
Total stockholders’ equity  32,400
Total liabilities and equity $72,000

 

Industry Key Ratios

Industry Average Ratios

Current ratio                             1.1

Quick ratio                              0.60

Days Sales Outstanding (DSO)                              25 days Fixed assets turnover                          5.8

Total asset turnover                2.95

Liabilities-to-assets ratio        65%

Times-interest-earned               3.2

Net profit margin                  1.3%

Return on equity                 7.32% Price/earnings ratio                                             20.38

Market/book ratio                         3.19

  1. Calculate current ratio and acid test ratio for the

 

  1. Calculate DSO, fixed assets turnover, and total asset turnover for the

 

  1. Calculate liabilities-to-assets ratio and times-interest-earned ratio for the

 

  1. Calculate net profit margin and return on equity for the
  2. Evaluate the performance of the firm in the following areas: Liquidity management

Asset management Debt management

Profitability management

 

When you explain the firm’s strength or weakness in each area, you must support your arguments through the evaluative reasoning process by providing reasons, methods, criteria, or assumptions behind the claims made.

 

  1. Deductive reasoning starts with a general principle and deduces that it applies to a specific Deductive reasoning moves with exacting precision from the assumed truth of a set of premises to a conclusion which cannot be false if those premises are true. Explain the deductive reasoning process applied to analyze the firm’s performance.

Establish (create) the COGs and SGA for a new Pediatric Healthcare center in Qingdao, China.

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Case study (need in 10 hours) and don’t use AI to produce results

Establish (create) the COGs and SGA for a new Pediatric Healthcare center in Qingdao, China.

COGs must include Direct Cost, Labor Cost, Expenses, Number of Patients, and Total COGs. For the word report, please explain each one, and how much will be for each one, also explain the criteria that you use. In Excel do the calculation, not only numbers, need to be the formulas that you used it. Forecast for 5 years, and explain the criteria that you use for forecast each component.

SAG must include indirect expenses associated with operating the pediatric center, cost of general and administrative expenses (non-medical staff), cost of selling and marketing expenses (these can include expenses associated with advertising, public relations, and other promotional activities), and the total SAG expenses by adding the general and administrative expenses and selling and marketing expenses. For the word report, please explain each one, and how much will be for each one, also explain the criteria that you use. In Excel do the calculation, not only numbers, need to be the formulas that you used it. Forecast for 5 years, and explain the criteria that you use for forecast each component.

You have to create tables and graphs for a better understanding. Remember that you have to create all this with information about Qingdao, China. Use US$ Dollar as currency.

The word report must include an introduction, body (COGs and SAG), conclusion, and references.

How important are team building activities? Do you think it would affect a work environment to have monthly team building activities? How?

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Journal Entry Requirements:

Your journal entry is not for reciting facts, it is a self-reflection on what you have learned and how you plan to use or have used the information. Use concepts from the leadership text as must as possible to guide your journal writing. Keep entries to a minimum of 200 words unless otherwise instructed. You may add an interesting leadership quote or leadership cartoon. Reference the text for leadership concepts cited.  You are required to complete a journal entry every three days.  The journal entry is for you and me.  You do NOT respond to any peers. Grades will be given based on content and word count. Feel free to use this word document to submit your answer or create a new document.

 

Journal Entry 11

How important are team building activities? Do you think it would affect a work environment to have monthly team building activities? How?

Using a graphic organizer of your choice, create a visual graphic that explains your answer to the question below. Write a short essay or paragraph of at least 300 words.

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DISCUSSION ESSAY

In June 2017, BMW announced plans to spend $600 million to expand production at its South Carolina plant. The new investment would allow BMW to prepare for the new X model of SUVs. BMW apparently felt it would be better able to compete and create value with a U.S.-based facility. In fact, BMW expected to export 70% of the vehicles produced in South Carolina. Also in 2017, noted Taiwanese iPhone supplier Foxconn announced plans to build a $10 billion plant in Wisconsin, and Chinese tire manufacturer Wanli Tire Corp. announced plans to build a $1 billion plant in South Carolina.

What are some of the reasons that foreign manufacturers of products as diverse as automobiles, cell phones, and tires might arrive at the same conclusion to build plants in the United States?

Using a graphic organizer of your choice, create a visual graphic that explains your answer to the question below.
Write a short essay or paragraph of at least 300 words.
Use concrete examples/details and avoid generalities.

dress all questions.
Use proper grammar and punctuation.
Remember to cite your sources when you research your topic and use information from what you learned.
Do not plagiarize.
You will not be able to edit your assignment once you post, so please proofread and spell-check before hitting the post!

With the recent global recession, along with the increasing failure of many financial institutions worldwide: USA, Europe, and possibly China. How would you explain all of these events, especially with the mater fact that global consumption has increased after recovering from COVID-19 with growing demand for many products & high levels of inventory, but at the same time, there is a high cost in the capital market (even Euromarket) as long as deleveraging by many local & global financial institutions.

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FIN-406: International Finance

Q1-With the recent global recession, along with the increasing failure of many financial institutions worldwide: USA, Europe, and possibly China. How would you explain all of these events, especially with the mater fact that global consumption has increased after recovering from COVID-19 with growing demand for many products & high levels of inventory, but at the same time, there is a high cost in the capital market (even Euromarket) as long as deleveraging by many local & global financial institutions. On the other hand, the labor market has been improved worldwide.

Discuss about the risk involved in DB and DC plan? What are the different Personality Types of Investors. As a Portfolio Manager, what type of investment strategy would you formulate for “Spontaneous ” of Investors?

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Portfolio management FIN424

1-The significance of IPS in Portfolio management. Explain it with appropriate examples.

2-Discuss about the risk involved in DB and DC plan?

3-What are the different Personality Types of Investors. As a Portfolio Manager, what type of investment strategy would you formulate for “Spontaneous ” of Investors?

To improve your answer you are requested to use scientific references, following APA style.

4-If Neutral rate is 4%, Inflation target is 3%, expected inflation is 7%, GDP long-term trend is 2% and expected GDP growth is 0%, so what will be the short-term interest rate target?

a.  

4%
b.  

11%
c.  

16%
d.  

5%

Show how are you answer it .

Project the required income statement and balance sheet items. Evaluate historical relations. Identify the company’s situation.

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Case study

Case Discussion

• Project the required income statement and balance sheet items.

• Evaluate historical relations.

• Identify the company’s situation. (to growth how to fund it?)

• Compare the options the company might have (to grow or not to grow?; if so, how to finance it? Remember workinig capital vs. operating working capital)

• Make a decision based on your analysis.

How will the PV and FV of the annuity in part f change if it is an annuity due? What will the FV be for $1,000 now in 5 years if the interest rate is 10%, semiannual compounding? What will the PV be for $1,000 in 5 years if the interest rate is 10%, semiannual compounding?

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FINANCIAL INSTITUTIONS MANAGEMENT

WRITTEN ASSIGNMENT # 2

Problem 1 (25 points)

TIME VALUE OF MONEY Answer the following questions:

  1. Assuming a rate of 10% annually, find the FV of $1,000 after 5 years.
  2. What is the investment’s FV at rates of 0%, 5%, and 20% after 0, 1, 2, 3, 4, and 5 years?
  3. Find the PV of $1,000 due in 5 years if the discount rate is 10%.
  4. What is the rate of return on a security that costs $1,000 and returns $2,000 after 5 years?
  5. Suppose California’s population is 40 million people and its population is expected to grow by 2% annually. How long will it take for the population to double?
  6. Find the PV of an ordinary annuity that pays $1,000 each of the next 5 years if the interest rate is 15%. What is the annuity’s FV?
  7. How will the PV and FV of the annuity in part f change if it is an annuity due?
  8. What will the FV be for $1,000 now in 5 years if the interest rate is 10%, semiannual compounding? What will the PV be for $1,000 in 5 years if the interest rate is 10%, semiannual compounding?
  9. What will the annual payments be for an ordinary annuity for 10 years with a PV of $1,000 if the interest rate is 8%? What will the payments be if this is an annuity due?
  10. Find the PV and the FV of an investment that pays 8% annually and makes the following end-of-year payments: Details
  11. Five banks offer nominal rates of 6% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. (1) What effective annual rate does each bank pay? If you deposit $5,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? (2) If all of the banks are insured by the government (the FDIC) and thus are equally risky, will they be equally able to attract funds? If not (and the TVM is the only consideration), what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? (3) Suppose you don’t have the $5,000 but need it at the end of 1 year. You plan to make a series of deposits—annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E—with payments beginning today. How large must the payments be to each bank? (4) Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? Explain.
  12. Suppose you borrow $15,000. The loan’s annual interest rate is 8%, and it requires four equal end-of-year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances.

 

Problem 2 (25 points)

BOND VALUATION Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds:

  • Bond A has a 7% annual coupon, matures in 12 years, and has a $1,000 face value.
  • Bond B has a 9% annual coupon, matures in 12 years, and has a $1,000 face value.
  • Bond C has an 11% annual coupon, matures in 12 years, and has a $1,000 face value.

Each bond has a yield to maturity of 9%.

  1. Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, at a discount, or at par.
  2. Calculate the price of each of the three bonds.
  3. Calculate the current yield for each of the three bonds. (Hint: Refer to footnote 6 for the definition of the current yield and to Table 7.1.)
  4. If the yield to maturity for each bond remains at 9%, what will be the price of each bond 1 year from now? What is the expected capital gains yield for each bond? What is the expected total return for each bond?
  5. Clark is considering another bond, Bond D. It has an 8% semiannual coupon and a $1,000 face value (i.e., it pays a $40 coupon every 6 months). Bond D is scheduled to mature in 9 years and has a price of $1,150. It is also callable in 5 years at a call price of $1,040. (1) What is the bond’s nominal yield to maturity? (2) What is the bond’s nominal yield to call? If Mr. Clark were to purchase this bond, would he be more likely to receive the yield to maturity or yield to call? Explain your answer.
  6. Explain briefly the difference between price risk and reinvestment risk. Show the price change to each of the following bonds if market interest rates rise from 9% per year to 10% to year. Which has the most reinvestment risk and why?
    • A 1-year bond with a 9% annual coupon
    • A 5-year bond with a 9% annual coupon A 5-year bond with a zero coupon
    • A 10-year bond with a 9% annual coupon
    • A 10-year bond with a zero coupon
  7. Calculate the price of each bond (A, B, and C) at the end of each year until maturity, assuming interest rates remain constant. Create a graph showing the time path of each bond’s value, similar to that shown in Figure 7.2. (1) What is the expected interest yield for each bond in each year? (2) What is the expected capital gains yield for each bond in each year? (3) What is the total return for each bond in each year?