Homework Help for Finance

what factors you would consider. For example, should we followFed announcements and try to anticipate movement? Should we justrefinance whenever there is a 25 basis point difference? Should weonly refinance when we receive offers of no closing fees oranticipate a return of "X%"?

Using the Du Pont method, evaluate the effects of the followingrelationships for the Butters Corporation.

a. Butters Corporation has a profit margin of 5.5percent and its return on assets (investment) is 15.5 percent. Whatis its assets turnover? (Round your answer to 2 decimalplaces.)

b. If the Butters Corporation has adebt-to-total-assets ratio of 25.00 percent, what would the firm’sreturn on equity be? (Input your answer as a percentrounded to 2 decimal places.)

c. What would happen to return on equity if thedebt-to-total-assets ratio decreased to 20.00 percent?(Input your answer as a percent rounded to 2 decimalplaces.)

The technique for calculating a bid price can be extended tomany other types of problems. Answer the following questions usingthe same technique as setting a bid price; that is, set the projectNPV to zero and solve for the variable in question. GuthrieEnterprises needs someone to supply it with 145,000 cartons ofmachine screws per year to support its manufacturing needs over thenext five years, and you’ve decided to bid on the contract. It willcost $1,850,000 to install the equipment necessary to startproduction; you’ll depreciate this cost straight-line to zero overthe project’s life. You estimate that in five years this equipmentcan be salvaged for $155,000. Your fixed production costs will be$270,000 per year, and your variable production costs should be$9.90 per carton. You also need an initial investment in networking capital of $135,000. The tax rate is 25 percent and yourequire a return of 11 percent on your investment. Assume that theprice per carton is $16.50. a. Calculate the project NPV. (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) b. What is the minimum number of cartons peryear that can be supplied and still break even? (Do not roundintermediate calculations and round your answer to the nearestwhole number, e.g., 32.) c. What is the highest fixed costs thatcould be incurred and still break even? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)

Dr. Zhivago Diagnostics Corp.'s income statement for 20X1 is asfollows:

a. Compute the profit margin for 20X1.(Input the profit margin as a percent rounded to 2 decimalplaces.)

b. Assume in 20X2, sales increase by 10 percentand cost of goods sold increases by 20 percent. The firm is able tokeep all other expenses the same. Once again, assume a tax rate of30 percent on income before taxes. What is income after taxes andthe profit margin for 20X2? (Input the profit margin as apercent rounded to 2 decimal places.)

Camille Sikorski was divorced last year. She currently providesa home for her 15-year-old daughter Kaly. Kaly lived in Camille’shome for the entire year, and Camille paid for all the costs ofmaintaining the home. She received a salary of $82,500 andcontributed $5,300 of it to a qualified retirement account (a forAGI deduction). She also received $11,500 of alimony from herformer husband. Finally, Camille paid $16,400 of expenditures thatqualified as itemized deductions.

What is Camille’s taxable income?

What would Camille’s taxable income be if she incurred $11,450of itemized deductions instead of $16,400?

Assume the original facts but now suppose Camille’s daughter,Kaly, is 25 years old and a full-time student. Kaly’s gross incomefor the year was $6,400. Kaly provided $3,840 of her own support,and Camille provided $6,400 of support. What is Camille’s taxableincome?

. Net operating profit after taxes (NOPAT) is defined as whichof the following? A. Net profit a firm earns before taxes, butafter any financing costs B. Net profit a firm earns after taxes,and after any financing cots C. Net profit a firm earns aftertaxes, but before any financing costs D. Net profit a firm earnsbefore taxes, and before any financing cost __________________ isdefined as after-tax operating profit minus the amount of newinvestment in working capital, fixed assets, and the development ofnew products. 12. Which of the following can be considered a sourceof cash by the organization: A. Depreciation B. Payment ofdividends C. Decrease in a current liability D. Increase in a noncash current asset.

Hemingway Corporation is considering expanding its operations toboost its income, but before making a final decision, it has askedyou to calculate the corporate tax consequences of its decision.Currently, Hemingway generates before-tax yearly income of $200,000and has no debt outstanding. Expanding operations would allowHemingway to increase before-tax yearly income to $350,000.Hemingway can use either cash reserves or debt to finance itsexpansion. If Hemingway uses debt, it will have yearly interestexpense of $70,000

Consider the following debt-free project for a machine:

What is the value of this project?

Carry out calculations to at least 4 decimal places. Enterpercentages as whole numbers. Example: 3.03% should be entered as3.03. Do not include commas or dollar signs in numericalanswers.

Is it ever optimal to exercise early an American call option onthe futures price of gold. Explain in detail..

Country USA

Period for Inflation 2000-2017

Capital EUR 2500

Time period for calculating purchasing power,years 12

Total inflation rate %?

Average geometric annual inflation rate%?

The purchasing power of the capital in the future EUR?

Suppose you were in a high marginal tax bracket and hadsignificant paper profits on a long position in 1,000 shares of XYZstock, after a ten month holding period. What option strategy couldyou use to take paper profits right away and still get a legalcapital gains tax break without incurring significant marketrisk?

20. 2 Describe (80–100 words each) four implementationstrategies and how each affects the worker’s ability to adapt tonew technology. (finance department)

What is gamma risk? Suppose you were managing an optionportfolio and had gamma risk. How would you get rid of gamma riskwithout incurring any other significant risk, at least for smallmarket moves?