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Finance
what is interpersonal equity? what is its definition?
Finance
The Case:
Prices of common stock of Cement Manufacturing Association (CMA) are increasing on daily basis. New investors are more enthusiastic in purchasing the CMA’s stock due to the belief that the company’s stock prices will tend to increase more in the days to come. Hence, at present the investment in this stock will be very beneficial for them. So, with the expectation to sell this stock at higher prices in the future could give them huge gain. However, the market analysts keeping an eye on the fundamental value of CMA’s stock are of the view that the stock prices of the company are overvalued, thus not representing their true values. According to these analysts, this stock will not be able to maintain its current trend of price increase in the future and will be forced by the market mechanism to adjust its price to its fundamental value.
Requirement:
Considering the above scenario, do you agree that this price hike is beneficial for the country’s economy in general and for the investors in particular? Support your answer with logical reason.
Prices of common stock of Cement Manufacturing Association (CMA) are increasing on daily basis. New investors are more enthusiastic in purchasing the CMA’s stock due to the belief that the company’s stock prices will tend to increase more in the days to come. Hence, at present the investment in this stock will be very beneficial for them. So, with the expectation to sell this stock at higher prices in the future could give them huge gain. However, the market analysts keeping an eye on the fundamental value of CMA’s stock are of the view that the stock prices of the company are overvalued, thus not representing their true values. According to these analysts, this stock will not be able to maintain its current trend of price increase in the future and will be forced by the market mechanism to adjust its price to its fundamental value.
Requirement:
Considering the above scenario, do you agree that this price hike is beneficial for the country’s economy in general and for the investors in particular? Support your answer with logical reason.
Finance
Buster’s Beverages is negotiating a lease on a new piece of equipment that would cost $100,000 if
purchased. The equipment falls into the MACRS 3‐year class, and it would be used for 3 years and
then sold, because the firm plans to move to a new facility at that time. The estimated value of the
equipment after 3 years is $30,000. A maintenance contract on the equipment would cost $3,000
per year, payable at the beginning of each year. Alternatively, the firm could lease the equipment
for 3 years for a lease payment of $29,000 per year, payable at the beginning of each year. The
lease would include maintenance. The firm is in the 20% tax bracket, and it could obtain a 3‐year
simple interest loan, interest payable at the end of the year, to purchase the equipment at a before‐
tax cost of 10%. If there is a positive Net Advantage to Leasing the firm will lease the equipment.
Otherwise, it will buy it. What is the NAL?
purchased. The equipment falls into the MACRS 3‐year class, and it would be used for 3 years and
then sold, because the firm plans to move to a new facility at that time. The estimated value of the
equipment after 3 years is $30,000. A maintenance contract on the equipment would cost $3,000
per year, payable at the beginning of each year. Alternatively, the firm could lease the equipment
for 3 years for a lease payment of $29,000 per year, payable at the beginning of each year. The
lease would include maintenance. The firm is in the 20% tax bracket, and it could obtain a 3‐year
simple interest loan, interest payable at the end of the year, to purchase the equipment at a before‐
tax cost of 10%. If there is a positive Net Advantage to Leasing the firm will lease the equipment.
Otherwise, it will buy it. What is the NAL?
Finance
If a firm adheres strictly to the residual dividend policy, then if its optimal capital budget requires the use of all earnings for a given year (along with new debt according to the optimal debt/total assets ratio), then the firm should pay
Finance
Compare the following investment appraisal approaches by showing calculating output; payback period; rate of return; net present value and IRR of given firm information.(P10) Critically evaluate the outcomes of these appraisal approaches for an investment decision.(D1) and communicate these findings to the relevant investment analyst.(M3)
Year 0 1 2 3 4 5 6
Income amounts -$1000 -$200 -$200 -$200 -$200 -$200 -$200
Year 0 1 2 3 4 5 6
Income amounts -$1000 -$200 -$200 -$200 -$200 -$200 -$200
Finance
The weight (gms) of 31 books picked from a consignment are as follows : 106, 107, 76, 82, 106, 107, 175, 93, 187, 95, 123, 125, 111, 92, 86, 70, 127, 68, 130, 129, 139, 119,115, 128, 100, 186, 84,99, 113, 204, 111 Test whether this sample may be treated as random.
Finance
Analyze the approaches to capital structure decisions and determine which theory is the most applicable across the widest number of scenarios. Explain your rationale
Finance
Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300.0 Last year’s accounts payable $50.0
Sales growth rate = g 40% Last year’s notes payable $15.0
Last year’s total assets = A0* $500.0 Last year’s accruals $20.0
Last year’s profit margin = PM 20.0% Initial payout ratio 10.0%
(show work)
Last year’s sales = S0 $300.0 Last year’s accounts payable $50.0
Sales growth rate = g 40% Last year’s notes payable $15.0
Last year’s total assets = A0* $500.0 Last year’s accruals $20.0
Last year’s profit margin = PM 20.0% Initial payout ratio 10.0%
(show work)
Finance
Discuss what might happen in an economy if a government increases income tax rates.
Finance
QuinnCo could not claim all of the income taxes that it paid to Japan as a foreign tax credit (FTC) this year. What computational limit probably kept QuinnCo from taking its full FTC?
