What Are The Internal And External Factors That Influence The Pricing Decisions? Please This
What are the internal and external factors that influence the pricing decisions? Please this is a marketing question
1.Stock A Has A Beta Of 0.50 And Stock B Has A Beta Of
1.Stock A has a beta of 0.50 and Stock B has a beta of 1.25. Suppose rf is 4% and Rm is 10%. a.Applying the security market line, determine the expected return for Stocks A and B. b.What is the expected return of an equally weighted portfolio of these two stocks?
You Are Trying To Evaluate A Private Firm’s Potential As A Good Investment Opportunity.
You are trying to evaluate a private firm’s potential as a good investment opportunity. Your mentor at the investment bank you interned during the summer told you to collect information on comparable firms, which will help you find the WACC of the private firm. The private firm has ND/E ratio of 2. The risk free rate is 2%. Market risk premium is 5%. Cost of debt for the private firm is assumed is 6%. The tax rate is 50%. The following table lists the information you have gathered: Firm Beta Equity Equity (Million) Debt (Million) Cash (Million) A 1.3 20 11 6 B 1.1 15 8 2 C 0.9 10 6 3 D 0.8 5 7 2 What is the net debt for firm A? Q2. Calculate the asset beta for firm D. Q3. What is the average asset beta you should use combining all the comparable firms? Q4. What is the equity beta for the private firm? Q5. What is the cost of equity for the private firm? 0.0/1.0 point (graded) Input the cost of equity for the private firm. （use the result from problem 3） ______ %(keep two decimal points)
You Are Trying To Calculate The WACC For Two Firms. Firm XiG Is Publicly
You are trying to calculate the WACC for two firms. Firm XiG is publicly traded and firm TanW is a private firm. You have collected all necessary information for your WACC calculation: In terms of liabilities, XiG has account payables of $400Million and a bank loan of $200Million. XiG also has cash holding of $300Million. XiG is current trading at $520/share with 1 Million shares outstanding. XiG’s returns move one to one with the stock market returns. XiG’s average tax rate is 30% and marginal tax rate of 35%. XiG is rated as Aa1 by Moody’s and similar Aa1 rating firms have cost of debt of 2%. Risk free rate is 1%, market risk premium is 5%. TanW is in the same industry as XiG. After consulting with an industry expert, you are confident that TanW and XiG have roughly the same business risk. Currently, TanW has net debt to equity ratio of 2. TanW’s average tax rate is 30% and marginal tax rate of 35%. Its cost of debt is 3%. Now you proceed to calculate the WACC for both firms. Q1. Which firm’s cost of equity (rE) can only be calculated using comparable method? 0.0/1.0 point (graded) Select the best answer from the following: XiG TanW Both Neither unanswered You have used 0 of 2 attempts Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button. Q2. What is the net debt for XiG? 0.0/1.0 point (graded) Input the net debt for XiG: $____ Million unanswered You have used 0 of 3 attempts Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button. Q3. What is the market value of equity for XiG? 0.0/1.0 point (graded) Enter the market value of equity for XiG: $_____Million unanswered You have used 0 of 3 attempts Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button. Q4. What is WACC for XiG? 0.0/1.0 point (graded) Enter the WACC for XiG: ___% (keep two decimal points) unanswered You have used 0 of 3 attempts Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button. Q5. Asset beta of TanW is ___ asset beta of XiG; Equity beta of TanW is ____ equity beta of XiG. 0.0/1.0 point (graded) Select the best answer from the following: Same as; Greater than Same as: Smaller than Greater than; Same as Smaller than ; Same as unanswered You have used 0 of 2 attempts Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button. Q6. What is the asset beta for TanW? 0.0/1.0 point (graded) Select the best answer from the following: 1.01 1.24 1.51 1.60 unanswered You have used 0 of 2 attempts Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button. Q7. What is the WACC for TanW? 0.0/1.0 point (graded) Select the best answer from the following: 6.58 7.12 7.83 8.65
Question 2 (25 Marks) Mr Radebe Has A 70% Shareholding In Radebe Holdings (Pty)
Question 2 (25 marks) Mr Radebe has a 70% shareholding in Radebe Holdings (Pty) Limited, which owns several ABC Limited franchise restaurants. Due to Mr Radebe’s extensive experience in the restaurant franchise industry, all of the group restaurants are very successful and most branches have won several ABC Limited franchise awards, all of which are proudly displayed at the entrance to the restaurants. As Mr Radebe recently turned 55 years old, he is curious as to the value of his equity share in the ABC Limited empire. He is considering selling his share in Radebe Holdings (of which each branch is a subsidiary) and retiring, if the equity value is high enough. If not, he will have to re-evaluate the situation upon turning 60. An extract of the financial results for the business is presented below: CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018 Sales 82 496 500 Cost of Sales (73 413 000) Gross profit 9 083 500 Finance charges (150 750) Net rental income 1 738 000 Dividend income 155 650 Depreciation (1 102 500) Other operating expenses (291 000) Profit before tax 9 432 900 Tax – 28% (2 641 212) Net profit 6 791 688 Additional information: Rental income is from commercial properties that are owned by Radebe Holdings. Current, market-related net rental yield is 5%. Dividend income is from an investment in shares of a listed company. The current market value of the shares is R 900 000. Part of the franchise agreement is that Mr Radebe spends R1 000 000 in cash on refurbishments on all of the restaurants next year (2019). Market research has shown that, due to the refurbishments, Mr Radebe can expect a real growth in gross profit for 2019 of 7% and 5% in 2020, after which gross profit will slow to an inflationary rate. All other expenses are expected to be in line with inflation. Finance charges consist of interest on a 10% long-term loan. The current interest rate on a similar loan is 13%. WACC is 26%, the company tax rate is 28% and inflation is expected to be 4% for the foreseeable future. Apart from the R1 000 000 to be spent in 2019, fixed assets are expected to be maintained at annual cash cost of inflation adjusted depreciation. Required: Value Mr Radebe’s interest in Radebe Holdings at 1 January 2019, by performing a free cash-flow valuation. (25)
Polycorp Is Investigating Two Projects. The Risk Free Rate Is 0.06 And The Market
Polycorp is investigating two projects. The risk free rate is 0.06 and the market premium is 0.05. Project A has a beta of 0.75 and project B has a beta 1.9 times that of the average for the firm’s existing projects. Projects A and B are independent. If accepted the projects will initially be funded by borrowing at 7% pa. Calculate the beta of project B to two decimal places. The firm’s current weighted average cost of capital is 11%pa (before taking either or both A and B). Assume no taxes.
Joy M PlC Is A Small Stationery Manufacturer Based In The Dallas. Given The
Joy M PlC is a small stationery manufacturer based in the dallas. Given the competitive nature of the market, the company directors have decided to pursue an acquisition strategy. however, some of the senior managers and other stockholders are worried about the likely success of this strategy and the reaction of companies to unwelcome takeover bids. the directors have appointed you, as an external consultant, to advise them. Required 1. Describe the defenses which could be used against unwelcome takeover bids. 2. Describe how the success of acquisitions can be measured.
What Is The Yield To Maturity On A 10-year, 9% Annual Coupon, $1,000 Par
What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or at a premium tell you about the relationship between and the bond’s coupon rate?
What Are The Total Return, The Current Yield, And The Capital Gains Yield For
What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.)
Please Help Me In This Question Provide Me A Well Detailed Answer Question: Hoffman
Please help me in this question provide me a well detailed answer Question: Hoffman Mining Limited needs the use of a large loader truck to transport mining material extract… Hoffman Mining Limited needs the use of a large loader truck to transport mining material extracted from its Papua New Guinea gold mine to the associated processing and extraction plant. The cost of purchasing a new Caterpillar loader truck is $500,000. The company can obtain a 10-year interest and principal loan at an 8.50% per annum interest rate from the Bank of PNG Limited to fund the $500,000 purchase cost. If acquired, the loader truck will be depreciated on a straight-line basis over the 10-year asset life. Assume the asset will have no disposal value at the end of the mining project. Based on the above loan terms, the debt repayment schedule will be as follows: Year Beginning balance Interest Total Loan payment Ending Balance 1 $500,000 $42,500 $542,500 $76,204 $466,296 2 $466,296 $39,635 $505,931 $76,204 $429,727 3 $429,727 $36,527 $466,254 $76,204 $390,050 4 $390,050 $33,154 $423,204 $76,204 $347,000 5 $347,000 $29,495 $376,495 $76,204 $300,291 6 $300,291 $25,525 $325,816 $76,204 $249,612 7 $249,612 $21,217 $270,829 $76,204 $194,625 8 $194,625 $16,543 $211,168 $76,204 $134,964 9 $134,964 $11,472 $146,436 $76,204 $70,232 10 $70,232 $5,972 $76,204 $76,204 $0 Alternatively, the company can lease the loader truck through the Caterpillar PNG Mining Finance Company on a 10-year lease term based on annual lease payments made in advance (at the beginning of the year) of $60,000. Hoffman Mining Limited has a corporate tax rate of 30%. Assume that the tax benefits from borrowing or leasing payments / allowable deductions are obtained at the end of same year that payments are made. Should Hoffman Mining Limited borrow-and-buy or lease the Caterpillar loader truck? (Note: Net advantage of leasing (NAL) = (PV of Tax Benefits from Leasing – PV of Tax Benefits from Borrowing) – Opportunity Cost of Leasing)
The Toy Story Trust Is Required To Distribute $80,000 Annually, Split Equally Between Its
The Toy Story Trust is required to distribute $80,000 annually, split equally between its two income beneficiaries, Molly and Andy. If trust income is not sufficient to pay these amounts, the trustee can invade corpus to the extent necessary. During the current year, the trust reports DNI of $60,000. Andy receives an additional $30,000 discretionary corpus distribution. How much of these distributions are first-tier distributions or second-tier distributions? How much of the $40,000 distributed to Molly is included in her gross income? How much of the $70,000 distributed to Andy is included in his gross income?
An Amount Of R10 000 Was Invested In A Special Savings Account On 15
An amount of R10 000 was invested in a special savings account on 15 May at an interest rate of 15% per annum, compounded quarterly for seven months. Interest is calculated on 1 January, 1 April, 1 July and 1 October of every year. (a). If simple interest is used for the odd periods and compound interest for the rest of the term, the amount of interest received after seven months is (b).If fractional compounding is used for the full term of seven months, the total amount of interest received is
Goofy, Who Is Unmarried, Gave The Following Gifts (directly To Each Listed Individual) In
Goofy, who is unmarried, gave the following gifts (directly to each listed individual) in 2018: Donee Amount Use by donee Ludwig $16,000 Down payment on house Clarabelle 10,000 Car Toodles 5,000 Vacation trip Goofy’s 2018 annual exclusions for gift tax purposes will total:
A 1010-year Bond With A Face Value Of $ 1 Comma 000$1,000 Has A
A 1010-year bond with a face value of $ 1 comma 000$1,000 has a coupon rate of 8.50 %8.50%, with semiannual payments. a. What is the coupon payment for this bond? b. Enter the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $42.5042.50. (Round to the nearest cent.) b. Enter the cash flows for the bond on a timeline. Cash Flow CF 1CF1 CF 2CF2 CF 19CF19 CF 20CF20 Amount (Round to the nearest cent.) $ $ $
Suppose A Seven-year, $1,000 Bond With A 11.94 % Coupon Rate And Semiannual Coupons
Suppose a seven-year, $1,000 bond with a 11.94 % coupon rate and semiannual coupons is trading with a yield to maturity of 9.79 %. a. Is this bond currently trading at a discount, at par, or at a premuim? Explain. b. If the yield to maturity of the bond rises to 10.26 % (APR with semiannual compounding), at what price will the bond trade? a. Is this bond currently trading at a discount, at par, or at a premuim? Explain. The bond is currently trading… (Select the best choice below.) A. … at a discount because the coupon rate is greater than the yield to maturity B. … at a premium because the yield to maturity is greater than the coupon rate. C. … at par because the coupon rate is equal to the yield to maturity D. … at a premium because the coupon rate is greater than the yield to maturity Your answer is correct. b. If the yield to maturity of the bond rises to 10.26 % (APR with semiannual compounding), at what price will the bond trade? The bond will trade for $ nothing. (Round to two decimal places.)
QUESTION 5 Dolby Enterprises Has The Option To Invest In Machinery In Projects M
QUESTION 5 Dolby Enterprises has the option to invest in machinery in Projects M and N but finance is only available to invest in one of them. Project M (R) Project N (R) Initial cost 450 000 450 000 Net Profit Year 1 36 000 69 000 Year 2 75 000 69 000 Year 3 102 000 69 000 Year 4 129 000 69 000 Year 5 81 000 69 000 1. Assume that all cash flows take place at the end of the year except the original investment in the project which takes place at the beginning of the project. 2. Project M machinery is expected to be disposed of at the end of year 5 with a scrap value of R60 000. 3. Project N machinery is expected to be disposed of at the end of year 5 with a nil scrap value. 4. Depreciation is calculated on a straight-line basis. 5. The discount rate to be used by the company is 12%. 5.1 Required: Use the information provided above by Dolby Enterprises to answer the following questions: 5.1.1 Calculate the Payback Period of Project N. (Answer must be expressed in years and months.) 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project M. (Answer must be expressed to two decimal places.) 5.1.3 Calculate the Net Present Value of each project. (Round off amounts to the nearest Rand.) 5.1.4 Using your answers from question 5.1.3, which project should be chosen? Why? 5.2 A machine with a purchase price of R418 000 is estimated to eliminate manual operations and save the company R130 000 cash per year. The machine will last 5 years and have no residual value at the end of its useful life. Required: Calculate the Internal Rate of Return (answer expressed to two decimal places).
When You Are Studying Capital Budgeting, You Go Through A Lot Of Work To
When you are studying capital budgeting, you go through a lot of work to come up with an investment decision. However, you have made many assumptions along the way to form what seems like a value-maximizing decision. Choose an assumption that you might make and discuss the risks associated with that assumption.
During The Process Of Calculating NPV (B), Why The Tax Savings @ 35% On
During the process of calculating NPV (B), why the Tax savings @ 35% on Interest and Depreciaton in Year 1 and Year 2 is $453,288 and $604,520 respectively?
Using A Car Industry, Describe Five Different Brands And How They Have Been Positioned
Using a car industry, describe five different brands and how they have been positioned
What Are The Basis For Positioning A Product? Please This Is A Marketing Question
What are the basis for positioning a product? Please this is a marketing question
1. What Is Product Positioning, What Are The Basis For Positioning A Product And
1. What is Product positioning, What are the basis for positioning a product and Use a car industry, describe five different brands and how they have been positioned. Please this question is marketing question
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