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6271809_FIN_CLAR QUESTION

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Question;Corporate Finance Name;Answer each of the following in the space provided. Be sure to show your work.;1.;You have your savings invested in an FDIC insured;account (Account A) that pays a nominal rate of 3.00% with interest compounded;monthly. You are considering moving your;savings to another FDIC insured account (Account B) that offers a nominal rate;of 3.10%, but with interest compounded daily.;Determine which account you should use for your investment.;Two years ago, Steven Industries issued 20-year, $1,000 Par;Value bonds with 6% coupon rate with interest paid semiannually. At origination, the bonds had a five year;call provision with a $100 premium.;Boxer?s cost of debt for these bonds has fallen to 4%. What is the price of one of their bonds?;Harris, Inc. has $5 billion in;assets and its tax rate is 40%. Its;basic earning power ratio is 10%, and its return on assets is 5%. What is Harris?s times-interest-earned ratio?;2.;Consider two mutually exclusive projects, C & H;with the following cash flows. The IRR;for project C is 14.05%, the IRR for project H is 15.97%, and both projects;would have the same NPV if the required rate of return was 22.62%. Determine the range of interest rates in;which you would choose project C, the range of interest rates in which you;would choose project H, and the range of interest rates for which you would;reject both project.;Time;0;1;2;3;CFC;($175);$85;$75;$70;CFH;($200);$70;$80;$125;Masters Mining is considering the;purchase of some new equipment that will expand their business. The revenues and expenditures associated with;that expansion are listed below (negative numbers in parentheses). Find the Net Present Value of this expansion;project and indicate whether you advise Miller to adopt the project.;Time;0;1;2;3;Equipment;($1,200,000);Installation;($50,000);DNWC;($80,000);Sales;$1,370,000;$1,450,000;$1,554,000;- non-depreciable Costs;($900,000);($912,000);($944,000);- Depreciation & Amortization;($412,500);($562,500);($187,500);-Tax;($20,126);$8,576;($147,876);Salvage;$290,000;- Capital Gains Tax;($70,876);ReturnDNWC;$80,000;Cash Flow;(1330000);449874;546576;761248;WACC;12.00%;NPV;49279.19;Adopt or Reject?;Adopt

 

Paper#48436 | Written in 18-Jul-2015

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