Q1
Camel Industries is expected to pay an annual dividend of RM1.30 a share next month.
The market price of the stock is RM24.80 and the growth rate is 3 percent. What is the
firm’s cost of equity?
Q2
An investment promises the following cash flow stream: RM1,000 at Time 0; RM2,000 at the
end of Year 1 (or at T=1); RM3,000 at the end of Year 2; and RM5,000 at the end of Year 3.
At a discount rate of 5%, what is the present value of the cash flow stream?
Q3
Recently you invested in a 20-year asset that pays you RM100 at t = 1, RM500 at t = 2,
RM750 at t = 3, and some fixed cash flow, X, at the end of each of the remaining 17
years. You purchased the asset for RM5,544.87. Alternative investments of equal risk
have a required return of 9%. What is the annual cash flow received at the end of each
of the final 17 years, that is, what is X?
Q4
You deposit RM1,000 in a bank account that pays 6% nominal annual interest, compounded
monthly. How much will you have in your account after 3 years?
Day: April 26, 2018
Hello,
I’m looking to flesh out some more inputs regarding the project I’m writing on (Impact of Uninsured and Unisured Population). I have Sharp Healthcare System in San Diego California as my case study. Im on Part 3 of my project. Can someone help me with the following criterias?
1.) Evaluate the overall risk to the organization if the rates of uninsured and underinsured continue to rise at 2-3% over the next five years. How is the risks being measured? (I guess, any not for profit hospital may be used as guideline).
2.) Give at least five key initiatives for building the organizational strength to meet these risks. The initiatives should detail the issue, the degree of risk, the internal and external environmental strengths and weaknesses, and your assessment of the ability of the organization to effectively respond to these risks. Factors that should be considered include the capacity of the organization to respond to change, the willingness of the leadership/ management to commit to organizational enhancement, and the barriers to organizational effectiveness.
A client asks his stockbroker to invest $100,000 for maximum annual income, subject to the three conditions:
1. Spread the investment over no more than three different stocks.
2. Put no more than 40 percent of the money into any one stock
3. Put a minimum of $10,000 into an oil stock.
The broker has identified three stocks for investment. Their estimated annual returns per share and price per share are shown in the following table:
Stock. Price per share. Estimate Annual Return per Share
Oil. $120. $11
Auto. $52. $4
Pharmaceutical. $18 $2
The client wishes to use LP to determine the optimal investment portfolio (number of shares to buy for each stock) so as to maximize the total estimated return.
Answer the following questions:
2.1) Write down the decision variables.
2.2) Write down the optimization statement for the objective function.
2.3) Write down the constraints.
2.4) With the aid of Excel Solver, what is the optimal portfolio? (Please hand in a printed copy of the report)
2.5) By Excel Solver, what is the sensitivity report?
Q1
Camel Industries is expected to pay an annual dividend of RM1.30 a share next month.
The market price of the stock is RM24.80 and the growth rate is 3 percent. What is the
firm’s cost of equity?
Q2
An investment promises the following cash flow stream: RM1,000 at Time 0; RM2,000 at the
end of Year 1 (or at T=1); RM3,000 at the end of Year 2; and RM5,000 at the end of Year 3.
At a discount rate of 5%, what is the present value of the cash flow stream?
Q3
Recently you invested in a 20-year asset that pays you RM100 at t = 1, RM500 at t = 2,
RM750 at t = 3, and some fixed cash flow, X, at the end of each of the remaining 17
years. You purchased the asset for RM5,544.87. Alternative investments of equal risk
have a required return of 9%. What is the annual cash flow received at the end of each
of the final 17 years, that is, what is X?
Q4
You deposit RM1,000 in a bank account that pays 6% nominal annual interest, compounded
monthly. How much will you have in your account after 3 years?
I’m having a hard time setting up an Excel solver model for the problem below:
Owens-Wheat uses two production lines to produce three types of fiberglass mats. The demand requirements for each type of mat (in tons) for the next four months are as follows:
Month Mat Type
1 2 3
1 200 300 400
2 300 100 300
3 200 400 200
4 300 200 100
If it were dedicated to simply producing a mat of a single type, a single line 1 machine could produce either 20 tons of a type 1 mat or 30 tons of a type 2 mat. Similarly, a single line 2 machine could produce either 25 tons of type 2 mat or 28 tons of type 3 mat. Note that mat type 1 cannot be produced on line2, while mat type 3 cannot be produced on line 1. If costs $ 5,000 per month to operate a single machine on line 1, and $ 5,500 to operate a single machine on line 2. A cost of $ 2,000 is incurred each time a new machine is purchased for either line, while a cost of $ 1,000 is incurred when a machine is retired from service. At the end of each month, Owens would like a minimum inventory of 50 tons of each mat type and the cost of holding one ton on inventory for a month of any mat type is $ 5. At the beginning of month 1, the company has 5 line 1 machines, and 8 line 2 machines. Determine a minimum cost production schedule for each mat type of each production line.
Q1
Camel Industries is expected to pay an annual dividend of RM1.30 a share next month.
The market price of the stock is RM24.80 and the growth rate is 3 percent. What is the
firm’s cost of equity?
Q2
An investment promises the following cash flow stream: RM1,000 at Time 0; RM2,000 at the
end of Year 1 (or at T=1); RM3,000 at the end of Year 2; and RM5,000 at the end of Year 3.
At a discount rate of 5%, what is the present value of the cash flow stream?
Q3
Recently you invested in a 20-year asset that pays you RM100 at t = 1, RM500 at t = 2,
RM750 at t = 3, and some fixed cash flow, X, at the end of each of the remaining 17
years. You purchased the asset for RM5,544.87. Alternative investments of equal risk
have a required return of 9%. What is the annual cash flow received at the end of each
of the final 17 years, that is, what is X?
Q4
You deposit RM1,000 in a bank account that pays 6% nominal annual interest, compounded
monthly. How much will you have in your account after 3 years?
Q4
The company is in the 40 percent tax bracket. Its cost of goods sold always represents 60 percent of its sales. That is, if the company’s sales were to increase to RM1.5 million, its cost of goods sold would increase to RM900,000.
Q5
The company’s CEO is unhappy with the forecast and wants the firm to achieve a net income equal to RM240,000. Assume that Hebat’s interest expense remains constant. At what level of sales the company has to achieve it wants to obtain this net income.
Q6
Nilai Services Bhd. reported RM2.3 million of retained earnings on its balance sheet last year. This year, the company has incurred a loss of RM500,000 (negative RM500,000). Despite the loss, the company still paid RM1.00 dividend per share this year. The company’s earnings per share for this year were -RM2.50 (negative RM2.50). What was the level of retained earnings on the company’s balance sheet this year?
Please work the following problem on an EXCEL spreadsheet. An elegant solution is not required, Just provide all the steps so I will understand the concept and be able to replicate it for similar problems. Also, provide a written description leading me through the solution.
PROBLEM:
A Company must make decisions on weekly production. The Company makes two products; Patio bars and barstools. Each bar contributes $20 and each barstool contributes $8 toward profit. The Company can sell all the products it makes but market demand requires that they must make at least two barstools for each bar that they produce.
There are constraints on production. The Company will have available only 24,000 units of raw materials, 12,000 labor hours, and $20,000 for supplies. Each bar requires 6 units of raw materials, 2 hours of labor, and $3 in supplies. Each barstool requires 3 units of raw material, 4 hours of labor, $3 in supplies. According to the union contract, the Company must produce 4,000 items each week.
The Company plans to maximize profit contribution for the weekly production. How many bars and how many barstools should the Company produce each week?
Q7. The zero coupon bonds of Markus Inc. have a market price of RM394.47, a face value of RM1,000, and a yield to maturity of 6.87%. When will this bond mature? (Answer in number of years.)
Q8. Windmill Corp has a 15-year bond issue outstanding that pays a 9% coupon. The bond is currently priced at RM894.60 and has a par value of RM1,000. Interest is paid semiannually. What is the yield to maturity?
Q9. Creative Inc. has a current beta of 1.6. The market risk premium is 7 percent and the risk-free rate of return is 3 percent. By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.9?
Q10. The Bystanders Company has 100,000 bonds outstanding that are selling at par value (RM1,000). Bonds with similar characteristics are yielding 7.5 percent. The company also has 1 million preferred stocks and 5 million shares of common stock outstanding. The preferred stock has par value of RM100 and fixed dividend of 10.5 percent and is selling at RM56 per share. The common stock has a beta of 1.2 and sells for RM38 a share. The Treasury bill is yielding 3 percent and the return on the market is 12 percent. The corporate tax rate is 34 percent. What is Bystander’s weighted average cost of capital?
Q7. The zero coupon bonds of Markus Inc. have a market price of RM394.47, a face value of RM1,000, and a yield to maturity of 6.87%. When will this bond mature? (Answer in number of years.)
Q8. Windmill Corp has a 15-year bond issue outstanding that pays a 9% coupon. The bond is currently priced at RM894.60 and has a par value of RM1,000. Interest is paid semiannually. What is the yield to maturity?
Q9. Creative Inc. has a current beta of 1.6. The market risk premium is 7 percent and the risk-free rate of return is 3 percent. By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.9?
Q10. The Bystanders Company has 100,000 bonds outstanding that are selling at par value (RM1,000). Bonds with similar characteristics are yielding 7.5 percent. The company also has 1 million preferred stocks and 5 million shares of common stock outstanding. The preferred stock has par value of RM100 and fixed dividend of 10.5 percent and is selling at RM56 per share. The common stock has a beta of 1.2 and sells for RM38 a share. The Treasury bill is yielding 3 percent and the return on the market is 12 percent. The corporate tax rate is 34 percent. What is Bystander’s weighted average cost of capital?
