The time value of money is the economic principal that a dollar received today has greater value than a dollar received in the future. In a professional setting, understanding the time value of money is necessary for financial decisions such as business loans, investment analysis, capital budgeting, and many more crucial decisions needed to run a successful company. All students studying finance should understand the […]

Overview: Neuquén, Inc., a publicly traded firm, is considering the acquisition of a private company, Artforever.com, which specializes in restoring damaged artwork and vintage photographs for high net worth individuals. Neuquén’s CEO and chairman of the board, Willie Ray, described the motivation for the acquisition as follows: “We are running out of profitable investment opportunities in our core vintage shoe restoration business, and our shareholders […]

Can someone help me with this question. My calculation doesn’t included in the question. 20) You are paid to teach graduate-level classes for the university and want to determine how much money the university makes from your graduate-level classes. Based on historical data, you estimate that your graduate classes for the next six years will generate an average annual revenue of $99,850. If you discount […]

 This is the foundation of the memo to make sure you and your client are both viewing the situation the . This is the foundation of the memo to make sure you and your client are both viewing the situation the same.) (Discuss how someone would determine if he is truly an entrepreneur.) (Explain how someone should decide how much capital is needed to start […]

Your company will receive USD10,000,000 in 3 months’ time and will keep the funds for a 3-month period to cover a payable 6 months from today. Your analysts think that interest rates may fall from their current level at 6.1% and you want to protect the return you will get until you need the funds. BNP-Paribas, a French bank, offers a FRA with an interest […]

Mr. Glass, the vice-president of finance of 21st Century Windows, Inc., has given you the following information and has asked you to compute the weighted average cost of capital to be used for the analysis of a prospective project. The company currently has outstanding 30,000 10-year bonds with a 5.5 percent coupon rate and another 55,000 7-year bonds with a 3.5 percent coupon rate. The firm […]

The table provided to you by your instructor contains calculations of several key ratios for a fictitious company, Texanna Pharmaceutical Company, a maker of proprietary and prescription drugs. Texanna is a small- to medium-sized publicly held pharmaceutical company. Approximately 80% of its sales has been in prescription drugs; the remaining 20% is in medical supplies over the counter. Auditor’s calculations are used to ascertain potential […]

On January 1 of Year 1, Drum Line Airways issued $3,500,000 of par value bonds for $3,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 7% while the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized using the straight-line method at a rate of $10,000 every six […]

a.    You are 45 years old and want to start saving for your retirement.  Suppose you open an account today with a $10,000 cash deposit and then invest $2,000 at the end of each year for the next 20 years at an annual rate of 10% compounded annually.    How much money will you have in the account at the end of 20 years?   b.    One year after your last […]

.  After careful analysis, Dexter Brothers has determined that its optimal capital structure is composed of the sources and target market value weights shown in the following table The cost of debt is estimated to be 7.2%; the cost of preferred stock is estimated to be 13.5%; the cost of retained earnings is estimated to be 16.0%; and the cost of new common stock is estimated […]