of multiple cash flows: Ajax Corp. is expecting the following

of multiple cash flows: Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)

$429,560

$414,322

$480,906

$477,235

Question 4 Chip’s Home Brew Whiskey management forecasts

Question 4

Chip’s Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 84 percent as high if the price is raised 18 percent. Chip’s variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm’s FCF for the year? (Round answers to nearest whole dollar, e.g. 5,275.)
At $20 per bottle the Chip’s FCF is $ and at the new price Chip’s FCF is $ .

TCO 1) Which of the following are capital structure concerns?

TCO 1) Which of the following are capital structure concerns?

I. how to obtain short-term financing
II. the company’s financing mix
III. the cost of funds
IV. how and where to raise money (Points : 4)
I and II
I, II and III
II, III and IV
I, III and IV
All of the above

Question 2. 2. (TCO 1) Market values reflect which of the following: (Points : 4)
The amount someone is willing to pay today for an asset.
The value of the asset based on generally-accepted accounting principles.
The asset’s historical cost.
A and B only
None of the above

Question 3. 3. (TCO 1) Use the following tax table to answer this question:

Taxable Income

Tax Rate

$0- $50,000 15%
$50,001- 75,000 25
$75,001- 100,000 34
$100,001- 335,000 39
$335,001- 10,000,000 34

Riddell, Inc. earned $144,320 in taxable income for the year. How much tax does the company owe on this income? (Points : 4)
$39,535
$49,069
$51,285
$56,285
$78,535

Question 4. 4. (TCO 3) Regional Bank offers you an APR of nine percent compounded quarterly, and Local Bank offers you an EAR of 9.15 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points : 4)
Regional Bank, APR
Local Bank, EAR
Regional Bank, EAR
Local Bank, APR

Question 5. 5. (TCO 3) You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4)
a decrease in the interest rate
increasing the initial amount of your deposit
decreasing the frequency of the interest payments
extending the length of the investment period

Question 6. 6. (TCO 3) You want to have $15,000 for a down payment on a house five years from now. If you can earn 13 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal? (Points : 4)
$7,858.11
$8,141.40
$9,803.58
$12,464.28
$14,213.25

Question 7. 7. (TCO 3) Paper Pro needed a new store. The company spent $65,000 to refurbish an old shop and create the current facility. The firm borrowed 75 percent of the refurbishment cost at eight percent interest for 11 years. What is the amount of each monthly payment? (Points : 4)
$91.05
$284.13
$556.50
$682.87
$731.60

Question 8. 8. (TCO 3) John borrowed $5,500 four years ago at an annual interest rate of 10 percent. The loan term is seven years. Since he borrowed the money, Sonny has been making annual payments of $550 to the bank. Which type of loan does John have? (Points : 4)
interest-only
pure discount
compounded
amortized
complex

Question 9. 9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 13 percent? Assume annual payments. (Points : 4)
$1078
$1085
$927
$1000

Question 10. 10. (TCO 6) The market where one shareholder sells shares to another shareholder is called the _____ market. (Points : 4)
primary
main
secondary
principal
dealer

Question 11. 11. (TCO 7) Which one of the following statements concerning financial leverage is correct? (Points : 4)
The benefits of leverage are unaffected by the amount of a firm’s earnings.
The use of leverage will always increase a firm’s earnings per share.
The shareholders of a firm are exposed to greater risk anytime a firm uses financial leverage.
Earnings per share are unaffected by changes in a firm’s debt-equity ratio.
Financial leverage is beneficial to a firm only when the firm has minimal earnings.

Question 12. 12. (TCO 3) A 10-year bond pays 11 percent interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity? (Points : 4)
9.33%
7.94%
12.66%
8.10%

Question 13. 13. (TCO 8) Which of the following is true regarding bonds? (Points : 4)
Bonds do not carry default risk.
Bonds are not sensitive to changes in the interest rates.
Moody’s and Standard and Poor’s provide information regarding a bond’s interest rate risk.
Municipal bonds are not free of default risk.
None of the above is true

Question 14. 14. (TCO 8) Which one of the following bonds is the most sensitive to interest rate movements? (Points : 4)
zero-coupon, five year
seven percent annual coupon, five year
zero-coupon, 10 year
five percent semi-annual coupon, 10 year
five percent annual coupon, 10 year

Question 15. 15. (TCO 6) A call provision in a bond agreement grants the issuer the right to: (Points : 4)
repurchase the bonds prior to maturity at a pre-specified price.
replace the bonds with equity securities.
repurchase the bonds after maturity at a pre-specified price.
change the coupon rate, provided the bondholders are notified in advance.
buy back the bonds on the open market prior to maturity.

1.”The Prime Directive in economics is the idea that the market

1.”The Prime Directive in economics is the idea that the market efficiently allocates resources and goods and services among all possible uses, and also creates incentives that increase the standard of living for all people in an economy.” Examine the validity of this statement and discuss some of the reasons that might make market outcomes inefficient or fail at times.

2.Explain why government is often seen as an alternative institution for finding efficient economic outcomes when markets fail and private solutions cannot be promoted. Can a government fail too? How and when? Use an example if you can.

suppose the marignal benfitis and cost per gallon of gasoline in

suppose the marignal benfitis and cost per gallon of gasoline in the united states are modeled as follows to illustrate the negative externaility of gasonline combustions: MSB=12.80 – .42Q MPB=12.80 – .4Q MSC=MPC=1.25 + .02Q Where Q is millions of gallons

State the equation that represents the market exertanilty. Give the economic interperation of this equation, using its specific numerical values.

Find the efficient equallibirum Pe and Oe for the market.

Find the dollar value of a per unit gasonline tax that would achieve the efficient solution and calcualte the tax revenues generated to the government as a result

Go to the IMF World Economic Outlook database, located at

Go to the IMF World Economic Outlook database, located at and calculate the current account balances (in USD) for the latest year available for the regions of the world listed below:

1. China

2. Japan

3. Emerging Asia (excluding China)

4. Middle East

5. Other Advanced (excluding United States and Japan)

6. Other Emerging and Developing

7. United States

Write a 1,000-word report on the following:

1. How rapidly have these imbalances grown since the 2007?

2. Why do financially and technologically advanced countries, such as the United States, have current account deficits? Why do emerging Asian countries, such as China, have current account surpluses?

3. Based on your own Internet research, what adjustments are required for the United States to rebalance its current account? What risks are inherent in such adjustments?

4. Based on the reading assigned for this module and your own Internet research, what adjustments are required for China to rebalance its current account? What risks are inherent in such adjustments?

State what will happen to the supply and/or demand curves for

State what will happen to the supply and/or demand curves for money and what will happen to the equilibrium interest rate. I do not need the actual supply and demand graph. I only need a narrative of the graph.
a. The fed buys bonds in the open market during a recession.
b. During a period of rapid inflation, the Fed increases the reserve requirement.
c. The Fed acts to hold interest rates constant during a period of high inflation.
d. During a period of no growth in GDP and zero inflation, the Fed lowers the discount rate.
e. During a period of a rapid real growth of GDP, the Fed acts to increase the reserve requirement.

Assume you are the manager of Abba Cable Company, which provides

Assume you are the manager of Abba Cable Company, which provides commercial communication services to the town of Canyon Lake, Texas. Because of licensing restrictions in the market, only your company and two others (Babba and Cabba) are allowed to operate in this market. The three companies decide to form a cartel and divide the market shares such that each company will provide services that will maximize its profits. The licensing restrictions allow each company to sell as much as it wants at a price ceiling of $2,200. You have the following output and MC data for each company:

Output MC ($)
Q Abba Babba Cabba
1,000 2,500 2,600 2,700
2,000 2,400 2,300 2,500
3,000 2,200 2,100 2,300
4,000 2,000 2,000 2,100
5,000 2,100 2,200 2,200
6,000 2,200 2,500 2,300

Calculate the industry output and market share at the current price of $2,200, assuming the prices are stable and unlikely to change.

Assume the current prices in the market are challenged by the regulatory agency, resulting in a new maximum price of $2,000. How will this change the industry output and market share for each company?

Is there any incentive for any company to cheat under either of the conditions in tasks a and b? Why or why not?
Create your report in a 2- to 3-page Microsoft Word document