Category: Finance

Select an article in the news, or from another reputable source. Write a brief summary of the article, and then describe how you would analyze that article using some of the tools/concepts from finance that we’ve learned in our class. Your analysis should be brief, but informative. You can keep it to 2 pages, if you’re using double spacing, or 1 page if you’re single spacing.
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Find a new or existing home that you would hypothetically like to buy. (Use any source you like: for example, realtor.com or zillow.com.) In order to make this more useful, you might focus on a house in an area where you think you might live someday. Also, think about a home in a price range that might be feasible for you in a few years. Show your work to receive partial credit for incorrect answers. (See the video, slides, and Excel file from the first 32 minutes of class on 10/28/24 to see two examples of this. You can also look at an Excel file with 3 examplesof these calculations.)
[Note: after ~9:00AM on Mon., Nov. 4, when the answer file is posted, new submissions will earn a maximum of 50% credit.]
Answer these 11 questions, and show some of your work for partial credit:
What is the address of the property?
What do you think the final sales price will be? (it’s up to you; you can agree to the asking price if you’d like!) This is the price to use as a starting point for the questions below.
How much money will you have to bring to closing to pay for CLOSING COSTS (including prepaids)? (Assume that closing costs and prepaids together total to 5% of the sales price)
How much money will you have to bring to closing to pay for the DOWN PAYMENT? (Assume that you make a 6% down payment that your lender requires)
How much will you have to bring to closing in total? (Add #3 and #4 together)
How much will the total mortgage amount be? (In other words, what will the loan amount or principal be? Hint: Note that in this exercise, you cannot borrow for closing costs or, by definition, the down payment. However, ONLY the down payment reduces the amount you are going to borrow.)
How much will your monthly payment be for just the principal and interest (a combined PMT number, or “PI”) for the loan? The loan will be a fixed-rate 30-year mortgage at 7.5% interest that will be compounded and paid monthly.
How much will your monthly property tax payments be, assuming a property tax rate equivalent to 2% of the home value each year? (Hint: use the property value, not the mortgage amount, to begin with, and be sure to convert to monthly amounts. These amounts are paid into your escrow account with your lender.)
How much will your monthly insurance payments be, assuming an insurance cost equivalent to 0.8% of the home value each year? (Hint: use the property value, not the mortgage amount, to begin with, and be sure to convert to monthlyamounts. These amounts are paid into your escrow account with your lender. Also pay attention to your decimal places; in this problem and for many people in Texas, your insurance payments should cost less than your property tax payments! However, that may be changing in the near future…)
Including all four PITI components, what will the full monthly mortgage payment be? (#7 + #8 + #9)
If your lender requires your monthly mortgage payment (PITI) to be no greater than 28% of your monthly gross income, and assuming that your other debt payments are small, what is the lowest annual gross income you could have and still purchase this house (according to your lender)?
(Hint: I can explain the algebra to you if you would like, but start with the answer from #10, multiply it by 12 to get your annual mortgage payment, and then divide that result by 0.28 to get the minimum annual gross income you would need.)

Hi
how are you?
I have an assignment with 3 questions, I need a clear answer with a 0% match. Thank you.

You are to do a 3 page Detailed financial analysis of The Bank of The Bahamas— tear the numbers apart: income statement, balance sheet, capital structure, dividend policy, capital budgeting expenditures, R&D, pension liabilities, impact of union contracts, credit rating, funding requirements, ROE, ROA, stock price, growth, legal problems, etc. What’s good? What’s bad?
Paper is to be written in APA format with subheadings the charts/graphs are not to be included in the paper but in the Power point presentation only (provide speaker notes). Plagiarism and AI is not acceptable and use up to 3 citations.

Please see the attached instructions. Before you begin working on the assignment, be sure to review the investment information for the Fidelity® Large Cap Stock Fund. https://fundresearch.fidelity.com/mutual-funds/summary/315912402

Valuation – Using both discount cash flow and multiple methods, you will estimate the current
value of the stock and its value one year from now. You will need to compare your forecasts
with other analysts and explain why yours deviate from theirs if by more than 5%. Finally, you
need to compare your expected total return to the expected return to a Treasury security of
similar maturity and divide their difference by the volatility of your stock over the past two
years. Similarly, obtain an estimate of the expected return to the S&P 500 over the next year and
divide the difference between it and the expected return to a Treasury security of a similar
maturity with an estimate of the volatility of the S&P 500 over the past two year. Interpret the
implications of these two ratios and their comparison.
Presentations should be no longer than 10 minutes, but questions can be asked during
presentations and so each presentation + questions is limited to 15 minutes.

Lesson 5 Homework Solution
100 Points
Chapter 9
Q1: Describe how NPV is calculated, and describe the information this measure provides about a
sequence of cash flows. What is the NPV criterion decision rule?
Example for Question 2: Calculating IRR: A firm evaluates all of its projects by applying the IRR rule. If
the required return is 14 percent, should the firm accept the following project?
Yea
r Cash Flow
0
1
2
3
−$34,000
15,000
17,000
13,000
Solution:
The IRR is the interest rate that makes the NPV of the project equal to zero. So, the equation that defines the
IRR for this project is:
0 = –$34,000 + $15,000/(1+IRR) + $17,000/(1+IRR)2 + $13,000/(1+IRR)3
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find that:
IRR = 15.80%
Since the IRR is greater than the required return, we would accept the project.
(Please also see Homework 5 Excel Examples for computation on Excel)
Q2: Calculating IRR: A firm evaluates all of its projects by applying the IRR rule. If the required return is
12.5 percent, should the firm accept the following project?
Yea
r Cash Flow
0
1
2
3
−$42,000
12,000
18,000
28,000
(Please follow above example to solve this question)
Example for Question 3: NPV versus IRR: Bruin, Inc., has identified the following two mutually exclusive
projects:
Year
Cash Flow
(A) Cash Flow (B)
0
1
2
3
4
−$37,500
17,300
16,200
13,800
7,600
−$37,500
5,700
12,900
16,300
27,500
a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the
company accept? Is this decision necessarily correct?
b. If the required return is 11 percent, what is the NPV for each of these projects? Which project
will the company choose if it applies the NPV decision rule?
Solution:
a. The IRR is the interest rate that makes the NPV of the project equal to zero. The equation for the IRR of
Project A is:
0 = –$37,500 + $17,300/(1+IRR) + $16,200/(1+IRR)2 + $13,800/(1+IRR)3 + $7,600/(1+IRR)4
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find
that:
IRR = 19.71%
The equation for the IRR of Project B is:
0 = –$37,500 + $5,700/(1+IRR) + $12,900/(1+IRR)2 + $16,300/(1+IRR)3 + $27,500/(1+IRR)4
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find
that:
IRR = 18.76%
Examining the IRRs of the projects, we see that IRRA is greater than IRRB, so the IRR decision
rule implies accepting Project A. This may not be a correct decision however, because the IRR
criterion has a ranking problem for mutually exclusive projects. To see if the IRR decision rule
is correct or not, we need to evaluate the project NPVs.
b. The NPV of Project A is:
NPVA = –$37,500 + $17,300/1.11+ $16,200/1.112 + $13,800/1.113 + $7,600/1.114
NPVA = $6,330.67
And the NPV of Project B is:
NPVB = –$37,500 + $5,700/1.11 + $12,900/1.112 + $16,300/1.113 + $27,500/1.114
NPVB = $8,138.59
The NPVB is greater than the NPVA, so we should accept Project B.
(Please also see Homework 5 Excel Examples for computation on Excel)
Q3: NPV versus IRR: Bruin, Inc., has identified the following two mutually exclusive projects:
Year
Cash Flow
(A) Cash Flow (B)
0
1
2
3
4
−$40,500
18,000
16,000
14,800
10,600
−$40,500
6,000
12,700
16,000
30,500
a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the
company accept? Is this decision necessarily correct?
b. If the required return is 12 percent, what is the NPV for each of these projects? Which project will
the company choose if it applies the NPV decision rule?
(Please follow above example to solve this question)
Chapter 10
Q4: In the context of capital budgeting, what is an opportunity cost?
Example for Question 5: Calculating Project Cash Flow from Assets: In the previous problem, suppose
the project requires an initial investment in net working capital of $250,000, and the fixed asset will
have a market value of $180,000 at the end of the project. What is the project’s Year 0 net cash flow?
Year 1? Year 2? Year 3? What is the new NPV?
Solution: The cash outflow at the beginning of the project will increase because of the spending on NWC.
At the end of the project, the company will recover the NWC, so it will be a cash inflow. The sale of
the equipment will result in a cash inflow, but we also must account for the taxes that will be paid on
this sale. So, the cash flows for each year of the project will be:
Year Cash Flow
0 –$2,570,000 = –$2,320,000 – 250,000
1 1,019,550
2 1,019,550
3 1,411,750 = $1,019,550 + 250,000 + 180,000 + ($0 – 180,000)(.21)
And the NPV of the project is:
NPV = –$2,570,000 + $1,019,550(PVIFA12%,2) + ($1,411,750/1.123)
NPV = $157,947.28
(Please also see Homework 5 Excel Examples for computation on Excel)
Q5: Calculating Project Cash Flow from Assets: In the previous problem, suppose the project requires
an initial investment in net working capital of $200,000, and the fixed asset will have a market value of
$175,000 at the end of the project. What is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3?
What is the new NPV?
Please follow above example to solve this question)

You are writing a discussion post. Please see attachment for what needs to be done. Make sure you follow all instructions and use APA citations.

Lesson 5 Homework Solution
100 Points
Chapter 9
Q1: Describe how NPV is calculated, and describe the information this measure provides about a
sequence of cash flows. What is the NPV criterion decision rule?
Example for Question 2: Calculating IRR: A firm evaluates all of its projects by applying the IRR rule. If
the required return is 14 percent, should the firm accept the following project?
Yea
r Cash Flow
0
1
2
3
−$34,000
15,000
17,000
13,000
Solution:
The IRR is the interest rate that makes the NPV of the project equal to zero. So, the equation that defines the
IRR for this project is:
0 = –$34,000 + $15,000/(1+IRR) + $17,000/(1+IRR)2 + $13,000/(1+IRR)3
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find that:
IRR = 15.80%
Since the IRR is greater than the required return, we would accept the project.
(Please also see Homework 5 Excel Examples for computation on Excel)
Q2: Calculating IRR: A firm evaluates all of its projects by applying the IRR rule. If the required return is
12.5 percent, should the firm accept the following project?
Yea
r Cash Flow
0
1
2
3
−$42,000
12,000
18,000
28,000
(Please follow above example to solve this question)
Example for Question 3: NPV versus IRR: Bruin, Inc., has identified the following two mutually exclusive
projects:
Year
Cash Flow
(A) Cash Flow (B)
0
1
2
3
4
−$37,500
17,300
16,200
13,800
7,600
−$37,500
5,700
12,900
16,300
27,500
a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the
company accept? Is this decision necessarily correct?
b. If the required return is 11 percent, what is the NPV for each of these projects? Which project
will the company choose if it applies the NPV decision rule?
Solution:
a. The IRR is the interest rate that makes the NPV of the project equal to zero. The equation for the IRR of
Project A is:
0 = –$37,500 + $17,300/(1+IRR) + $16,200/(1+IRR)2 + $13,800/(1+IRR)3 + $7,600/(1+IRR)4
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find
that:
IRR = 19.71%
The equation for the IRR of Project B is:
0 = –$37,500 + $5,700/(1+IRR) + $12,900/(1+IRR)2 + $16,300/(1+IRR)3 + $27,500/(1+IRR)4
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find
that:
IRR = 18.76%
Examining the IRRs of the projects, we see that IRRA is greater than IRRB, so the IRR decision
rule implies accepting Project A. This may not be a correct decision however, because the IRR
criterion has a ranking problem for mutually exclusive projects. To see if the IRR decision rule
is correct or not, we need to evaluate the project NPVs.
b. The NPV of Project A is:
NPVA = –$37,500 + $17,300/1.11+ $16,200/1.112 + $13,800/1.113 + $7,600/1.114
NPVA = $6,330.67
And the NPV of Project B is:
NPVB = –$37,500 + $5,700/1.11 + $12,900/1.112 + $16,300/1.113 + $27,500/1.114
NPVB = $8,138.59
The NPVB is greater than the NPVA, so we should accept Project B.
(Please also see Homework 5 Excel Examples for computation on Excel)
Q3: NPV versus IRR: Bruin, Inc., has identified the following two mutually exclusive projects:
Year
Cash Flow
(A) Cash Flow (B)
0
1
2
3
4
−$40,500
18,000
16,000
14,800
10,600
−$40,500
6,000
12,700
16,000
30,500
a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the
company accept? Is this decision necessarily correct?
b. If the required return is 12 percent, what is the NPV for each of these projects? Which project will
the company choose if it applies the NPV decision rule?
(Please follow above example to solve this question)
Chapter 10
Q4: In the context of capital budgeting, what is an opportunity cost?
Example for Question 5: Calculating Project Cash Flow from Assets: In the previous problem, suppose
the project requires an initial investment in net working capital of $250,000, and the fixed asset will
have a market value of $180,000 at the end of the project. What is the project’s Year 0 net cash flow?
Year 1? Year 2? Year 3? What is the new NPV?
Solution: The cash outflow at the beginning of the project will increase because of the spending on NWC.
At the end of the project, the company will recover the NWC, so it will be a cash inflow. The sale of
the equipment will result in a cash inflow, but we also must account for the taxes that will be paid on
this sale. So, the cash flows for each year of the project will be:
Year Cash Flow
0 –$2,570,000 = –$2,320,000 – 250,000
1 1,019,550
2 1,019,550
3 1,411,750 = $1,019,550 + 250,000 + 180,000 + ($0 – 180,000)(.21)
And the NPV of the project is:
NPV = –$2,570,000 + $1,019,550(PVIFA12%,2) + ($1,411,750/1.123)
NPV = $157,947.28
(Please also see Homework 5 Excel Examples for computation on Excel)
Q5: Calculating Project Cash Flow from Assets: In the previous problem, suppose the project requires
an initial investment in net working capital of $200,000, and the fixed asset will have a market value of
$175,000 at the end of the project. What is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3?
What is the new NPV?
Please follow above example to solve this question)

You are writing a discussion post. Please see attachment for what needs to be done. Make sure you follow all instructions and use APA citations.