Firm A has a value of $100 million and Firm B has a value of $70 million. Merging the two would enable cost savings with a present value of $20 million. Firm A purchases Firm B for $75 million. What is the gain from this merger?      $75 million   $30 million   $15 million   $20 million

Q: Following are the probability distribution of returns of portfolio of Stock A and Stock B in equal…

A: Expected Return: It represents the return anticipated by the investor for investing in the issuer's…

Q: The owner of a small business borrows $40,000 on a 2-year contract at 5% interest compounded…

A: In case of amortization, a series of equal periodic payments is made.  Here, the periodic payment…

Q: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

A:

Q: Describe at least 4 key differences between a primary and secondary market.

A: Primary Market: It is the market where the shares of a company or bonds are issued to the public…

Q: Calculate the expected value of X, E(X), for the given probability distribution. x −20 −10 0 10 20…

A: The mean value of the probability distribution is called the expected value. It is calculated by…

Q: £1443 paid at the end of each year for the first 4 years followed by £1441 paid at the end of each…

A: Annual payment for first 4 years = £1443 Annual payment for 15 years (including first 4 years) = p =…

Q: Suppese Compoo Systems pays no dividends but spent $4.87 belion on share repurchases last year. If…

A: Calculate the market capitalisation the total existing share outstanding is considered and the total…

Q: are considering starting a walk-in clinic. Your financial projections for the first year of…

A: Income statement: Revenue   405,041 Less:- Variable expense     Medical supplies 46,208…

Q: Demonstrate how the credit risk management issue(s) in the Washington Mutual case can be resolved…

A: A method for identifying potential hazards, assessing those risks, and putting procedures in place…

Q: NoGrowth Corporation currently pays a dividend of $0.54 per quarter, and it will continue to pay…

A: No growth stock means that the dividend payout amount remains the same forever. In this case, the…

Q: A one-year long forward contract on a dividend-paying stock is entered into, when the stock price is…

A: Here, Time Period is 1 year Stock Price is $40 Risk Free Rate is 10% Dividend Yield is 2%

Q: Company 7 has 10% debt and a cost of debt of 5.5%. The firm's WACC is currently 11.35%. Assume there…

A: WACC refers to weighted average cost of capital. It takes into consideration the percentage of each…

Q: The effective rate of interest compounded quarterly is given by i(m)/m. What is m? Write your answer…

A: Quarterly compounded effective rate of interest implies that rate of interest is compounded every…

Q: A Philippine government bond called "Edsa Revolution Commemorative Bond" promises to pay Php 12,000…

A: Price of the bond is the PV of the par value. We can determine the Price using the formula below:…

Q: Consider the following variance-covariance matrix for Security A, Security B, and the Market:…

A: The portfolios with the best balance of risk and return are shown on the capital market line. It is…

Q: hi table factor wrong the rest right

A: The formula to determine the table factor is as follows: Table Factor = Loan Amount * r1 - (1+r)-n…

Q: a) Using the formula for Put Call Parity, what combination can you make of options positions and the…

A: a. Put-call parity is a fundamental concept in options pricing theory that relates the prices of…

Q: Why should the cost of capital used in capital budgeting be calculated as a weighted average of the…

A: The cost of capital used in capital budgeting should be calculated as a weighted average of the…

Q: Calculate the dividend yield on OPQ stock. Earnings per share (EPS) are $2.75, and the quarterly…

A: Dividend Yield: A financial ratio represents how much income is earned in dividend payouts each…

Q: Assume that McGill Inc. is expected to experience supernormal growth of 25 percent for the next 2…

A: Here,

Q: Calculate the accumulated value at the end of year 22 of the following payments made into a savings…

A: Data given: For year 2 to 7, amount paid into a savings plan at the end of each year=£1963 For year…

Q: Suppose that the yield on a two-year Treasury security is 5.84%, and the yield on a five-year…

A: Under expectation theory, we can determine the future rates using the spot rates as the term…

Q: Assume that you are given the following historical returns for the Market and Security J. Also…

A:

Q: Suppose that Taggart Transcontinental currently has no debt and has an equity cost of capital of…

A: Given the following:  Unlevered Cost of Equity, RU = 10%  Cost of debt, RD = 6%  Debt ratio, D = 20%…

Q: percent. Given this information, determine the best estimate of Company B's weighted average cost of…

A: The Weighted average cost of capital is the average cost of different sources of finance. This…

Q: Explain the concept of immunization within a portfolio management context. How can immunization be…

A: Introduction: Portfolio management refers to the process of managing an investor's investments,…

Q: Assume that you run a regression on the raw returns of the stock of Company J against the raw…

A: Jensen's Alpha is a measure of a stock's risk-adjusted performance, which compares the stock's…

Q: Aspen Company's non-callable bonds currently sell for $985. They have a 15-year maturity, an annual…

A: Yield to maturity refers to the internal rate of return which is earned by the investor who makes…

Q: 13. Texas Inc. is all equity financed and uses common shares to finance its investments and…

A: Price per share refers to an amount that is used for calculating market capitalization. It is…

Q: Taking into consideration all the information given, determine the Net Present Value of the project.

A: Initial cost includes the cost of equipment, installation cost and increase in net working capital.…

Q: Is the technical or fundamental analysis a more effective strategy and why?

A: Technical analysis and fundamental analysis are two popular methods used in finance for investment…

Q: The Development Director needed a venue for a special event. His sister-in-law just became the new…

A: A conflict of interest is a situation where an individual or entity has competing personal,…

Q: wo years ago, Bob purchased a 20-year $1,000 par value zero-coupon bond for $311.80. If today (with…

A: A zero-coupon bond is a type of security that pays no coupons but trades at a price below the par…

Q: Assume the marginal corporate tax rate is 21 percent. The firm has no debt in its capital structure.…

A: Value of the levered firm (with debt) can be determined with the formula below: Value of levered…

Q: Your grandparents would like to establish a trust fund that will pay you and your heirs $135,000 per…

A: Data given: Payments forever=$135,000 First payment=12 years from today Annual Return=26%…

Q: Find the amount of the payment necessary to amortize a loan of $32,000 at 4% compounded quarterly in…

A: Step 1 The term "amortization" refers to a gradual shift in your loan payments. Your monthly…

Q: What is the future value if $6,000.00 is invested for 3 years at 6% compounded semi-annual?

A: Future value is the amount at which current investment will grow over time at a specified rate of…

Q: Question 21: Studying Bonds Yields Good Returns Suppose there are 3 types of bonds in an economy,…

A: A bond is a debt instrument that facilitates the issuer to raise funds and also obligates him to pay…

Q: Argument if dividend policy matters, backed by academic literature. You are required to demonstrate…

A: Dividend policy refers to the decision-making process of a company regarding the distribution of…

Q: Suppose that in three months’ time, the six-month LIBOR turns out to be 2%. What is the annualized…

A: b.   The differential interest earned due to put = (2.15%-2%) *80 = 0.12 Net Profit = 0.12 - 0.07 =…

Q: not sure why, but that is not the correct solution to the question.

A: Present value With future value (FV), periodic interest rate (r) and period (n), the present value…

Q: Find the amount necessary to fund the given withdrawals. Semiannual withdrawals of $700 for 9 years;…

A: An annuity is a financial product or investment that provides a regular income stream for a fixed…

Q: Nona purchased a new car earlier today for $40,000. She financed the entire amount with a seven-year…

A: Here, Cost of Car is $40,000 Annual Interest Rate is 6% Time Period is 7 years

Q: Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its pain-reliever…

A: The cash flow generated by terminating and liquidating a project at the conclusion of its economic…

Q: 1. The better alternative between the first increment is ________________. 2. The better…

A:

Q: Garrett Company's outstanding bonds have a $1,000 par value, and they mature in 25 years. Their…

A: Compound = semiannually face value = fv = $1000 Time = t = 25 * 2 = 50 semiannual Interest rate = r…

Q: Suppose you are a hedge fund. You are trying to form a portfolio out of 2 risky assets and a…

A: The tangency portfolio refers to the portfolio that lies on the efficient frontier and is tangent to…

Q: Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its…

A: The mix of debt and equity that any entity employs to raise funds is its capital structure. An…

Q: Q3 : Starting on the day Anna was born, her mother has invested $40 at the beginning of every month…

A: A series of regular fixed periodic payments made at each interval is annuity. The broad…

Q: You deposit $137987 at 4.6% per year in a saving account. What is the interest at the end of one…

A: Under compound interest, the interest will be calculated on the interest earned and the deposit…