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Strayer university fin 534 final paper 2
- 1. Strayer-University FIN 534 Final Exam Part 2 Get help for Strayer-University FIN 534. We provide assignment, homework, discussions and case studies help for all subject Strayer-University for Session 2015-2016 Week 11 Final Exam Part 2 • Question1 A U.S.-basedimporter,ZarbInc.,makesapurchase of crystal glassware froma firmin Switzerlandfor39,960 Swissfrancs,or$24,000, at the spot rate of 1.665 francsper dollar.The termsof the purchase are net90 days,and the U.S. firmwantsto cover thistrade payable withaforwardmarket hedge toeliminate itsexchange rate risk.Supposethe firmcompletesaforwardhedge atthe 90-day forwardrate of 1.682 francs.If the spotrate in 90 daysis actually1.638 francs,how much will the U.S. firmhave savedor lostinU.S. dollarsbyhedgingitsexchange rate exposure? • Question2 Suppose aforeigninvestorwhoholdstax-exemptEurobondspaying9% isconsideringinvestinginan equivalent-riskdomesticbondina countrywitha 28% withholdingtax oninterestpaidtoforeigners.If 9% after-tax isthe investor'srequiredreturn,whatbefore-taxrate wouldthe domesticbondneedto pay to provide the requiredafter-taxreturn? • Question3
- 2. Suppose the exchange rate betweenU.S.dollarsandSwissfrancsisSF1.41 = $1.00, and the exchange rate betweenthe U.S.dollarandthe eurois$1.00 = 1.64 euros.Whatis the cross-rate of Swissfrancsto euros? • Question4 Suppose YatesInc.,a U.S. exporter,soldaconsignmentof antique Americanmuscle-carstoa Japanese customerata price of 143.5 millionyen,whenthe exchange rate was140 yenperdollar.In orderto close the sale,Yatesagreedto make the bill payable inyen,thusagreeingtotake some exchange rate riskforthe transaction.The termswere net6 months.If the yenfell againstthe dollar such that one dollarwouldbuy154.4 yenwhenthe invoice waspaid,whatdollaramountwouldYates actuallyreceive afteritexchangedyenforU.S.dollars? • Question5 If the spotrate of the Israeli shekel is5.51 shekelsperdollarandthe 180-day forwardrate is 5.97 shekelsperdollar,thenthe forwardrate forthe Israeli shekelissellingata____ to the spot rate. • Question6 If 1.64 Canadiandollars canpurchase one U.S. dollar,how manyU.S. dollarscanyou purchase forone Canadiandollar? • Question7
- 3. Suppose acarton of hockeypuckssell inCanadafor 105 Canadiandollars,and1 Canadiandollar equals0.71 U.S.dollars.If purchasingpower parity(PPP) holds,whatisthe price of hockeypucksinthe UnitedStates? • Question8 If the inflationrate inthe UnitedStatesisgreaterthanthe inflationrate inBritain,otherthingsheld constant,the Britishpoundwill • Question9 Whichof the followingstatementsiscorrect? • Question10 Considertwoverydifferentfirms,Mand N. FirmM isa mature firmina mature industry.Its annual netincome andnetcash flowsare both consistentlyhighandstable.However,M'sgrowth prospectsare quite limited,soitscapital budgetissmall relativetoitsnetincome.FirmN isa relatively newfirmina newandgrowingindustry.Itsmarketsandproductshave not stabilized,soitsannual operatingincome fluctuatesconsiderably.However,N hassubstantial growthopportunities,andits capital budgetisexpectedtobe large relative toitsnetincome forthe foreseeablefuture.Whichof the followingstatementsiscorrect? • Question11
- 4. RohterGaleanoInc.is consideringhow tosetitsdividendpolicy.Ithasa capital budgetof $3,000,000. The companywants to maintainatarget capital structure thatis 15% debtand85% equity. The company forecaststhatitsnet income thisyearwill be $3,500,000. If the companyfollowsaresidual dividendpolicy,whatwillbe itstotal dividendpayment? • Question12 Whichof the followingstatementsiscorrect? • Question13 The capital budgetof Creative VenturesInc.is$1,000,000. The companywantsto maintaina target capital structure thatis 30% debtand 70% equity.The companyforecaststhatitsnetincome this yearwill be $800,000. If the companyfollowsaresidual dividendpolicy,whatwill be itstotal dividend payment? • Question14 Whichof the followingstatementsiscorrect? • Question15 Whichof the followingstatementsisCORRECT? • Question16 Whichof the followingisNOTnormallyregardedasbeingagoodreasonto establishanESOP?
- 5. • Question17 Whichof the followingisNOTnormallyregardedasbeingabarrierto hostile takeovers? • Question18 Whichof the followingstatementsbestdescribesthe optimal capital structure?The optimal capital structure isthe mix of debt,equity,andpreferredstockthatmaximizesthe company's____. • Question19 Barette Consultingcurrentlyhasnodebtinitscapital structure,has$500 millionof total assets,andits basicearningpoweris15%. The CFOis contemplatingarecapitalizationwhere itwill issuedebtata cost of 10% and use the proceedstobuy back sharesof the company'scommon stock,payingbookvalue.If the companyproceedswiththe recapitalization,itsoperatingincome,total assets,andtax rate will remainunchanged.Whichof the followingismostlikelytooccuras a resultof the recapitalization? • Question20 BluelinePublishersisconsideringarecapitalizationplan.Itiscurrently100% equityfinancedbut underthe planit wouldissue long-termdebtwithayieldof 9% anduse the proceedstorepurchase commonstock.The recapitalizationwouldnotchange the company'stotal assets,norwoulditaffectthe firm'sbasicearningpower,whichiscurrently15%.The CFObelievesthatthisrecapitalizationwould reduce the WACCand increase stockprice.Whichof the followingwouldalsobe likelytooccurif the companygoesaheadwiththe recapitalizationplan?
- 6. • Question21 Whichof the followingstatementsisCORRECT? • Question22 Whichof the followingeventsislikelytoencourage acompanyto raise itstargetdebtratio, otherthingsheldconstant? • Question23 Two operationallysimilarcompanies,HDandLD, have the same total assets,operatingincome (EBIT), tax rate,and businessrisk.CompanyHD,however,hasamuch higherdebtratiothanLD. AlsoHD's basic earningpower(BEP) exceedsitscostof debt(rd).Whichof the followingstatementsisCORRECT? • Question24 Whichof the followingstatementsisCORRECT? • Question 25 Firmsgenerallychoose tofinance temporarycurrentoperatingassetswithshort-termdebtbecause • Question26
- 7. A lockbox planismostbeneficial tofirmsthat • Question27 Whichof the followingactionsshouldReeceWindowstake if itwantsto reduce itscash conversioncycle? • Question28 Otherthingsheldconstant,whichof the followingwouldtendtoreduce the cashconversioncycle? • Question29 Whichof the followingwill cause anincrease innetworkingcapital,otherthingsheldconstant? • Question30 A lockbox planis http://www.justquestionanswer.com/viewanswer_detail/Week-11-Final-Exam-Part-2-Question-1-A-U-S- based-45877