Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share. Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 9.80 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Why or why not? Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 9.80 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. How much should be paid to the broker excluding transaction cost

Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share. Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 9.80 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Why or why not? Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 9.80 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. How much should be paid to the broker excluding transaction cost

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 5P

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Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share. * Assuming on September 1, 2021, Mr. X purchased only 100,000 shares at 10.00 per share and sold the same stocks to Mr. Y at 9.80 per share. What is the net income/loss of Mr. X in selling the stocks to Mr. Y? (Transaction cost in buying and selling stocks is the same in the given data above).
Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 10.90 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y after deducting transaction costs and interest payment to the broker? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 10.10 per share with a…
Assumptions: (a) Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 10.10 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Why or why not?
Assumptions: (a) Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 10.90 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y after deducting transaction costs and interest payment to the broker? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Why or why not?
1. Suppose Einar Aas (who is that?) buys 200 shares of Nordic Power Corp. at $50 cach. The clearinghouse NASDUCK sets a margin requirement of 25% and charges an interest rate of r = 2% on the loan for purchasing the shares. K (a) How much cash does Einar need to invest? (b) Calculate the margin call of NASDUCK if the price falls to $46. (c) What is the return for Einar on the transaction after the price decline? (d) How is the return on equity influenced by a change in the interest rate r? Does your answer depend on the size of the margin requirement? [Hint: For this sensitivity analysis use a derivative with respect to r and, then, m.]
Suppose that XTel currently is selling at $60 per share. You buy 1,000 shares using $48,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. Required:a. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to (i) $66; (ii) $60; (ii) $54? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) b. If the maintenance margin is 20%, how low can XTel’s price fall before you get a margin call? (Round your answer to 2 decimal places.) c. How would your answer to requirement b would change if you had financed the initial purchase with only $30,000 of your own money? (Round your answer to 2 decimal places.) d. What is the rate of return on your margined position (assuming again that you invest $48,000 of your own money) if XTel is selling…
You own all the equity of R.G.C. I Ltd. The company has no debt. The company’s annual cash flow is GH¢900,000 before interest and taxes. The company tax rate is 35%. You have the option to exchange 1/2 of your equity position for 5% bonds with a face value of GH¢2,000,000. What is the total cash flow to the investors? What is the value of the unlevered firm? What is the value of the levered firm? Assuming a bankruptcy cost of GH¢8000, what is the value of the levered firm after considering bankruptcy cost?
Suppose that XTel currently is selling at $50 per share. You buy 800 shares using $30,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. Required:a. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to (i) $56; (ii) $50; (ii) $44? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) b. If the maintenance margin is 25%, how low can XTel’s price fall before you get a margin call? (Round your answer to 2 decimal places.) c. How would your answer to requirement b would change if you had financed the initial purchase with only $20,000 of your own money? (Round your answer to 2 decimal places.)
Suppose that Xtel currently is selling at $20 per share. You buy 1,000 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%.a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: (i) $22; (ii) $20; (iii) $18? What is the relationship between your percentage return and the percentage change in the price of Xtel?b. If the maintenance margin is 25%, how low can Xtel’s price fall before you get a margin call?c. How would your answer to (b) change if you had financed the initial purchase with only $10,000 of your own money?d. What is the rate of return on your margined position (assuming again that you invest $15,000 of your own money) if Xtel is selling after 1 year at: (i) $22; (ii) $20; (iii) $18? What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel pays no dividends.e.…
Suppose that XTel currently is selling at $40 per share. You buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. Required:a. What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to (i) $44; (ii) $40; (iii) $36? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) b. If the maintenance margin is 25%, how low can XTel’s price fall before you get a margin call? (Round your answer to 2 decimal places.) c. How would your answer to requirement b change if you had financed the initial purchase with only $10,000 of your own money? (Round your answer to 2 decimal places.) d. What is the rate of return on your margined position (assuming again that you invest $15,000 of your own money) if XTel is selling after one year…
Suppose that Xtel currently is selling at $46 per share. You buy 250 shares using $8,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 6%. Required: a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: (i) $48.76; (ii) $46; (iii) $43.24? What is the relationship between your percentage return and the percentage change in the price of Xtel? b. If the maintenance margin is 25%, how low can Xtel's price fall before you get a margin call? c. How would your answer to (b) change if you had financed the initial purchase with only $5,750 of your own money? d. What is the rate of return on your margined position (assuming again that you invest $8,000 of your own money) if Xtel is selling after 1 year at: (i) $48.76; (ii) $46; (iii) $43.24? What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel…
You own all the equity of R.G.C. I Ltd. The company has no debt. The company's annual cash flow is GH¢900,000 before interest and taxes. The company tax rate is 30%. You have the option to exchange 1/2 of your equity position for 5% bonds with a face value of GH¢2,000,000. i. What is the value of the unlevered firm? ii. What is the value of the levered firm? iii. Assuming a bankruptey cost of GH¢8000, what is the value of the levered firm after considering bankruptcy cost?