The balance sheet of Horizon Ventures contains the following list of assets: Cash: $6,000,000 Land: $5,500,000 Buildings: $3,200,000 Other Assets: $1,000,000 Horizon Ventures' only debt is $4,000,000 to a bank. How much will stockholders' equity change when Horizon borrows $500,000 to purchase equipment?
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- Suppose the Schoof Company has this book value balance sheet: Current assets Fixed assets Total assets Short-term debt Long-term debt Common equity Total capital $ $30,000,000 $ 70,000,000 $100,000,000 The notes payable are to banks, and the interest rate on this debt is 7%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 8%, and a 15-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Current liabilities Notes payable Long-term debt Common stock (1…Below, we see the balance sheet for Schlau Bank. Assets Reserves: $ 100 Long-term investments: $ 100 Total Assets: ? Liabilities Demand deposits: $ 150 Borrowing from other banks: $40 Total liabilities: ? Stockholders' equity: ? a. Calculate the stockholders' equity for Schlau Bank. b. After a mortgage crisis, 20% of the Schlau Bank's long-term investments default, losing completely their value. Is Schlau Bank able to withstand this test without getting insolvent? Explain your answer. c. In case of insolvency, explain (briefly) how the Fed minimizes the risk of possible losses by depositors and preverits a bank run from happening in (healthy) banks in the financial system. TableA DI has the following balance sheet (in millions). Assets: Cash=9$ ; Loans=95 ; Securities= 26; total assets=130 Liabilities and equity: deposits= 75; purchased funds= 40; equity=15 ; total liabilites and equity= 130 The DI’s securities portfolio includes $16 million in T-bills and $10 million in GNMA securities. The DI has a $20 million line of credit to borrow in the repo market and $5 million in excess cash reserves (above reserve requirements) with the Fed. The DI currently has borrowed $22 million in Fed funds and $18 million from the Fed discount window to meet seasonal demands. 1) What is the DI’s total available (sources of) liquidity? 2) What is the DI’s current total uses of liquidity? 3) What is the net liquidity of the DI? 4) Calculate the financing gap. 5) What is the financing requirement? 6) The DI expects a net deposit drain of $20 million. Show the DI's balance sheet if the following conditions occur: a. The DI purchases liabilities to offset this expected drain. b.…
- 9. AllStarBank has the following balance sheet (in millions): Assets $ 30 90 50 Total assets $170 Cash Loans Securities Liabilities and Equity $110 40 Equity 20 Total liabilities and equity $170 Deposits Borrowed funds AllStarBank's largest customer decides to exercise a $15 million loan co ment. How will the new balance sheet appear if AllStar uses the fol liquidity risk strategies? a. Stored liquidity management. b. Purchased liquidity management. miThe liabilities and owners’ equity for Campbell Industries is found here. What percentage of the firm’s assets does the firm now finance using debt (liabilities)? If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm’s new debt ratio?Suppose the Schoof Company has this book value balance sheet: $30,000,000 Current assets Fixed assets Total assets Short-term debt Long-term debt Common equity Total capital $ 70,000,000 $ $100,000,000 Current liabilities Notes payable The notes payable are to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon nterest rate of 7%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this s the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Long-term debt Common stock (1…
- Consider a bank with the following balance sheet (M means million): (Image Attached) Calculate the equity (total asset – total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) and calculate the duration and convexity of the both asset and liability sides. Thank You in AdvanceUse the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $100 Deposits $1,000 Loans $500 Debt $50 Securities $400 Capital (owners' equity) -$50 Suppose the owners of the bank contribute an additional $125 from their own funds and use it to buy securities in the name of the bank. This would increase the securities account and the account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply. The total value of liabilities The size of the monetary base The return on each assetf. ABC Bank has the following balance sheet (in millions) and has no off-balance-sheet exposure. Assets Liabilities and Equity Cash $20 Deposits $960 Treasury bills 40 Subordinated debt 25 Residential mortgages Common stock 45 Business loans 430 Retained earnings 40 Total assets $1,090 Total liabilities and equity $1.090 Total Risk Weighted Assets are $730. i) What is the Tier 1 risk-based capital ratio? ii) What is the Capital Adequacy Ratio (CAR)? iii) What is the Tier 1 leverage ratio?
- The following table contains balance sheet information for Dual bank. All assets and liabilities are currently priced at par. Assets Commercial bills T-notes T-bonds Loans Amount (Smillion) Duration 900 400 (?) 700 Liabilities 0.5 Deposits 0.9 Federal Funds 2 0.7 Amount (Smillion) Duration 500 500 2 If the financial institution has instead invested $400 million on the T- bonds, what would be the impact on the firms' market value of equity if the entire yield curve shifts upward by 30 basis points [i.e., DR/(1+R) = 0.0030]?12. The Bank of Greater Pittsburg has the balance sheet listed on the right if it has to write off $26 million in loans is it solvent or insolvent (please explain your answer). Reserves Loans Securities Assets $200M Depostis $500M Debt $200M Capital Liabilities $750M $125M $25MYou observe the following details about a bank (amounts in million) net interest income: $1,250 net noninterest income: $200 operating expenses: $900 loan loss provisions: $170 gains from trading: $75 Taxes: $150 Total assets: $17,000 Equity: $2,200 What is the bank's ROE? Write your answer expressed as a %, and round to two decimals. For instance, if you think the ROE is 0.0856237, then you write 8.56 below