a.
To show: The data in tabular form in new worksheet.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
a.
Explanation of Solution
The date have been shown in ‘column A’ while price of stock has been represented in ‘column’ B. The tabular presentation of the given data has been shown below:
b.
To compute:
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
b.
Explanation of Solution
Rate of return for each year has been computed using the following formula:
Thus, the calculated rate of return has been shown below:
c.
To compute: Cumulative total return since 2011.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
c.
Explanation of Solution
Cumulative rate of return can be computed by adding each year’s rate of return. It can be computed on excel using following formula:
Thus, the calculated cumulative rate of return has been shown below:
d.
To compute: Rate of return for holding period and compound average rate of return.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
d.
Explanation of Solution
The rate of return for the holding period can be computed as:
The calculated answer has been shown below:
Now, compound annual average of return can be computed using:
e.
To prepare: Line chart and scattered chart. Also, state the difference between the two charts and suggest the most suitable.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
e.
Explanation of Solution
The line chart has been prepared for FAST stock prices:
The scattered chart has been prepared for FAST stock prices:
Following are the differences between line and scatter chart:
Line chart: The values ??are plotted only on the y-axis i.e., the vertical axis. While, on the x-axis i.e., the horizontal axis the sequence number of the value is shown. Exceptions: graphs with the date on the X-axis.
Scatter chart: The relationship between two values is represented using the scatter chart. Scatter charts is often known as XY chart.
Here, two different values are not given which means there is no need to find the relationship between two values. So, in order to find trend of stock prices a line chart is more appropriate.
f.
To prepare: 3-D line chart and discuss if it helps in better understanding.
Introduction: An investor may purchase stock of a company and become the stockholder (owner) of the company. Based on the performance of the company and demand for company’s stocks, the value of company’s stocks increases or decreases.
f.
Explanation of Solution
The line chart has been prepared for FAST stock prices:
The 3-D line chart has been prepared:
The comparison between the two charts can be seen easily. Thus, yes the enhancements will make data more attractive for the reader.
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Chapter 1 Solutions
EBK FINANCIAL ANALYSIS WITH MICROSOFT E
- Problem Three (15 marks) You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock NEWER Inc. just paid a dividend of $6.00. The dividend is expected to increase by 60%, 45%, 30% and 15% per year, respectively, in the next four years. Thereafter, the dividend will increase by 4% per year in perpetuity. Calculate NEWER’s expected dividend for t = 1, 2, 3, 4 and 5. The required rate of return for NEWER stock is 14% compounded annually. What is NEWER’s stock price? The second stock is OLDER Inc. OLDER Inc. will pay its first dividend of $10.00 three (3) years from today. The dividend will increase by 30% per year for the following four (4) years after its first dividend payment. Thereafter, the dividend will increase by 3% per year in perpetuity. Calculate OLDER’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7 and 8. The required rate of return for OLDER stock is 16% compounded annually. What is OLDER’s stock price? Now assume that…arrow_forwardProblem Three (15 marks) You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock NEWER Inc. just paid a dividend of $6.00. The dividend is expected to increase by 60%, 45%, 30% and 15% per year, respectively, in the next four years. Thereafter, the dividend will increase by 4% per year in perpetuity. Calculate NEWER’s expected dividend for t = 1, 2, 3, 4 and 5. The required rate of return for NEWER stock is 14% compounded annually. What is NEWER’s stock price? The second stock is OLDER Inc. OLDER Inc. will pay its first dividend of $10.00 three (3) years from today. The dividend will increase by 30% per year for the following four (4) years after its first dividend payment. Thereafter, the dividend will increase by 3% per year in perpetuity. Calculate OLDER’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7 and 8. The required rate of return for OLDER stock is 16% compounded annually. What is OLDER’s stock price? Now assume that…arrow_forwardProblem Three (15 marks) You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock NEWER Inc. just paid a dividend of $6.00. The dividend is expected to increase by 60%, 45%, 30% and 15% per year, respectively, in the next four years. Thereafter, the dividend will increase by 4% per year in perpetuity. Calculate NEWER’s expected dividend for t = 1, 2, 3, 4 and 5. The required rate of return for NEWER stock is 14% compounded annually. What is NEWER’s stock price? The second stock is OLDER Inc. OLDER Inc. will pay its first dividend of $10.00 three (3) years from today. The dividend will increase by 30% per year for the following four (4) years after its first dividend payment. Thereafter, the dividend will increase by 3% per year in perpetuity. Calculate OLDER’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7 and 8. The required rate of return for OLDER stock is 16% compounded annually. What is OLDER’s stock price? Now…arrow_forward
- You are considering a 10-year, $1,000 par value bond. Its coupon rate is 11%, and interest is paid semiannually. Bond valuation Years to maturity 10 Par value of bond $1,000.00 Coupon rate 11.00% Frequency interest paid per year 2 Effective annual rate 8.78% Calculation of periodic rate: Formulas Nominal annual rate #N/A Periodic rate #N/A Calculation of bond price: Formulas Number of periods #N/A Interest rate per period 0.00% Coupon payment per period #N/A Par value of bond $1,000.00 Price of bond #N/Aarrow_forwardHow much do investor psychology and market sentiment play into stock price movements? Do these emotional reactions having a bigger impact on short-term swings, or do they also shape long-term trends in a meaningful way?arrow_forwardExplain The business of predatory tax return preparation, including: How they deceive the working poor,The marketing tactics the preparers use, and Other than paying high fees, what negative impact can the use of these unqualified and unregulated preparers have on the taxpayer?arrow_forward
- Explain the changes in tax return preparation you would like to see in Alabama, based on what has been successful in other states.arrow_forwardExplain the understanding (or misunderstanding) of the working poor with tax return preparation within one page report.arrow_forwardExplain the regulations or requirements for tax return preparers in Alabama.arrow_forward
- question 1. Toodles Inc. had sales of $1,840,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $1,180,000, $185,000 and $365,000 respectively. In addition, the company had an interest expense of $280,000 and a tax rate of 35 percent. (Ignore any tax loss carry-back or carry-forward provisions.)Arrange the financial information for Toodles Inc. in an income statement and compute its OCF?Question 2 Anti-Pandemic Pharma Co. Ltd. reports the following information in its income statement: Sales = $5,250,000;Costs = $2, 173,000;Other expenses = $187,400; Depreciation expense = $79,000; Interest expense= $53,555; Taxes = $76,000; Dividends = $69,000. $136,700 worth of new shares were also issued during the year and long-term debt worth $65,300 was redeemed.a) Compute the cash flow from assetsb) Compute the net change in working capitalQuestion 3Footfall Manufacturing Ltd. reports the following financial information at the end of the current year:…arrow_forwardAccrued Interest PayableCompute the interest for December accrued on each of the following notes payable owed by Riff-Raff'n Yell Inc., on December 31: Day of Calendar: 1 Lender: New Age Principal: $10,000 Interest Rate: 5% Term (Days) 120 Day of Calendar: 8 Lender: Wyvern Tavern Principal: $8,000 Interest Rate: 6% Term (Days) 90 Day of Calendar: 17 Lender: Cedar Tree Principal: $15,000 Interest Rate: 4% Term (Days) 90 Note: Use 360 days for calculations and round to the nearest dollar. Riff-Raff'n Yell, Inc. Lender (in alphabetical order) Accrued Interest Cedar Tree Answer 1 New Age Answer 2 Wyvern Tavern Answer 3arrow_forwardQuestion Footfall afacturing pers The following fancial information at the end of the current years Inventory turnover ratio Fixed accetturnover ratio bot to assets ratia set profit ang ross profit margin the given information to fill at the templates for income statement and balance sheet geb In Statement of Footfall Manufacturing Ltd. for the year ending RELEASED BY THE CL MOME2003, FEBRUARY 9, 3005 Sales December 31, 20 Cast of other expec Earnings befo Camings afterarrow_forward
