Chapter 7.2, Problem 4CC

Which of the following is the best definition of the time value of money?A) Money loses value over time due to inflation.B) A dollar today is worth more than a dollar in the future.C) The future value of money is always higher than its present value.D) Interest rates are always tied  to the value of money over time.

Which of the following is a long-term financing option for a company?A) Accounts PayableB) Bank OverdraftC) Issuing BondsD) Trade Credit need help

Which of the following is a long-term financing option for a company?A) Accounts PayableB) Bank OverdraftC) Issuing BondsD) Trade Credit

EPS and optimal debt ratio Williams Glassware has estimated, at various debt ratios, the expected earnings per share and the standard deviation of the earnings per share as shown in the following table. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Earnings per share (EPS) Standard deviation of EPS Debt ratio 0% 20 40 60 80 $2.31 3.02 3.49 3.96 3.85 $1.15 1.82 2.84 3.98 5.59 a. Estimate the optimal debt ratio on the basis of the relationship between earnings per share and the debt ratio. You will probably find it helpful to graph the relationship. b. Graph the relationship between the coefficient of variation and the debt ratio. Label the areas associated with business risk and financial risk.

What is the Net Present Value (NPV) of a project?A) The initial investment in a projectB) The difference between the present value of cash inflows and outflowsC) The expected cash inflows from a projectD) The total cost of financing a project need help!

What is the Net Present Value (NPV) of a project?A) The initial investment in a projectB) The difference between the present value of cash inflows and outflowsC) The expected cash inflows from a projectD) The total cost of financing a project

What is the Payback Period in capital budgeting?A) The time it takes to recover the initial investmentB) The time it takes to achieve profitabilityC) The time it takes to double the investmentD) The time it takes to reach maximum revenue

Required: Suppose you conduct currency carry trade by borrowing $1 million at the start of each year and investing in the New Zealand dollar for one year. One-year interest rates and the exchange rate between the U.S. dollar ($) and New Zealand dollar (NZ$) are provided below for the period 2000 - 2009. Note that interest rates are one-year interbank rates on January 1st each year, and that the exchange rate is the amount of New Zealand dollar per U.S. dollar on December 31 each year. The exchange rate was NZ$1.9090 per $ on January 1, 2000. Fill out columns (4) - (7) and compute the total dollar profits from this carry trade over the ten-year period. Also, assess the validity of uncovered interest rate parity based on your solution of this problem. You are encouraged to use the Excel spreadsheet software to tackle this problem. Note: Negative value should be entered with a minus sign. Enter profit value answers in dollars, rather than in millions of dollars. Do not round intermediate…

Which of the following is considered a capital budgeting decision?A) Deciding how to finance a new projectB) Deciding whether to replace a machineC) Deciding how to manage cash reservesD) Deciding how to structure employee benefits