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Financial Management (Doc)

   

Added on  2019-09-26

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RUNNING HEAD: FINANCIAL MANAGEMNTFinancial ManagementStudent Name:Course Work:University:

FINANCIAL MANAGEMNT1Q1. Realized percentage holding period return:= [(4400-4000+4(40))/4000 x 100%= 14%Q2. Following is the impact of the financial decision on the current, quick and debt-equity ratio:a.The firm reduces its investment by $500,000 then the current ratio is 1.92 by dividing 5,750/3,000 so the current ratio remains the same. The quick ratio will be 1.08 by dividing 3,250/3,000 and the debt-equity ratio will be 0.79 by dividing 4,750/6,000. All the three ratios will not be impacted by reducing the investment.b.The purchase of twenty new delivery trucks of total $500,000 impact on the current ratioand new ratio is 1.75 by dividing 5250/3000. The new quick ratio is 0.916 by dividing 2750/3000. The debt-equity ratio is same 0.79 by dividing 4,750/6,000. c.The investment of short term loan of $500,000 impacts on the current ratio and the new ratio is 1.78 by 6250/3000. The new quick ratio is 0.928 by dividing 3250/3000. The new debt-equity ratio is 0.875 by dividing 5250/6000. d.The use of mid-term loan of $2 Million for the expansion of plant impacts on the financial ratios. The current ratio is 1.92 which remains the same by dividing 5750/3000.The quick ratio is 1.08 which is also remains the same by dividing 3250/3000. The new debt-equity ratio is 1.125 by dividing 6750/6000.e.The firm sells $2 Million in common stock and uses it to expand its plant which impacts on the financial ratios. The current ratio is 1.92 by dividing 5,750/3,000 so the current ratio remains the same. The quick ratio is 1.08 which is also remains the same by dividing 3250/3000. The new debt-equity ratio is 0.593 by dividing 4750/8000.Q3. Following is the calculation of amount that needs to be invested:$600,000 = PMT (FVIFA.09, 25) = PMT (84.701)PMT = $7,083.74Q4. Following are the given values are:Face value of the bond is $1,000Annual coupon rate is 7 3/8%Years of maturity is 7 yearsCurrent price of the bond is $900

FINANCIAL MANAGEMNT2Callable price of the bond is $1,037.08Following are the calculations of the YTC of the bond:The bond is callable so the selling price become present value and the price become the future value. The values are inserted in the Fx function in excel. Following table shows the calculations.Nper =7PMT =73.75PV=9009.81%FV=-1037.08Thus, the yield to call of the bond is 9.81%Q5. Following table shows the calculations:

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