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Alborosie
3 years ago
9

John, who has just completed his first finance course, is unsure whether he should take a course in business analysis and valuat

ion using financial statements, since he believes that financial analysis adds little value, given the efficiency of capital markets. Explain to John when financial analysis can add value, even if capital markets are efficient.
Business
1 answer:
Irina18 [472]3 years ago
3 0

Answer:

Following are the solution to the given question:

Explanation:

The financial analysis allows you to understand the strong a corporation's finances throughout the study of capital markets, which's very helpful. Mercedes typically produce short-term misprice for resources as well as the returns are created by an investor/fund manager. These gains also are called Alpha. Economic analysis shows whether an organization handles its money. Economic reporting in project management is useful to recognize its competitive edge of a capital market business and, ultimately, that company(asset) sells efficiently over a lengthy sector.

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Amanda Forsythe of Springfield, Missouri, must decide whether to buy or lease a car she has selected. She has negotiated a purch
geniusboy [140]

Answer:

Since the cost of financing for leasing is higher than buying, Amanda she should finance the car.

Explanation:

Solution

Buy versus Lease problem:

Now,

Buy case

The Purchase price = Gross capitalized cost = $30,000

The Down payment = $3300

The  Present value of borrowing from credit union = 30,000 - 3300 = $26700

The EMI payment = $614.88,

No of months = 48, Annual percentage rate (APR) = 5%

The Monthly Percentage rate = 5%/12 = 0.4%

Then

We find future value at the end of 48 months

By applying Excel,

PV=26700, N=48, I/Y=0.4%, PMT=614.88

FV = -0.14079 which is approximate to Zero (given that EMI payment was rounded off to digit of  2 , FV has resulted slightly differ from zero)

So, at the end of four years, the car has no residual value as per the buy option.

The Finance charges of borrowing the car = Sum of all the EMI payments – principal payment

= $61488*48 - 26700 = $2924.724

The lease case

The  cost reduction  capital= $3300 (capitalized cost is paid by customers to decrease the rate of lease while leasing cars)

Fee disposition on the car = $350

The Residual value = $12,400

Then,

PV = $30,000 - $3300 = $26,700, EMI = $330, Number of months leased = 48

FV = Residual value – Disposition fee = $12,400 - $350 = $12,050

The cost of dollar of leasing = Sum of all the  payments of EMI - payment based on principal value at the end of the lease period = 330 * 48 – (26700 – 12050) = $1190

Therefore, since the cost of financing for leasing is higher than buying, Amanda she should finance the car.

4 0
3 years ago
Exactly three years ago, you purchased a $1,000 face value bond for $1,211.16. The coupon rate was 6.5 percent with interest pai
solniwko [45]

Answer:

The rate of return on this investment is 6.06%

Explanation:

Rate of return or holding period return is the rate of income earned during the period in which the investment is held. It includes any income in the form of interest received or dividend and price difference.

Interest received  during 3 years = 1,000 x 6.5% x 3 = $195

Price difference = Current price  - Initial Price = 1089.54 - 12,11.16 = -121.62

Rate of return = ( ( Income received + Price change ) / Initial price ) x 100

Rate of return =  ( ( $195 + (-121.62) ) / 1211.16 ) x 100

Rate of return  = ( $73.78 / $1,211.16 ) x 100

Rate of return = 0.0606

Rate of return = 6.06%

Holding period return is 6.06%

6 0
3 years ago
What advantage(s) can come from having a river as a natural boundary, when used in conjunction with more traditional barriers su
Alla [95]
<span>The river as a natural boundary is more efficient than traditional fencing is a net advantage because you don't have to repair it. The costs are therefore lower. A fence can be easily broken if people want to get over it. A river, if it is wide, is harder to get over.</span>
6 0
3 years ago
Suppose that your bathroom scale reads your mass as 69 and your uncertainty is 3%. what is your uncertainty in kg
a_sh-v [17]
69kg 0.03= 2.07Kg of uncertainty
5 0
3 years ago
The annual demand for a product is 1,000 units. The company orders 200 units each time an order is placed. The lead-time is 6 da
ololo11 [35]

Answer:Safety stock= 26 units  

Explanation:

Annual demand = 1,000

Working days = 250 days per year

Demand per day = 1000/ 250 = 4 units per day

Lead Time demand  = Lead time x Average sales per day

= 6 days lead time x 4 units per day = 24 units

reorder point= Lead time demand + Safety stpock

Safety stock = Reorder point - lead time demand

=  50 - 24 units

Safety stock= 26 units  

8 0
3 years ago
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