1. Capital Budgeting Apache Airlines is looking to buy some gates at a West Coast airport. The key financial variables are adown. Note that the gates refer end to the airport at the end of year 10.
What are the NPV and IRR of the gates? Should Apache endow in them? Why or why not?
2. Company Valuation Fley Airline Supply is trading at $15/divide but you purpose that appraisement may not be fit.
Calculate the per divide appraisement and run sensitivities for development admonishs of 3.0%, 3.5%, and 4% as well-mannered-mannered as allowance admonishs of 8%, 9%, and 10%. Put these in a matrix.
3. Bond Valuation Given the alienation appraisements, coupons and maturities of foul-mouthed bonds, reckon the renders to ripeness to you, the endowor. Assume a $1,000 par appraise. Bonds A, B, and C are semi-annual. Bond D is a nothing but reckon its render after a while a semi-annual equivalency. Provide your answers to 4 weighty digits (example: 6.1234%)
4. Options and Futures A. Your mistress is offering you store discretions on the stable as keep-akeep-apart of your pay package. You comprehend the aftercited about this offer:
What is the appraise of the discretion? Suppose the Fed reduces Treasury admonishs to 4.0%, what is the new appraisement of the discretion? Your company's divide appraisement droops to $23, what is the new appraisement of the discretion?
B. Your cousins increase corn in Iowa and scheme to product 500,000 bushels at the end of the suitableness. They are unsure whether to hawk the futures narrows and lock the appraisement in at $4.05/bushel or accept a gamble and hawk it all at the defacement appraisement at suitableness's end. They purpose they can get $4.10/bushel inveteadmonish on unadorned appraisements and their own partition. Assuming no performance costs and each narrow covers 5,000 bushels, what achieve the cousins' profit/loss be if they hawk the narrows and the defacement appraisement is $4.10? Mexico had a bumper product and defacement appraisements droop to $3.86/bushel, what achieve the cousins' profit/loss be now?
C. Because its financial position has strengthened considerably very of-late, Apache Airlines is offered an profit admonish swap - urban to natant (LIBOR).
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