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Please Show Steps. A soybean oil contract calls for delivery of 70,000 pounds. What happens to the seller of a soybean futures contract at 16

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  1. A soybean oil contract calls for delivery of 70,000 pounds. What happens to the seller of a soybean futures contract at 16 cents per pound if the futures price closes the next day at 18 cents per pound?
  2. Ski World is considering a new product line which will require additional inventory costing $146,000. Accounts payable will increase by $87,000 as suppliers are willing to finance a portion of these purchases. Accounts receivable are currently $80,000 and are expected to increase by 20% if this project is accepted. What is the initial net working capital requirement for the new product line?
  3. A portfolio has an expected return of 11.57%. The portfolio consists of stock A with an expected return of 8.6% and stock B with a beta of 1.28. The risk-free rate of return is 3% and the market risk premium is 8%. What is the portfolio weight of Stock A?
  4. Port Company is financed entirely by equity and has three divisions. Division A is the stable products division, and has a beta of 0.8. Division B takes only projects with the same risk as the market portfolio. Division C is the research and development division, where the average beta of projects taken is 1.6. The firm's assets are divided equally (both in terms of market value and book value) among the three divisions. What is the beta of the firm?
  5. Tyson Enterprises has decided to take its company public by offering a total of 80,000 shares of common stock to the public in an initial public offering (IPO). Tyson has hired an underwriter who arranges a full commitment underwriting and suggests an initial selling price of $32 a share with a 9 percent spread. As it turns out, the underwriters only sell 68,500 shares. How much cash will Tyson receive from the IPO?
  6. ow does net working capital affect the NPV of a six-year project if working capital is expected to increase by $25,000 at the beginning of the project and recaptured at the end (the firm has a 15% cost of capital)?
  7. UNLEV has an expected perpetual EBIT = $4,000. The unlevered cost of capital = 15% and there are 20,000 shares of stock outstanding. The firm is considering issuing $8,800 in new par bonds to add financial leverage to the firm. The proceeds of the debt issue will be used to repurchase equity. The cost of debt = 10% and the tax rate = 34%.What is the value of UNLEV's equity after the restructuring?
  8. What is the maximum percentage of variable costs in relation to sales that a firm could experience and still break even with $5 million revenue, $2 million fixed costs, and $500,000 depreciation?
  9. A portfolio has an expected return of 13.12%. The portfolio is comprised of 60% stock A and 40% stock B. The risk-free rate of return is 4% and the market risk premium is 8%. The beta of stock B is .87. What is the beta of stock A?
  10. A project requires the purchase of machinery for $40,000. The machinery belongs in a 20% CCA class and will have a salvage value of $4,000 at the end of the 4 year project. It will require a net working capital investment of $5,000 up-front and this will be recaptured at the end of the project. The firm has a tax rate of 34% and a required return of 10%. The project generates after-tax operating income of $10,001 every year. What is the project's NPV?

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