Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Put-call parity Consider the following information on the current stock and option prices of company Y: One-year put option with an exercise price of 120

Put-call parity

Consider the following information on the current stock and option prices of company Y:

One-year put option with an exercise price of 120 = $23.5

One-year call option with an exercise price of 120 = $45.0

Two-year put option with an exercise price of 150 is $50.60 The annual interest rate = 6%

Using put-call parity relationship, what would be the current stock price? $ ________(enter a value with two decimal places)

What is the expected value for the 2-year call option of this stock with an exercise price of 150? $_______ (enter a value with two decimal places)

In the following questions, use the balance sheet and the income statements shown below.

At the end of 2019, this company had 2,832 million shares outstanding with a share price of $94. The company's weighted-average cost of capital was 5%. Assume the corporate tax rate was 21%.

In all the following questions, enter an integer value in $ million, unless otherwise specified.

Company's performance:

What was the economic value added (EVA) in 2019?________

What was the average number of days in inventory of Walmart in 2019? ________(enter a value with two decimal places)

What was Walmart's net working capital in 2019?__________

ANSWER ALL FOUR QUESTION.....

image text in transcribed

\begin{tabular}{|lrr|} \hline Balance Sheet & Fiscal 2019 & Fiscal 2018 \\ \hline Assets & & \\ Current assets & & \\ Cash and marketable securities & & \\ Accounts receivable & 9,465 & $7,722 \\ Inventories & 6,284 & 6,283 \\ Other current assets & 44,435 & 44,269 \\ Total current assets & 1,622 & 3,623 \\ Fixed assets & $61,806 & $61,897 \\ Net fixed assets & & \\ Other long-term assets & $127,049 & $111,395 \\ Total assets & 47,640 & 46,003 \\ Liabilities and Shareholders' Equity & $236,495 & $219,295 \\ Current liabilities & & \\ Accounts payable & $46,973 & $47,060 \\ Other current liabilities & 30,817 & 30,417 \\ Total current liabilities & $77,790 & $77,477 \\ Long-term debt & 43,714 & 43,520 \\ Other long-term liabilities & 33,439 & 18,664 \\ Total liabilities & $154,943 & $139,661 \\ Total shareholders' equity & $81,552 & 79,634 \\ Total liabilities and shareholders' equity & $236,495 & $219,295 \\ \hline \end{tabular} \begin{tabular}{|lr|} \hline Income Statement & \\ Net sales & $523,964 \\ Cost of goods sold & 394,605 \\ Selling, general, and administrative expenses & 97,804 \\ Depreciation & 10,987 \\ Other incomelexpenses & 2,147 \\ Earnings before interest and tax (EBIT) & $22,715 \\ Interest expense & 2,599 \\ Taxable income & $20,116 \\ Tax & 4,915 \\ Net income & $15,201 \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Accounting Finance And Auditing For Lawyers

Authors: Lawrence A. Cunningham

5th Edition

0314912606, 978-0314912602

More Books

Students also viewed these Accounting questions

Question

Use the FOIL method to find each product. (4k+ 3) (3k - 2)

Answered: 1 week ago