When normalizing historical earnings for a private company, an analyst identifies that the CEO’s current compensation is significantly above the market rate for equivalent executives. To estimate normalized earnings, how should the analyst adjust the income statement?

(Continued from previous question) An analyst is forecasting the free cash flows for Firm Beta for the upcoming year using a sales-based forecasting approach based on the following financial information: Forecasted Sales: $5,000 million Forecasted EBIT: $800 million Net Income Margin: 10.0% Target Debt Ratio: 40.0% Purchases of Fixed Assets (FCInv): $600 million Depreciation Expense: $400 million Change in Working Capital (WCInv): $100 million Marginal Tax Rate: 25.0% Based on the scenario above, what is the forecasted Free Cash Flow to Equity (FCFE) assuming the target capital structure (debt ratio) is maintained?

A bank has the following:        Assets                                        Liabilities RSA   = $600 at 1%                    RSL   = $700 at 2%   NRSA = $400 at 3%                   NRSL = $300 at 4% a.  Calculate the GAP. [Note: Do not type your answer in Canvas] [2 points] b.  If the interest rate declines by 20%, calculate the NIM. [Note: Do not type your answer in Canvas] [10 points] c. Interpret the NIM.  [Note: Do not type your answer in Canvas] [4 points]

An investor bought 10 shares of stock T for $575 per share.  One year later, the investor sold the stock for $450 per share.  Calculate the return on this investment.  [Note: Do not type your answer in Canvas] [5 points]

A bank has the following:        Assets                                        Liabilities RSA   = $100 at 2%                    RSL   = $100 at 1%   NRSA = $400 at 4%                   NRSL = $400 at 3% a.  Calculate the NIM. [Note: Do not type your answer in Canvas] [6 points] b. Interpret the NIM.  [Note: Do not type your answer in Canvas] [2 points] 

What distinguishes the assets of banks from the assets of savings and loan?  [Note: Do not type your answer in Canvas] [8 points]

The expected return on the market portfolio is 6 percent and the risk-free rate is 3 percent.  The beta of stock K is 0.8.  Use the CAPM to calculate the expected return of stock K.  How risky is stock K?  [Note: Do not type your answer in Canvas] [8 points]

Do you prefer your hometown to borrow money by issuing a general obligation bond or a revenue bond?  Explain.  [Note: Do not type your answer in Canvas] [8 points]

Discuss one similarity and two differences between T-bills and T-bonds.  [Note: Do not type your answer in Canvas] [9 points]

Calculate the yield of a 10-year zero coupon bond that is selling at 80% of face value.  The face value of the bond is $1,000.  [Note: Do not type your answer in Canvas] [8 points]