Pecos Company acquired 100 percent of Suaroӳ outstanding stock for $1 450 000 cash on January 1 2012 when Suaro had the following balance sheet: Assets Liabilities and Equity Cash . . . . . . . . . . . . . . . . $ 37 000 Liabilities . . . . . . . . . . . . . . . . $(422 000) Receivables . . . . . . . . . . . 82 000 Inventory . . . . . . . . . . . . . 149 000 Common stock . . . . . . . . . . . (350 000) Land . . . . . . . . . . . . . . . . 90 000 Retained earnings . . . . . . . . . (126 000) Equipment (net) . . . . . . . . 225 000 Software . . . . . . . . . . . . . 315 000 Total assets . . . . . . . . . . $898 000 Total liabilities and equity . . $(898 000) At the acquisition date the fair values of each identifiable asset and liability that differed from book value were as follows: Land $ 80 000 Brand name 60 000 (indefinite lifeصnrecognized on Suaroӳ books) Software 415 000 (2-year estimated useful life) In-Process R&D 300 000 Additional Information ՠAlthough at acquisition date Pecos expected future benefits from Suaroӳ in-process research and development (R&D) by the end of 2012 it became clear that the research project was a failure with no future economic benefits. ՠDuring 2012 Suaro earns $75 000 and pays no dividends. ՠSelected amounts from Pecos and Suaroӳ separate financial statements at December 31 2013 are presented in the consolidated information worksheet. All consolidated worksheets are to be prepared as of December 31 2013 two years subsequent to acquisition. ՠPecosӳ January 1 2013 Retained Earnings balanceآefore any effect from Suaroӳ 2012 incomeנ is $(930 000) (credit balance). ՠPecos has 500 000 common shares outstanding for EPS calculations and reported $2 943 100 for consolidatedassets at the beginning of the period.
Ridley Company has a factory machine,Ridley Company has a factory machine with a book value of $80 400 and a remaining useful life of 6 years. A new machine is available at a cost of $206 100. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $580 600 to $384 400.Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15 000 or parenthesis e.g. (15 000). Enter all other amounts in all other columns as positive and subtract where necessary.)RetainEquipmentReplaceEquipmentNet 6-YearIncomeIncrease(Decrease)Variable manufacturing costs $ $ $New machine cost Total $ $ $The old factory machine should be .
Accounting Study Guide Assignment,I. Multiple Choice: 1. Management accounting primarily is concerned with providing: a. information to managers inside the organization as well as information to stockholders creditors and others outside the organization. b. information to governmental regulatory agencies. c. information to managers inside the organization. d. information to stockholders creditors and others outside the organization. 2. Managerial accounting reports are: a. required under the Foreign Corrupt Practices Act of 1977. b. specified by the Securities and Exchange Commission. c. designed to meet the needs of the managers and are not mandated by a regulatory body or outside agency. d. governed by the requirements of generally accepted accounting principles. 3. An example of a direct labor cost is wages paid to a: Factory machine operator Supervisor in a factory a. No No b. No Yes c. Yes Yes d. Yes No 4. Within the relevant range: a. variable cost per unit decreases as production decreases. b. fixed cost per unit increases as production decreases. c. fixed cost per unit decreases as production decreases. d. variable cost per unit increases as production decreases. 5. Manufacturing overhead cost: a. can be either a variable cost or a fixed cost. b. includes the costs shipping finished goods to customers. c. includes all factory labor costs. d. include all fixed costs. 6. When the level of activity increases within the relevant range how does each of the following change? Average cost Total variable Fixed cost per unit cost per unit a. Increases Increases Increases b. Increases No change Increases c. Decreases No change Decreases d. Decreases Increases Decreases 7. The manufacturing operation that would be most likely to use a job-order costing system is: a. Shipbuilding. b. Toy manufacturing. c. Candy manufacturing. d. Crude oil refining. 8. A disadvantage of the high-low method of cost analysis is that: a. it cannot be used when there are a very large number of observations. b. it is too time consuming to apply. c. it uses two extreme data points which may not be representative of normal conditions. d. it relies totally on the judgment of the person performing the cost analysis. 9. In computing its predetermined overhead rate Brady Company included its factory insurance cost twice. This error will result in: a. the ending balance of Finished Goods to be understated. b. the credits to the Manufacturing Overhead account to be understated. c. the Cost of Goods manufactured to be overstated. d. the Net Operating Income to be overstated. 10. A proper journal entry to close overapplied overhead to Cost of Goods Sold would be: a. Cost of Goods Sold xxx Work in Process xxx b. Cost of Goods Sold xxx Manufacturing Overhead xxx c. Cost of Goods Sold xxx Finished Goods xxx d. Manufacturing Overhead xxx Cost of Goods Sold xxx 11. A proper journal entry to record issuing raw materials to be used on a job would be: a. Finished Goods xxx Raw Materials xxx b. Work in Process xxx Raw Materials xxx c. Raw Materials xxx Work in Process xxx d. Raw Materials xxx Finished Goods xxx 12. Contribution margin means a. what remains from total sales after deducting fixed expenses. b. what remains after deducting cost of goods sold to cover fixed and variable expenses. c. what remains from total sales after deducting all variable expenses. d. the sum of cost of goods sold and variable expenses. 13. If the labor efficiency variance is unfavorable then: a. actual hours exceeded standard hours allowed for the actual output. b. standard hours allowed for the actual output exceeded actual hours. c. the standard rate exceeded the actual rate. d. the actual rate exceeded the standard rate. 14. An unfavorable material quantity variance indicates that: a. actual usage of material exceeds the standard material allowed for output. b. standard material allowed for output exceeds the actual usage of material. c. actual material price exceeds standard price. d. standard material price exceeds actual price. 15. Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table? a. The amount paid to the individual who stains the table. b. The commission paid to the salesperson who sold the table. c. The cost of glue used in the table. d. The cost of the wood used in the table. 16. In a manufacturing company direct labor costs combined with direct materials costs are known as: a. period costs. b. prime costs. c. conversion costs. d. opportunity cost. 17. The property taxes on the factory building for a manufacturer would be an example of: Prime Cost Conversion Cost a. Yes No b. No Yes c. No No d. Yes Yes 18. All of the following costs would be found in a company’s accounting records except: a. Sunk cost. b. Direct cost. c. Indirect costs. d. Opportunity costs. 19. A sunk cost is: a. a cost that may be saved by not adopting an alternative. b. a cost that may be shifted to the future with little or no effect on current operations. c. a cost that cannot be avoided because it has already been incurred. d. a cost which does not entail any dollar outlay but which is relevant to the decision-making process. 20. The balance in the Work in Process account equals: a. the balance in the Finished Goods inventory account. b. the balance in the Cost of Goods Sold account. c. the balances on the job cost sheets of uncompleted jobs. d. the balance in the Manufacturing Overhead account. 21. Which of the following costs if expressed on a per unit basis would be expected to vary inversely with the level of production and sales? a. Sales commissions. b. Fixed manufacturing overhead. c. Variable manufacturing overhead. d. Direct materials. 22. All other things equal if a divisionӳ traceable fixed expenses decrease: a. the divisionӳ segment margin will increase. b. the overall company net operating income will decrease. c. the divisionӳ contribution margin will increase. d. the divisionӳ sales volume will increase. 23. On January 1 Lake Corporation increased its management salaries. All other costs and revenues were unchanged. How did this increase affect Lake’s break-even point and margin of safety? Break-even point Margin of safety a. Increase Decrease b. Increase Increase c. Decrease Increase d. Decrease Decrease 24. The break-even point in units is calculated using: a. variable expenses and the unit contribution margin. b. variable expenses and the contribution margin ratio. c. fixed expenses and the unit contribution margin. d. fixed expenses and the contribution margin ratio. 25. If sales volume increases and all other factors remain constant then the: a. contribution margin ratio will increase. b. break-even point will decrease. c. margin of safety will increase. d. net operating income will decrease. 26. Segmented income statements are most meaningful to managers when they are prepared: a. in a single-step format. b. on an absorption cost basis. c. on a cost behavior (contribution format) basis. d. on a cash basis. 27. In setting a transfer price which of the following should not be considered? a. Production capacity of the selling division. b. Product demand from outside customers. c. Costs eliminated by internal transfers. d. Fixed production costs of the buying division. II. Multiple Choice: Problems 1. Electrical costs at one of Gotch Corporation’s factories are listed below: Machine ours Electrical Cost March ŅŅŅŅ 3 731 $35 243 April ŅŅŅŅ.. 3 728 35 248 May ŅŅŅŅ… 3 765 35 479 June ŅŅŅŅ… 3 793 35 651 July ŅŅŅŅŠ3 797 35 692 August ŅŅŅŮ.. 3 701 35 044 September ŅŅŅ.. 3 800 35 694 October ŅŅŅŮ. 3 735 35 276 November ŅŅŅ.. 3 740 35 325 Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the high-low method to estimate the variable and fixed components of this cost these estimates would be closest to: a. $0.15 per machine-hour; $35 115 per month b. $9.11 per machine-hour; $1 249 per month c. $9.43 per machine-hour; $35 406 per month d. $6.57 per machine-hour; $10 728 per month Exhibit 1: The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720 000. If these microcomputers are upgraded at a total cost of $100 000 they can be sold for a total of $160 000. As an alternative the microcomputers can be sold in their present condition for $50 000. 2. Refer to Exhibit 1. The sunk cost in this situation is: a. $720 000 b. $160 000 c. $ 50 000 d. $100 000 3. Refer to Exhibit 1: What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition? a. $110 000 advantage. b. $660 000 disadvantage. c. $ 10 000 advantage. d. $ 60 000 advantage. 4. Refer to Exhibit 1. Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition? a. $100 b. $770 c. $ 300 d. $210 Exhibit 2: The Liski Company has established standards as follows: Direct material ŅŅŅŅŅ.. 3 pounds @ $4/pound = $12 per unit Direct labor ŅŅŅŅŅŅ 2 hours @ $8/hour = $16 per unit 4 Variable overhead ŅŅŅŅŮ. 2 hours @ $5/hour = $10 per unit Actual production figures for the past year were as follows: Units produced ŅŅŅŅŅŮ. 500 Direct material used ŅŅŅŅ.Ů 1 600 pounds Direct material purchased (3 000 pounds)Š$12 300 Direct labor cost (950 hours) ŅŅŅ $7 790 Variable overhead cost incurred ŅŅ… $4 655 5. Refer to Exhibit 2. The materials price variance is: a. $160 U b. $6 300 U c. $300 U d. $150 U 6. Refer to Exhibit 2. The materials quantity variance is: a. $ 400 U b. $410 F c. $410 U d. $ 6 000 U 7. Refer to Exhibit 2. The labor rate variance is: a. $210 F b. $190 F c. $399 F d. $190 U 8. Refer to Exhibit 2. The labor efficiency variance is: a. $400 F b. $800 F c. $800 U d. $500 F 9. Refer to Exhibit 2. The variable overhead spending variance is: a. $345 F b. $95 F c. $655.50 F d. $345 U 10. Refer to Exhibit 2. The variable overhead efficiency variance is: a. $500 F b. $500 U c. $245 F d. $250 F III. Problems: 1. Watkins Pacific Company sells a single product for $38 per unit. If variable expenses are 62.5% of sales and fixed expenses total $13 500 the break-even point in quantity and dollar($) will be: 2. Best Client Company has sales of 1 200 units at $60 a unit. Variable expenses are 40% of the selling price and total fixed expenses are $35 000. If Cartel Company expects next yearӳ total sales could increase 12% they want to know how this change affects their profit. Calculate DOL and then using DOL calculate next yearӳ net income in dollar. 3. At the end of the year actual manufacturing overhead costs were $120 000 and applied manufacturing overhead costs were $163 125. If the denominator activity for the year was 20 000 machine-hours and if 22 500 standard machine-hours were allowed for the year’s production Calculate the predetermined overhead rate per machine-hour. 4. The Assembly Department uses the weighted-average method in its process costing system. The following information pertains to one of the companyӳ processing departments for a recent month (5 points): Number of units Materials cost Beginning WIP ———————— 30 000 $22 000 Started during the month ————- 80 000 $72 000 Ending WIP —————————- 25 000 (60% completed) a. How many units were completed and transferred to the next processing department during the month? b. What is the EU in the ending WIP? c. What is the cost per unit for material? 5. Central Company has two product lines J and K. During June the company’s net operating income was $25 000 and the common fixed expenses were $37 000. The contribution margin ratio for J was 30% its sales were $200 000 and its segment margin was $21 000. If the contribution margin for K was $80 000 Calculate the segment margin for K. 6. The Kosco Company has three divisions؎orthern Western and Southern. The divisions have the following revenues and expenses: Northernn Western Southern Sales $450 000 $400 000 680 000 Variable expenses 235 000 140 000 242 000 Traceable fixed expenses 165 000 105 000 218 000 Allocated common corporate expenses 92 000 85 000 135 000 Net operating income (loss) $(42 000) $70 000 $ 85 000 Management of Kosco is considering the elimination of the Northern Division. If the Northern Division were eliminated its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data what is your decision eliminating or keeping it and why? Justify your decision by showing your calculation and overall companyӳ net operating income (or loss) before and after eliminating Northern Division. 7. Rowell Corporation manufactures laser printers. Rowell currently manufactures the 32 000 imaging drums that it uses in its printers. The annual costs to manufacture these 32 000 drums are as follows: Cost of drum Total cost Variable manufacturing cost ŅŅŠ$23 $736 000 Fixed manufacturing cost ŅŅŅ.. $65 $2 080 000 Total cost $88 $2 816 000 Hardware Solutions Inc. has offered to provide Rowell with all of its imaging drum needs for $72 per drum. If Rowell accepts this offer 70% of the fixed manufacturing cost above could be totally eliminated. Also Rowell will be able to use the freed up space to generate $240 000 of income each year in the production of alternative products. Based on the information presented would Rowell be better off to make the drums or buy the drums and by how much? 8. Hausman Corporation bases its budget on machine-hours. The companyӳ static planning budget for November appears below: Budgeted number of machine-hours ————————- $9 500 Budgeted variable costs: Supplies (@$3.70 per machine-hour) ————- 35 150 Power (@$2.40 per machine-hour) —————- 22 800 Budgeted fixed costs: Salaries ———————————————— 46 550 Equipment depreciation —————————– 31 350 Total cost —————————————————— $135 850 Required: Prepare a flexible budget for 9 850 machine-hours per month.
Prepare a review of literature on monetary and Keynesian theories,Prepare a review of literature on monetary and Keynesian theories and their respective effects on monetary and fiscal policy.The paper Must establish the main differences between the two theoriesIntroductionClassical Theory of MoneyAggregate demand and supply of money and labor inputKeynesian Theory of MoneyFunctions of monetarismMonetary and Fiscal PolicyReducing the discount rate (interest)The use of monetary policy to ease inflationDifferences and similarities in the pattern of Keynes and the classicsConclusionRequirement : 20 pages along with graphics and explanation.
Capital Project Case Study – Jiranna Healthcare,Capital Project Case Study Part 1 This case study considers the expected costs and benefits to a managed care organization resulting from a decision to design a centralized nurse triage line. This triage line would assist routine primary care patients to provide self-care and/or seek urgent care in lieu of seeking more expensive care after-hours in the emergency room. Summary Jiranna Healthcare owns and operates a 268-bed hospital in the San Jose area. The hospital is Jiranna Healthcareӳ main facility and is home to more than 80 on-site specialty and surgery clinics employing over 5 000 staff. In addition to the main hospital Jiranna Healthcare has 18 satellite clinics containing primary care services such as pediatrics family medicine and geriatric health. These facilities (hospital plus outlying clinics) serve a total enrollee population of 97 000. Currently Jiranna Healthcareӳ centralized call center schedules primary care appointments and handles an average of 1 500 to 2 000 calls daily with a staff of 20. Patients routinely have difficulty obtaining access to urgent or acute care (primary care) in a timely fashion. Additionally the majority of Jiranna Healthcareӳ primary care centers are unable to meet access standards in three out of four cases. These access issues have a secondary effect on the call center which experiences a much higher call rate because members have to call back multiple times to find available appointments. The existing process leads to overutilization of emergency departments for urgent care and primary care concerns. In addition patient satisfaction has steadily declined as a result of the continued lack of appointment availability. To address this problem there is a proposal to implement a centralized nurse triage line an off-site phone center that would be staffed by registered nurses with a multitude of specialties (including ER nurses critical care surgical and even some nurse practitioners). These nurses are able to offer callers medical advice encompassing the treatment of fevers wound care and emergent conditions such as chest pain. The nurses are trained to triage conditions to the appropriate level of care be that at home at an urgent care center or at an emergency department. The major cost impact is the increased salary requirement for the phone center staff which will entail approximately 33 multi-discipline employees based on workload and enrollment data. Additional elements of the proposal include hiring an IT specialist to manage the triage lineӳ computer system and facility renovations. The main benefit of this proposal is projected cost reductions in patient care as a result of moving primary care out of the expensive emergency-room setting. Assignment The Capital Project Case Study Part 2 spreadsheet provides cash flow data (costs and benefits) for the proposal. Download and save this Excel spreadsheet and use the information provided to complete the following: 1. Determine the cash inflows and outflows for each year. 2. Evaluate the capital project by calculating the following metrics: a. net present value (NPV) b. internal rate of return (IRR) c. modified internal rate of return (MIRR) d. payback period e. discounted payback period 3. Indicate whether the project is acceptable assuming Jiranna has a corporate policy of not accepting projects that take more than 3.5 years to pay for themselves and assuming an 11% cost of capital.
Finance Assignment – GameStop Corp.,GameStop Corp.10-Q12/10/2014Symbol: GMEUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSCreated by Morningstar Document Research.http://documentresearch.morningstar.com/November 1 2014(In millions except per share data)ASSETSCurrent assets:Cash and cash equivalentsReceivables netMerchandise inventories netDeferred income taxesIncome taxes receivablePrepaid expenses and other current assetsTotal current assetsProperty and equipment:LandBuildings and leasehold improvementsFixtures and equipmentTotal property and equipmentLess accumulated depreciation and amortizationNet property and equipmentGoodwillOther intangible assets netOther noncurrent assetsTotal noncurrent assetsTotal assetsLIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payableAccrued liabilitiesIncome taxes payableCurrent portion of debtTotal current liabilitiesDeferred income taxesLong-term debtOther long-term liabilitiesTotal long-term liabilitiesTotal liabilitiesCommitments and contingencies (Note 7)Stockholders equity:Prefer red stock authorized 5.0 shares;no sha res issued or outstandingClass A common stock $.001 par value; authorized300.0 shares; 109.3 116.2 and 115.3 sharesissued and outstanding respectivelyAdditional paid-in-capitalAccumulated other comprehensive incomeRetained earningsTotal stockholders equityTotal liabilities and stockholders equityNovember 2 2013February 1 2014$374.00116.901 714.4059.1058.00121.302 443.70$471.9088.601 717.0055.0030.4094.602 457.50$536.2084.40###51.7020.10625.10890.801 536.001 071.00465.001 408.50234.8089.602 197.90$4 641.6021.30604.00952.901 578.201 105.30472.901 371.40142.90120.302 107.50$4 565.0020.40609.60841.80###995.60476.20###194.3056.60######$1 316.10814.6016.903.802 151.4057.20350.2074.20481.602 633.00$1 356.60959.00$783.90861.7078.002.40###37.401.6075.00114.00###0.100.1061.801 946.702 008.60$4 641.60220.80118.601 807.802 147.30$4 565.002 315.6026.2075.90102.102 417.7078.40###0.10172.9082.50#########Using the attached ratio calculations and analysis of GameStop answer the following questions:Comparison of ratios with industry averages (find industry averages online)i) Find industry financial ratios online (e.g. yahoo.com) and compare the attached ratio to these industry ratios.ii) Present your results following the five types of ratios discussed in part d.iii) A table with both corporation and industry ratio is required. You must also compare the ratios in words.
FIN 5080 Homework Assignment,3. How many years would it take $500 to double if you invested it in a bank that pays 4.25% per year? 4. You want to buy a new sports car 5 years from now and you plan to save $5 800 per year beginning immediately. You will make 5 deposits in an account that pays 4.75% interest. Under these assumptions how much will you have 5 years from today? 5. Whatӳ the present value of a 4-year ordinary annuity of $3 595 per year plus an additional $1 500 at the end of Year 4 if the interest rate is 9%? 6. Whatӳ the future value of $2 500 after 10 years if the appropriate nominal interest rate is 8.75% compounded quarterly? 7. An investment promises the following cash flow stream: $3 500 at Time 0; $2 750 at the end of Year 1 (or at t = 1); $3 450 at the end of Year 2; and $5 400 at the end of Year 3. At a discount rate of 6.0% what is the present value of the cash flow stream? 8. Suppose you are buying your first house for $500 000 and are making a $100 000 down payment. You have arranged to finance the remaining amount with a 15-year monthly payment amortized mortgage at a 3.10% nominal interest rate. What will your equal monthly payments be? 9. You plan to borrow $125 000 at a 9.5% annual interest rate. The terms require you to amortize the loan with 10 equal end-of-year payments. How much interest would you be paying in Year 3? 10. You just deposited $4 000 in a bank account that pays a 6.25% nominal interest rate compounded quarterly. If you also add another $9 000 to the account one year (12 months) from now and another $7 500 to the account two years from now how much will be in the account three years (12 quarters) from now? 11. Your sister turned 35 today and she is planning to save $12 000 per year for retirement with the first deposit to be made one year from today. She will invest in a mutual fund that will provide a return of 7.0% per year. She plans to retire 30 years from today when she turns 65 and she expects to live for 25 years after retirement to age 90. Under these assumptions how much can she spend in each year after she retires? Her first withdrawal will be made at the beginning of her first retirement year. 12. You anticipate that you will need $3 750 000 when you retire 40 years from now. You plan to make 40 deposits beginning today in a bank account that will pay 7% interest compounded annually. You expect to receive annual raises of 2% so you will increase the amount you deposit each year by 2%. (That is your 2nd deposit will be 2% greater than your first the 3rd will be 2% greater than the 2nd etc.) How much must your 1st deposit be if you are to meet your goal? 13. Which of the following factors could explain why Dellva Energy had a negative net cash flow last year even though the cash on its balance sheet increased? a. The company sold a new issue of bonds. b. The company made a large investment in new plant and equipment. c. The company paid a large dividend. d. The company had high amortization expenses. e. The company repurchased 20% of its common stock. 14. Medium Size Retailers Inc. (MSR) has EBIT of $225 000 interest expense of $35 000 dividend income of $30 000 short term capital gains of $15 000 and long term capital losses of $20 000. What is MSRӳ income tax liability? 15. Frederickson Office Supplies recently reported $17 500 of sales $7 750 of operating costs other than depreciation and $1 775 of depreciation. The company had no amortization charges and no non-operating income. It had $20 000 of bonds outstanding that carry a 9.5% interest rate and its federal-plus-state income tax rate was 40%. How much was the firm’s taxable income or earnings before taxes (EBT)? 16. Over the years Janjigian Corporation’s stockholders have provided $45 950 of capital partly when they purchased new issues of stock and partly when they allowed management to retain some of the firm’s earnings. The firm now has 2 250 shares of common stock outstanding and it sells at a price of $26.50 per share. How much value has Janjigian’s management added to stockholder wealth over the years i.e. what is Janjigian’s MVA? 17. Zumbahlen Inc. has the following balance sheet. How much total net operating capital does the firm have? Cash $ 25.00 Accounts payable $ 50.00 Short-term investments 60.00 Accruals 50.00 Accounts receivable 40.00 Notes payable 30.00 Inventory 60.00 Current liabilities $130.00 Current assets $185.00 Long-term debt 130.00 Gross fixed assets $225.00 Common stock 30.00 Accumulated deprec. 60.00 Retained earnings 60.00 Net fixed assets $165.00 Total common equity $ 90.00 Total assets $350.00 Total liab. & equity $350.00 18. HHH Inc. reported $17 500 of sales and $6 575 of operating costs (including depreciation). The company had $18 750 of investor-supplied operating capital the weighted average cost of that capital (the WACC) was 11.75% and the federal-plus-state income tax rate was 35%. What was HHH’s Economic Value Added (EVA) i.e. how much value did management add to stockholders’ wealth during the year? 19. Wells Water Systems recently reported $12 550 of sales $4 250 of operating costs other than depreciation and $1 400 of depreciation. The company had no amortization charges it had $3 250 of outstanding bonds that carry a 6.75% interest rate and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate sales and cash flows in the future the firm was required to spend $1 050 to buy new fixed assets and to invest $475 in net operating working capital. How much free cash flow did Wells generate? 20. Amram Companyӳ current ratio is 1.9. Considered alone which of the following actions would reduce the companyӳ current ratio? a. Borrow using short-term notes payable and use the proceeds to reduce accruals. b. Borrow using short-term notes payable and use the proceeds to reduce long-term debt. c. Use cash to reduce accruals. d. Use cash to reduce short-term notes payable. e. Use cash to reduce accounts payable. 21. Northwest Lumber had a net profit margin of 5.25% a total assets turnover of 2.95 and an equity multiplier of 1.65. What was the firm’s ROE? 22. An investor is considering starting a new business. The company would require $575 000 of assets and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 24.0% return on the invested capital which means that the firm must have an ROE of 24.0%. How much net income must be expected to warrant starting the business? 23. Helmuth Inc.’s latest net income was $1 450 000 and it had 225 000 shares outstanding. The company wants to pay out 45% of its income as dividends. What dividend per share should it declare? 24. Heaton Corp. sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $725 000 and its year-end receivables were $110 000. If its DSO is less than the 45-day credit period then customers are paying on time. Otherwise they are paying late. By how much are customers paying early or late? Base your answer on this equation: DSO – Credit period = days early or late and use a 365-day year when calculating the DSO. A positive answer indicates late payments while a negative answer indicates early payments. 25. Last year Mason Inc. had a total assets turnover of 2.75 and an equity multiplier of 1.95. Its sales were $225 000 and its net income was $9 549. The CFO believes that the company could have operated more efficiently lowered its costs and increased its net income by $5 400 without changing its sales assets or capital structure. Had it cut costs and increased its net income in this amount by how much would the ROE have changed? 26. Muscarella Inc. has the following balance sheet and income statement data: Cash $ 14 000 Accounts payable $ 42 000 Receivables 60 000 Other current liabilities 28 000 Inventories 225 000 Total CL $ 70 000 Total CA $299 000 Long-term debt 75 000 Net fixed assets 121 000 Common equity 275 000 Total assets $420 000 Total liab. and equity $420 000 Sales $250 000 Net income $ 15 000 The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average 2.65 without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level and that the funds generated are used to buy back common stock at book value by how much would the ROE change? 27. Stock X has a beta of 0.5 and Stock Y has a beta of 1.5. Which of the following statements must be true according to the CAPM? a. If you invest $50 000 in Stock X and $50 000 in Stock Y your 2-stock portfolio will have a beta significantly lower than 1.0 provided the returns on the two stocks are not perfectly correlated. b. Stock Yӳ return during the coming year will be higher than Stock Xӳ return. c. If expected inflation increases but the market risk premium is unchanged the required returns on the two stocks will increase by the same amount. d. Stock Yӳ return has a higher standard deviation than Stock X. e. If the market risk premium declines but the risk-free rate is unchanged Stock X will have a larger decline in its required return than will Stock Y. 28. Rick Kish has a $120 000 stock portfolio. $50 000 is invested in a stock with a beta of 1.25 and the remainder is invested in a stock with a beta of 2.85. These are the only two investments in his portfolio. What is his portfolioӳ beta? 29. ABC Company’s stock has a beta of 1.95 the risk-free rate is2.75% and the market risk premium is7.50%. What is ABC’s required rate of return using CAPM? 30. Ripken Iron Works believes the following probability distribution exists for its stock. What is the standard deviation of return on the company’s stock? State of the Economy Probability of State Occurring Stock’s Expected Return Boom 0.25 35% Normal 0.50 13% Recession 0.25 -13% 31. Joel Foster is the portfolio manager of the Go Anywhere Fund a $3 million hedge fund that contains the following stocks. The required rate of return on the market is 9.00% and the risk-free rate is 2.00%. What rate of return should investors expect (and require) on this fund? Stock Amount Beta A $1 075 000 1.20 B 675 000 1.50 C 750 000 3.35 D 500 000 1.10 $3 000 000 32. Hazel Morrison a mutual fund manager has a $60 million portfolio with a beta of 1.00. The risk-free rate is 3.25% and the market risk premium is 6.00%. Hazel expects to receive an additional $40 million which she plans to invest in additional stocks. After investing the additional funds she wants the fund’s required and expected return to be 16.00%. What must the average beta of the new stocks be to achieve the target required rate of return? 33. Campbell’s father holds just one stock East Coast Bank (ECB) which he thinks is a very low-risk security. Campbell agrees that the stock is relatively safe but he wants to demonstrate that his father’s risk would be even lower if he were more diversified. Campbell obtained the following returns data shown for West Coast Bank (WCB). Both have had less variability than most other stocks over the past 5 years. Measured by the standard deviation of returns by how much would his father’s historical risk have been reduced if he had held a portfolio consisting of 60% ECB and the remainder in WCB? Year ECB WCB 2010 20.00% 25.00% 2011 -10.00% 15.00% 2012 35.00% -5.00% 2013 -5.00% -10.00% 2014 15.00% 35.00% 34. Which of the following statements is CORRECT? a. If a coupon bond is selling at par its current yield equals its yield to maturity. b. If a coupon bond is selling at a discount its price will continue to decline until it reaches its par value at maturity. c. If interest rates increase the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond. d. If a bondӳ yield to maturity exceeds its annual coupon then the bond will trade at a premium. e. If a coupon bond is selling at a premium its current yield equals its yield to maturity. 35. Garvin EnterprisesҠbonds currently sell for $1 150. They have a 6-year maturity an annual coupon of $90 and a par value of $1 000. What is their current yield? 36. Sadik Inc.’s bonds currently sell for $1 275 and have a par value of $1 000. They pay a $115 annual coupon and have a 15-year maturity but they can be called in 4 years at $1 115. What is their yield to call (YTC)? 37. Moerdyk Corporation’s bonds have a 10-year maturity a 5.25% coupon rate with interest paid semiannually and a par value of $1 000. The nominal required rate of return on these bonds is 6.50%. What is the bondӳ intrinsic value? 38. Niendorf Corporation’s 5-year bonds yield 8.75% and 5-year T-bonds yield 4.50%. The real risk-free rate is r* = 2.45% the inflation premium for 5-year bonds is IP = 1.65% the default risk premium for Niendorf’s bonds is DRP = 2.85% versus zero for T-bonds and the maturity risk premium for all bonds is found with the formula MRP = (t ֠1) x 0.1% where t = number of years to maturity. What is the liquidity premium (LP) on Niendorf’s bonds? 39. A 30-year $1 000 par value bond has a 7.50% coupon rate with interest paid semiannually. The bond currently sells for $825. What is the capital gains yield on these bonds? 40. O’Brien Ltd.’s outstanding bonds have a $1 000 par value and they mature in 20 years. Their nominal yield to maturity is 8.25% they pay interest semiannually and they sell at a price of $875. What is the bond’s nominal (annual) coupon interest rate?
FIN 100 Week 4 Assignment 1 – Complexities of the US Financial System,The U.S. financial system has many complexities and it is impacted by several environmental factors including federal regulations and the economy.Write a two (2) page paper in which you:1.Briefly describe one (1) way the U.S. financial markets impact the economy one (1) way the U.S. financial markets impact businesses and one (1) way the U.S. financial markets impact individuals.2.Briefly explain the primary roles of the U.S. Federal Reserve the Federal Reserve Chairman and the Federal Reserve Board. Indicate each partyӳ effectiveness in todayӳ economic environment. Provide support for your explanation.3.Briefly explain two (2) ways interest rates influence the U.S. and global financial environment. Provide at least one (1) example of such influence for both the U.S. financial environment and one (1) example for the global financial environment.Your assignment must follow these formatting requirements:ւe typed double spaced using Times New Roman font (size 12) with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.։nclude a cover page containing the title of the assignment the studentӳ name the professorӳ name the course title and the date. The cover page and the reference page are not included in the required assignment page length.The specific course learning outcomes associated with this assignment are:քiscuss the key concepts related to money monetary systems and money supply.քescribe the function of the Federal Reserve its composition and other key policy makers that influence the financial system.օxplain the international monetary system exchange rates and the related impact on international trade.֕se technology and information resources to research issues in finance.֗rite clearly and concisely about finance using proper writing mechanics.
ACC107 WEEK 4,Controls and Cash Worksheet Part 1. Internal Controls List the 5 most widely accepted components of internal control. Then in your own words write 1-2 paragraphs describing the purpose of internal controls. Provide examples as appropriate. Use this weekӳ content readings and your LIRN resources or the Internet as needed to support your answer. Part 2. Dardano Enterprises Bank Reconciliation The June 30 bank statement for Dardano Enterprises shows a balance of $79 310. Dardano Enterprises however shows a cash balance of $67 000. In addition Dardanoӳ had the following information: 1. $4 500 in deposits made but not appearing on the June 30 bank statement. 2. A $15 300 check written but not appearing on the June bank statement. 3. One check written for the purchase of Supplies erroneously recorded for $670 but appears on the bank statement as $760. 4. Monthly service charges listed on the banks statement are $275. Dardano has already recorded the effect of $175 of those charges. 5. A customer payment for a $1 700 receivable was collected by the bank but not yet recorded by Hayley. a. Prepare the bank reconciliation for Dardano Enterprises as of June 30. Enter your answers in the shaded areas of the bank reconciliation below. Dardano Enterprises Bank Reconciliation June 30 Balance per bank statement Add: Deposits in transit Deduct: Outstanding checks Actual cash balance Balance per company records Add: Collection of receivable Deduct: Error Service charges Actual cash balance b. Now prepare the necessary journal entries resulting from the reconciliation. Enter your answers in the shaded areas of the journal below. General Journal Date Account Names Debit Credit June 30 Cash Accounts Receivable To record collection of receivable by the bank June 30 Supplies Cash To record correction. June 30 Service Charge Expense Cash To record bank service charge. Part 3. Bixler Companyӳ Petty Cash Bixler Company establishes a petty cash fund for $250 on April 1. On April 30 the fundӳ custodian prepares a report showing $165 in cash remaining and receipts of $17 for miscellaneous items $35 for postage and $32 for supplies. The custodian then gives the report to the accountant who replenishes the fund. Prepare any necessary journal entries for the month of April. Hint: A journal entry is made to record the establishment of the fund. No entries are made as payments are made from the fund but are made when the fund is replenished. DonӴ forget to check for cash over or cash short before making the entries. Enter your answers in the shaded areas of the journal below. General Journal Date Account Names Debit Credit April 1 To record creation of petty cash fund. April 30 To record expenses and replenishment of petty cash fund. Part 4. Cash and Cash Equivalents Indicate with a yes or no whether the item listed would be reported as cash and cash equivalents. Enter your answer in the shaded box next to each. ITEM YES or NO? Commercial paper maturing in 120 days Certificate of deposit maturing in 45 days Cash on hand Undeposited checks from customers Common stock Commercial paper maturing in 60 days Part 5. Bedfordӳ Cash and Cash Equivalents On December 31 2012 Bedford Company has $25 000 of cash in a checking account. The company invested in the following items during November and December of 2012: November: One-month Treasury bills (T-bills) $10 000 Certificate of deposit maturing 1/15/2014 30 000 Common Stock 55 000 Commercial paper maturing 1/31/2013 60 000 December: 60-day Treasury bills $15 000 Certificate of deposit maturing 2/15/2013 20 000 Preferred Stock 40 000 What is the total of cash and cash equivalents that should be reported on the December 31 2012 balance sheet? Enter the items that should be included in the shaded areas below to determine the total. The first one has been done for you. HINT: Review each item to determine which ones are readily convertible into cash and have an original maturity of three months or less. Checking Account $25 000 Add: One-month T-bills $10 000 Total cash equivalents ` Total cash and cash equivalents December 31 2012
ACC107 WEEK 5,Receivables Worksheet Part 1. Pandot Inc. On August 25 Maria Gomez purchases $12 500 in products from Pandot Inc. on credit. The terms of the sale are 5/20 net 45. On September 7 Ms. Gomez returns $2 500 of product to Pandot. On September 9 she pays her bill in full. Prepare the journal entries required to record the sale of merchandise the return of merchandise and the collection of the accounts receivable. Enter your answers in the shaded areas of the journal below. Date Account Names Debit Credit Aug. 25 To record sales on account. Sept. 7 To record sales return. Sept. 9 To record payment. Part 2. Moray Snax Inc. Moray Snax Inc. sold 500 pounds of eel food to the District Aquarium on credit on February 7 for $6 000. The terms of the sale were 2/10 net 30. The District Aquarium pays the bill in full on February 21. a. Prepare the entries to record the sale and the receipt of payment. Date Account Names Debit Credit Feb. 7 To record sales on account. Feb. 21 To record payment. b. Why didnӴ the Aquarium receive a discount? Part 3. Blizzard Companyӳ Bad Debt Expense On December 31 the Blizzard Company has a receivables balance of $55 000. Blizzard accountants have estimated that 5% of this balance will be uncollectible. Prior to any year-end adjustments the balance in the allowance account is a $1000 debit. a. Prepare the journal entry to record bad debt expense for the year and show the calculation for bad debt expense in T-Account form. Enter your answers in the shaded areas of the journal and T-account below. Allowance for Bad Debts Existing balance Adjustment required = Bad debt expense Desired balance (55 000 x 5%) Date Account Names Debit Credit Dec. 31 b. On January 17 the Blizzard Company determines that an account receivable of $500 is uncollectible. Prepare the necessary journal entries to write it off the books. Hint: The company will write off the receivable and reduce the balance in the allowance account that was created when the bad debt expense was entered. Date Account Names Debit Credit Jan. 17 Part 4. Calculate Interest on Notes Receivable Read each of the following scenarios. 1. On 10/1 Company A accepts a $15 000 5% 6-month note receivable. 2. On 4/1 Company B accepts a $30 000 10% 3-month note receivable. 3. On 3/15 Company C accepts a $25 000 7% 6-month note receivable. Assuming a December 31 year end calculate the current-year interest revenue for each of the scenarios. Hint: Remember Interest = Principal x Annual Rate of Interest x Time Outstanding. Enter your answers in the shaded areas below. 1. Company A interest revenue = 2. Company B interest revenue = 3. Company C interest revenue = Part 5. Record Notes Receivable Dolce Company has a fiscal year end of December 31. On March 1 Dolce accepts $10 000 cash and a six-month 5% $40 000 note receivable from Flicker Inc. for services provided. Flicker paid the principal and interest at maturity. a. Prepare all journal entries from the acceptance of the note to the maturity date. Enter your answers in the shaded areas below. A couple of account names have been filled in for you. Date Account Names Debit Credit Mar. 1 Cash To record acceptance of the note. Sept. 1 Cash To record payment of the note.
CSC FIN333 MIDTERM EXAM,Part 1 of 1 – 100.0 Points Question 1 of 33 3.0 Points When demand increases A. consumers buy more of the good only if its price falls. B. the price is lower at any level of quantity demanded. C. consumers are willing to buy more at any price. D. the demand curve shifts leftward. Question 2 of 33 3.0 Points If the demand for digital cameras increases when consumers’ incomes rise then digital cameras are A. a substitute for camcorders. B. made using advanced technology. C. an inferior good. D. a normal good. Question 3 of 33 3.0 Points In a recession consumers have less income to spend. As a result if dining out is a normal good then which of the following would happen to the demand curve for dining out? A. The demand curve would shift rightward. B. The demand curve would not shift but the price of dining out would fall. C. The demand curve would shift leftward. D. The effect on the demand curve is unknown. Question 4 of 33 3.0 Points If a consumer’s income doubles and she now purchases less of good X we can infer that good X is a(n) __________ good. a. Luxury A. Luxury B. Normal C. Inferior D. Special Question 5 of 33 3.0 Points Referring to figure at a price of $70 the amount of producer surplus is:
M/M/1 waiting line queing model,Discuss several advantages of using the M/M/1 waiting line queuing model. Clearly explain the reasons for your choices.
AD 741 Topic 3 Case – Eli Lilly and Co.,Topic 3 CaseEli Lilly and CompanyThis case emphasizes:The difference between a) the trajectory or path over time of increases in performanceimprovement in an industrial segment which consumers demand or want (trajectory of customerneed); and b) the improvement over time in the level of product performance that technologistscan provide (trajectory of technological improvement) in a product.How the criteria customers use to choose among competing products changes (the evolving basisof competition) and dramatic results when the technology available (b above) has overshotwhat customers want?We do this by studying the history of Eli Lilly and Companys efforts to develop new products and services for thediabetes care market a field it had originally pioneered and some of the successes and failures it had as the marketitself evolved.Background:Lilly invested heavily to maintain its dominant position as an insulin manufacturer but began to see its worldwideposition weaken despite its efforts. In addition there were several other waves of innovative opportunities in thediabetes care market that Lilly had already missed. Lilly at the time of the case was engaged in a determined effort tostrengthen its position in insulin and grow beyond that single product into other products and services. In particular the case describes Lillys intent to participate in some way in the huge market opportunity created by patient noncompliance and thereby increase demand for insulin.Note that there are four particular classes of innovation explored in the case: Improvements in insulin; Deliverydevices (pens and injection devices); Meters and technology to measure blood glucose levels; and the developmentof products or services for education and behavioral change among patients with diabetes.Questions:In addressing and discussing the outcomes of the questions below about what Lilly did wrong and about how itshould approach the current decisions remember to use the readings and concepts from the course for examplethose on the shifting basis of competition about how to best explore new opportunities and the reading on BigCompanies Need to Act More Like Startups.1.Review the history in recent years of Lilly that is presented in the case: what mistakes did Lilly make inits product and service initiatives and why did this happen.2.Is Eli Lilly & Co. talking to the right persons or groups to determine what product features oradvancements would be most appreciated by the diabetes related market? Explain your answer.3.WHAT SHOULD WE LEARN FROM THIS CASE?Think about broader issues raised by the Eli Lilly and Co. case (Innovation in Diabetes Care) and in the Exubera Mini-case. Eli Lilly and Pfizer are two leading pharmaceutical companies that spent enormous capital and organizational energy on developing potentially exciting and innovative products that their customers ultimately did not want or could not get appropriately reimbursed. Both failures were quite remarkable with Eli Lilly and Pfizer banking huge losses and taking strong hit to their market share and reputation (especially Pfizer). So what when wrong and why? How could two worldwide pharmaceutical industry leaders Eli Lilly and Pfizer with vast resources and expertise in the field make such massive miscalculations of the market’s demand for Humilin and Exubera? How can big established organizations do a better job in avoiding such kinds of issues?Please do not just repeat the case and mini-case discussions of the week but move onto how these problems can be addressed in other large successful professionalized organizations especially but not limited to big Pharma. Be prepared to focus on both substantive (e.g. methods of better understanding the shifting basis of competition and other broader factors in an industry such as emerging new technologies business models and arenas” of opportunity a la McGrath 2013) and organizational factors (e.g. how companies structure manage and incentivize their efforts). Structure and Formatting Requirements for Individual Assignment Papers All assignment papers in the Course should useAPA formatfor formatting and citing in the body of the Paper that is at least: should be typed double-spaced with 1″ margins on all sides using 12 pt. Times New Roman font. Include a page header (also known as the “running head”) at the top of every page. To create a page header/running head insert page numbers flush right. Then type “TITLE OF YOUR PAPER” in the header flushes left using all capital letters. The running head is a shortened version of your paper’s title and cannot exceed 50 characters including spacing and punctuation. Word limit requirement is enforced: your paper should be at least750 words and no longer than 1000 words. Assignment papers should have clear structure including: Title Page that should have title of your paper; author’s name; Institutional affiliation ֠Boston University; MET AD 741; and Date. Abstract that gives a concise summary of the key points of the paper. Abstract should be not more than 100 words (note: do not count towards the total word limit for the Assignment paper). Main Body of the paper is for detailed analysis of the key issues and circumstances of the company or business practice under consideration and how relevant concepts and frameworks from the course can be applied to understand what is going on. Main body should have appropriate sections and sub-sections to show structure and logic. The actual subhead titles can be descriptive normative or humorous to best reflect your own writing style. Recommendations section should be separate and occupy at least one third of the body of the paper. References that are properly cited and enclosures (Note: do not count towards the total word count limit for Assignment paper). Both assignments can be submitted only in word or pdf formats.
