Showing 964–972 of 1959 results
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Calculation of the equivalent annual cost of Harwell University
$7.00Harwell University must purchase word processors for its typing lab. The university can buy 10 EVF word processors that cost $8,000 each and have annual, year-end maintenance costs of $2,000 per machine. The EVF word processors will be replaced at the end of year 4 and have no value at that time. Alternatively, Harwell can buy 11 AEH word processors to accomplish the same work.
The AEH word processors will be replaced after three years. They each cost $5,000 and have annual, year-end maintenance costs of $2,500 per machine. Each AEH word processor will have a resale value of $500 at the end of three years. The university’s opportunity cost of funds for this type of investment is 14 percent. Because the university is a nonprofit institution, it does not pay taxes. It is anticipated that whichever manufacturer is chosen now will be the supplier of future machines.
Would you recommend purchasing 10 EVF word processors or 11 AEH machines?
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Yohe Telecommunications is a multinational corporation
$15.00Yohe Telecommunications is a multinational corporation that produces and distributes telecommunications technology. Although its corporate headquarters are located in Maitland, Florida, Yohe usually buys its raw materials in several different foreign countries using several different foreign currencies. The matter is further complicated because Yohe often sells its products in other foreign countries. One product in particular, the SY-20 radio transmitter, draws Component X, Component Y, and Component Z (its principal components) from Switzerland, France, and England, respectively. Specifically, Component X costs 165 Swiss francs, Component Y costs 20 euros, and Component Z costs 105 British pounds. The largest market for the SY-20 is Japan, where the product sells for 38,000 Japanese yen. Naturally, Yohe is intimately concerned with economic conditions that could adversely affect dollar exchange rates. You will find Tables 17-1, 17-2, and 17-3 useful for completing this problem.
- How much in dollars does it cost Yohe to produce the SY-20? What is the dollar sale price of the SY-20?
- What is the dollar profit that Yohe makes on the sale of the SY-20? What is the percentage profit?
- If the U.S. dollar was to weaken by 10% against all foreign currencies, what would be the dollar profit for the SY-20?
- If the U.S. dollar was to weaken by 10% only against the Japanese yen and remained constant relative to all other foreign currencies, what would be the dollar and percentage profits for the SY-20?
- Using the 180-day forward exchange information from Table 17-3, calculate the return on 1-year securities in Switzerland assuming the rate of return on 1-year securities in the United States is 4.9%.
- Assuming that purchasing power parity (PPP) holds, what would be the sale price of the SY-20 if it was sold in England rather than Japan?
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Rapp Corporation Case
$5.00You are provided with the following information for Rapp Corporation, effective as of its April 30, 2012, year-end.
Accounts payable …………..…………… $ 2,100
Accounts receivable ……………………….. 9,150
Accumulated depreciation-equipment ….…. 6,600
Depreciation expense ……………………… 2,200
Cash ………………………………………. 21,955
Common stock …………………………….. 20,000
Dividends …………………………………… 2,800
Equipment …………………………………. 24,250
Sales revenue ………………………………. 21,450
Income tax expense ………………………….. 1,600
Income taxes payable ………………………….. 300
Interest expense ……………………………….. 350
Interest payable ……………………………….. 175
Notes payable (due in 2016) ………………… 5,700
Prepaid rent …………………………………… 380
Rent expense …………………………………. 760
Retained earnings, beginning ……………… 13,960
Salaries and wages expense …………………. 6,840Instructions
(a) Prepare an income statement and a retained earnings statement for Rapp Corporation for the year ended April 30, 2012.
(b) Prepare a classified balance sheet for Rapp as of April 30, 2012.
(c) Explain how each financial statement interrelates with the others. -
Analysis of transactions and preparation of the income statement and balance sheet Zealock Bookstore
$5.00Analysis of transactions and preparation of the income statement and balance sheet Zealock Bookstore opened a bookstore near a college campus on July 1, 2008. Transactions and events of Zealock Bookstore during 2008 follow. The firm uses the calendar year as its reporting period.
(1) July 1, 2008: Receives $25,000 from Quinn Zealock for 25,000 shares of the bookstore’s $1 par value common stack.
(2) July 1, 2008: Obtains a $30,000 loan from a local bank for working capital needs. The loan bean interest at 6% per year. The loan is repayable with interest on June 30, 2009
(3) July 1, 2008: Signs a rental agreement for three years at an annual rental of $20,000. Pays the first year’s rent in advance.
(4) July 1, 2008: Acquires bookshelves for $4.000 cash. The bookshelves have an estimated useful life of five years and zero salvage value.
(5) July 1, 2008: Acquires computers for $10,000 cash. The computers ha an estimated useful life of three ?~ears and $1.000 salvage value.
(6) July 1, 2008: Makes security deposits with various book distributors totaling $8,000. The deposits are refundable on June 30. 2009. If the bookstore pays on time all amounts due for books purchased from the distributors between July 1, 2008, and June 30, 2009.
(7) During 2008: Purchases books on account from various distributors costing $160,000.
(8) During 2008: Sells books costing $140,000 for $172,800. Of the total sales, $24,600 is for cash, and $148,200 is on account.
(9) During 2008: Returns unsold books and books ordered in error costing $14,600. The firm had not yet paid for these books.
(10) During 2008: Collects $142,400 from sales on account.
(11) During 2008: Pays employees compensation of $16,700.
(12) During 2008: Pays book distributors $139,800 of the amounts due for purchases on account.
(13) December 28, 2008: Receives advances from customers of $850 for special-order books that the bookstore will order and expects to receive during 2009.
(14) December 31, 2008: Records an appropriate amount of interest expense on the loan in (2) for 2008.
(15) December 31, 2008: Records an appropriate amount of rent expense for 2008.
(16) December 31, 2008: Records an appropriate amount of depreciation expense on the bookshelves in (4).
(17) December 31, 2008: Records an appropriate amount of depreciation expense on the computers in (5).
(18) December 31, 2008: Records an appropriate amount of income tax expense for 2008. The income tax rate is 40%. The taxes are payable on March 15, 2009.
a. Using T-accounts enter the 18 transactions and events above.
b. Prepare an income statement for the six months ending December 31, 2008.
c. Prepare a balance sheet on December 31, 2008.
Note: Problem 37 extends this problem to income transact ions for 2009. -
What is the synergy worth? What is the maximum price Novell can pay for WordPerfect?
$7.00In April 1994, Novell, Inc. announced its plan to acquire WordPerfect Corporation for
$1.4billion.
Atthetimeoftheacquisition,therelevantinformationaboutthetwo companies was as follows:
Novell
WordPerfect
Revenues $1,200.00
$600.00
Costof Goods Sold (w/o Depreciation) 57.00%
75.00%
Depreciation $42.00
$25.00
Tax Rate 35.00%
$25.00%
CapitalSpending $75.00
$40.00
WorkingCapital(as%ofRevenue) 40.00%
30.00%
Beta 1.45
1.25
ExpectedGrowth Rate in Revenues/EBIT 25.00%
15.00%
ExpectedPeriod of High Growth 10years
10years
GrowthrateAfterHigh-GrowthPeriod 6.00%
6.00%
BetaAfterHigh-Growthperiod 1.10
1.10
Capital spending will be offset by depreciation after the high-growth period. Neither firm has any debt outstanding. The treasury bond rate is 7%.
a. Estimate the value of Novell, operating independently.
b. Estimate the value of WordPerfect, operating independently. c. Estimate the value of the combined firm, with no synergy.
d. As a result of the merger, the combined firm is expected to grow 24% a year for the high-growth period. Estimate the value of the combined firm with the higher growth.
e. Whatis thesynergyworth? Whatisthe maximumpriceNovell canpayfor WordPerfect?
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Chill Mount Creamery manufactures a variety of Ice creams…
$10.00Chill Mount Creamery manufactures a variety of Ice creams. The company is considering introducing a new product (Yugo cream). The company’s manager has been provided with the following information by their business analyst.
The project has an anticipated economic life of 5 years. The Company plans to spend $1,300,000 on advertising campaign to boost sales.The Company’s interest expense each year will be $500,000. The Company is required to purchase a new machine to produce the new product. The machine’s initial cost is $5,500,000. The machine will be depreciated on a straight – line basis over 5 years. The Company anticipates that the machine will last for 10 years; the salvage value after 5 years is $500,000.
Six months ago the Company also paid $300,000 to a firm to do research regarding new product. If the Company goes ahead with the new product, it will have an effect on the Company’s net operating capital. The forecasted net working capital will be $200,000 (at time zero). The new product is expected to generate sales revenue of $1,500,000, 2,500,000, 3,500,000, 4500,000 and 5,500,000 in year 1, 2, 3, 4 and 5 respectively. Each year the operating cost (not including depreciation) expected to equal 30 percent of sales revenue. In addition the Company expects with introduction of new product, sale of other ice cream increase by $500,000 after taxes each year.
The Company’s overall WACC is 7.5 percent. However, the proposed project is riskier than the average project; the new project’s WACC is estimated to be 10 percent. The Company’s tax rate is 30 percent.
What is the net present value, internal rate of return, payback period, discounted payback period, and profitability index of the proposed project. Based on your analysis should the project be accepted? Discuss.
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HA1022 Principles of Financial Markets – Assignment
$15.00HA1022 Principles of Financial Markets – Assignment Marking Guide
Choose two (2) companies in the same industry and work on the criterion mentioned below:
- Business Overview
- Risk
- Short Term Financial Policies of the business
- Current Capital Structure
- Current Dividend Policy
Recommendations
References
- Students need to clearly show the theoretical understanding of the above stated issues, defining them and using references where required.
- Further, students need to relate the theory to the companies selected by analysing the data and the stating as to how the companies are managing their Risk, Short Term Financial Policy, Current Capital Structure and their Current Dividend Policy.
Note: Students would be assessed as follows:
1 Business Overview 5 Marks 2 (Criterion: A, B, C, D, E) – Theory 5 Marks 3 (Criterion: A, B, C, D, E) – Theory related to companies and analysis 5 Marks 4 Recommendations 2.5 Marks 5 Harvard Reference 2.5 Marks TOTAL 20 Marks -
Do we have everything we need on sales and costs?…
$7.00“Do we have everything we need on sales and costs?” you ask. ”It must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apex expansion project.”
“We have the data from James and Luke regarding projected sales and costs, respectively, for the food packaging project,” says Mary. “It is feasible to project that we will receive a tax break from this implementation. I have information from our audit firm, which indicates that future depreciation methods for taxes will be straight-line; however, the corporate rates will be reduced to 35% as we assumed in our weighted average cost of capital (WACC) calculation.”
“That sounds good,” you say.
“Right,” says Mary. “You can use the WACC of 1% listed in the excel file posted for the computation of the NPV and comparison for IRR.”
“I’ve got the information I need from Luke and James,” you say. “Does this look right to you? Here’s what they gave me,” you say, as you hand a sheet of paper to Mary.
“Let’s look at this now while we’re together,” she says.
The information you hand to Mary shows the following:
- Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year
- Project and equipment life: 5 years
- Sales: $25 million per year for five years
- Assume gross margin of 60% (exclusive of depreciation)
- Depreciation: Straight-line for tax purposes
- Selling, general, and administrative expenses: 10% of sales
- Tax rate: 35%
You continue your conversation.
“It looks good,” says Mary. “Use this information from Luke and James to compute the cash flows for the project.”
“No problem,” you say.
“Then, compute NPV and IRR of the project using the Excel spreadsheet I sent earlier today,” says Mary. “Use the IRR financial function for the computation of IRR.”
“Okay,” you say. “I’ll submit my Excel file showing the computation of cash flows, NPV, and IRR by the end of week so you can look at it over the weekend.”
“Thanks,” says Mary.
To recap: Complete the above worksheet for this assignment.
FOR NPV AND COMPARISON FOR IRR.
RQUIRED A COMPLETE EXCEL FILE SHOWING THE COMPUTATION OF CASH FLOWS, NPV, AND IRR FROM THE ABOVE SCENARIO.
Additional Files:
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Suppose that you manage a fund with an expected rate of return of 12.5% and a standard deviation of 18%.
$5.00Suppose that you manage a fund with an expected rate of return of 12.5% and a standard deviation of 18%. The T-bill rate currently is 4%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund.
a) What is the expected return and standard deviation of your client’s portfolio?
b) Suppose your risky portfolio includes the following investments in the given proportions:
Stock A 40%
Stock B 25%
Stock C 35%
What are the investment proportions of your client’s overall portfolio, including the position in T-bills?
c) What is the reward-to-volatility ratio (S) of your risky portfolio and your client’s overall portfolio?