Question 1
Resources: Harvard Business Publishing: Working Capital Simulation: Managing Growth Assignment Ch. 1 - 21 ofFundamentals of Corporate Finance WileyPLUS Assignments All additional resources from each week Review the following scenario: Acting as the CEO of a small company called Sunflower Nutraceuticals (SNC), you will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory. You must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm's financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity. Sign-in to the simulation and review each of the following: Welcome Statement How to Play Terminology Primer More Details (this includes information to help you understand how to play the simulation) Write a paper of no more than 1,400 words that analyzes your decisions during each phase (1-3) and how they influenced each of the following final outcomes (metrics) of SNC: Sales EBIT Net Income Free Cash Flow Total Firm Value Address the following in your paper: A summary of your decisions and why you made them How they affected SNC's working capital What general effects are associated with limited access to financing Include scholarly references (in addition to your course textbook and simulation materials) to support your positions. Format your paper consistent with APA guidelines.
Question 2
Instructions: Use the information presented in this packet for this assignment. To complete this assignment, read and understand the problem and decide the right descriptive and inferential statistical methods needed to solve the problem. Plan, calculate, analyze, and interpret all statistical procedures relevant to the data presented. Write and justify your statistical strategies and procedures. Write down the statistical analysis and your findings and conclusions. Your report can be presented in either a Word or an Excel format. Since it is an exam, you are supposed to do it on your own. Context The intent of this case is to analyze household income in two subdivisions. Each division has 50 households total. The head of household age and occupation are also recorded. The county manager is interested in finding out household income information about the two subdivisions in total and separate. Also of interest is whether any significant differences existed between the two subdivisions, and whether age or occupation affect the income level. In addition, the county manager is also interested in the opinions of the residents of the two subdivisions regarding the location of a new high school. Households were given a short questionnaire asking their views. The following questions made up this questionnaire. 1. Build the new high school in the existing park. 2. Expand the elementary school ground to include the new high school. 3. Build a new elementary school and a new high school both near the county land near the highway and keep the park as is. 4. Build a new elementary school and a new high school both in the park. 5. Don?t build the new high school. The households responded to these questions using the following rating scale. 1. (1) strongly agree 2. (2) agree 3. (3) agree somewhat 4. (4) disagree 5. (5) strongly disagree The county manager is interested in finding out how each subdivision and household by occupation responded to the survey. Were there any differences in questionnaire response between subdivision and occupation? Finally, the county manager seeks to see what relationship exists between household income and their responses to the questionnaire. As county analysts, your responsibility is to examine the data presented in this package, analyze it, and present your findings to the county manager. QUESTIONS: Your writing should include the statistical analysis and final answers to the following: 1. Why the two geographical subdivisions/groups are used and the manager wants to compare the two groups (Use your knowledge about the US economics and education)? How many cases are in each group? How the two subdivisions differ in age, income, and occupation? 2. Why occupation information is collected? Use a pie chart and display on the bar chart the percentages and frequency of the occupation information. How the different occupations differ in income? 3. Analyze and show all relevant descriptive statistics for age and answer how age is related to income. 4. How different age, income, and occupation differ in responding to Q1 and Q4? 5. How different age, income, and occupation differ in responding to Q2, Q3 and Q5? 6. Overall, how different age, income, and occupation differ in responses? 7. What conclusions/decisions can you make from the project if you are the manager?
Question 3
Abe and Brenda formed the AB Partnership ten years ago as a general partnership and have been very successful with the business. However, in the current year, economic conditions caused them to lose significant amounts, but they expect the economy and their business to recover and return to profitable operations by next year or the year after. Abe manages the partnership and works full time. Brenda has a full time job as an accountant at an annual salary of $39,000, but she also works in the partnership occasionally. She estimates that she spent about 120 hours working in the partnership this year. Abe has a 40% profits interest, a 50% loss interest and a basis in the partnership interest on December 31st (before this year's operations). The partnership has no liabilities at December 31st. Neither Abe nor Brenda currently has other investments. The AB Partnership incurs the following amounts during the year. Ordinary loss $100,000 SEC 1231 Gain 10,000 Tax Exempt Muni Bond Income 14,000 Long Term Capital Loss 14,000 Short Term Capital Loss 136,000 Early next year, the AB Partnership is considering borrowing $100,000 from a local bank to be secured by a mortgage on a building owned by the partnership with $150,000 FMV. Required: Prepare a presentation to be made to Abe and Brenda discussing this matter. Points to include in your discussion include: What amounts should Abe and Brenda report on their income tax returns for the current year from the AB Partnership? What are their bases in the partnership after taking all transactions into account? What planning ideas would you suggest for Brenda? Any other ideas?
Question 4
Question 1 (Multiple Choice Worth 5 points) Jack Robbins is saving for a new car. He needs to have $21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to the nearest dollar.) $22,680 $26,454 $16,671 $19,444 -------------------------------------------------------------------------------- Question 2 (True/False Worth 5 points) In the text, the perpetual British government war bonds were referred to as consols. True False -------------------------------------------------------------------------------- Question 3 (True/False Worth 5 points) Trey Hughes opened a pizza place last year. He expects to increase his revenue from last year by 7 percent every year for the next 10 years. This is an example of a growing annuity. True False -------------------------------------------------------------------------------- Question 4 (True/False Worth 5 points) The lower the discount rate, the lower the present value of a future cash flow. True False -------------------------------------------------------------------------------- Question 5 (Multiple Choice Worth 5 points) The process of converting future cash flows to its present value is time value of money discounting compounding none of the above -------------------------------------------------------------------------------- Question 6 (Multiple Choice Worth 5 points) Joachim Noah is investing $5,000 in an account paying 6.75 percent annually for three years. What is the interest-on-interest if interest is compounded? $1,012.50 $1,082.38 $82.38 $69.88 -------------------------------------------------------------------------------- Question 7 (Multiple Choice Worth 5 points) You plan to save $1,250 at the end of each of the next three years to pay for a vacation. If you can invest it at 7 percent, how much will you have at the end of three years? (Round to the nearest dollar.) $3,750 $3,918 $4,019 $4,589 -------------------------------------------------------------------------------- Question 8 (True/False Worth 5 points) The future value technique uses discounting to find the future value of each cash flow at the end of the project?s life. True False -------------------------------------------------------------------------------- Question 9 (True/False Worth 5 points) The rent paid for an apartment is an example of an ordinary annuity. True False -------------------------------------------------------------------------------- Question 10 (True/False Worth 5 points) The less frequently the interest payments are compounded, the larger the future value of $1 for a given time period. True False -------------------------------------------------------------------------------- Question 11 (Multiple Choice Worth 5 points) Jackson Electricals has borrowed $27,850 from its bank at an annual rate of 8.5 percent. It plans to repay the loan in eight equal installments. Beginning at the end of next year. What is its annual loan payment? (Round to the nearest dollar.) $4,708 $5,134 $4,939 $4,748 -------------------------------------------------------------------------------- Question 12 (True/False Worth 5 points) The sooner in the future you receive a dollar, the less it is worth today. True False -------------------------------------------------------------------------------- Question 13 (Multiple Choice Worth 5 points) Marcicela Sanchez needs to have $25,000 in five years. If she can earn 8 percent on any investment, what is the amount that she will have to invest every year for the next five years: (Round to the nearest dollar.) $5,000 $4,261 $4,640 $4,445 -------------------------------------------------------------------------------- Question 14 (True/False Worth 5 points) In computing the present and future value of multiple cash flows, each cash flow is discounted or compounded at the same rate. True False -------------------------------------------------------------------------------- Question 15 (True/False Worth 5 points) The present value of a perpetuity is the promised constant cash payment divided by the interest rate (i). True False -------------------------------------------------------------------------------- Question 16 (Multiple Choice Worth 5 points) Lorraine Jackson won a lottery. She will have a choice of receiving $25,000 at the end of each year for the next 30 years, or a lump sum today. If she can earn a return of 10 percent on any investment she makes, what is the minimum amount she should be willing to accept today as a lump-sum payment? (Round to the nearest hundred dollars.) $750,000 $334,600 $212,400 $235,700 -------------------------------------------------------------------------------- Question 17 (True/False Worth 5 points) The Rule of 72 allows one to calculate the return earned on an investment over six years. True False -------------------------------------------------------------------------------- Question 18 (Multiple Choice Worth 5 points) Your friend Jackson is asking to borrow today with a promise to repay $6,665 in four years. If you could earn 7.45 percent annually on any investment you make today, how much will you be willing to lend Jackson today? (Round to the nearest dollar.) $5,000 $4,035 $4,500 $5,150 -------------------------------------------------------------------------------- Question 19 (Multiple Choice Worth 5 points) Ray Seo has $5,000 to invest in a small business venture. His partner has promised to pay him back $8,200 in five years. What is the return earned on this investment? 9.3% 8.7% 11.1% 10.4% -------------------------------------------------------------------------------- Question 20 (Multiple Choice Worth 5 points) Roger Stamp wants to save $1,450 at the end of each of the next four years to use as a down payment for a car. If he can invest it at 6 percent, how much will he have at the end of four years/ (Round to the nearest dollar.) $6,343 $5,918 $6,019 $6,589
Question 5
CA17-1 (Issues Raised about Investment Securities) You have just started work for Warren Co. as part of the controller?s group involved in current financial reporting problems. Jane Henshaw, controller for Warren, is interested in your accounting background because the company has experienced a series of financial reporting surprises over the last few years. Recently, the controller has learned from the company?s auditors that there is authoritative literature that may apply to its investment in securities. She assumes that you are familiar with this pronouncement and asks how the following situations should be reported in the financial statements. Situation 1 Trading securities in the current assets section have a fair value that is $4,200 lower than cost. Situation 2 A trading security whose fair value is currently less than cost is transferred to the available-for-sale category. Situation 3 An available-for-sale security whose fair value is currently less than cost is classified as noncurrent but is to be reclassified as current. Situation 4 A company?s portfolio of available-for-sale securities consists of the common stock of one company. At the end of the prior year the fair value of the security was 50% of original cost, and this reduction in market value was reported as an other than temporary impairment. However, at the end of the current year the fair value of the security had appreciated to twice the original cost. Situation 5 The company has purchased some convertible debentures that it plans to hold for less than a year. The fair value of the convertible debentures is $7,700 below its cost. Instructions What is the effect upon carrying value and earnings for each of the situations above? Assume that these situations are unrelated.
