Question 1
TRUE OR FALSE 1. To record the amortization of a premium on a bond investment, Investment in Bonds would be debited and interest revenue would be credited? 2. Any gains or losses on the sale of long term investments would normally would be reported in the other income or other loss section of the income statement. 3. The fair market value of bond investment should be disclosed, either on the face of the financial statements or in an accompanying note. 4. Comprehensive income in all changes in stockholders' equity during the period except those resulting from dividends and stockholders' investments. 5. Other comprehensive income transactions should be reported net of taxes. 6. Comprehensive income does not affect net income or retained earnings. 7. Although marketable securities may be retained for several years, they continue to be classified as temporary, provided they are readily marketable and cant be sold for cash at any time. 8. Temporary investments are reported in the balance sheet at cost. 9. Unrealized gains and losses are reported as other comprehensive income items until the related securities are sold, the the gains and losses become realized and are included in determining net income. 10. Ordinarily, a corporation owning a significant portion of the voting stock of another corporation accounts for the investment using the equity method. 11. Under the equity method, a stock purchase is recorded at its original cost, but is not subsequently adjusted to fair market value. 12. The equity method causes the investment account to mirror the proportional changes in book value of the investee. 13.It is NOT possible for one company to influence the operating policies of another company unless it owns more than 50% interest in that company. Multiple Choice: 1. Long-term investments are held for all of the listed reasons below EXCEPT A. their income B. long-term potential gain C. Influence over another business entity D. meet current cash needs 2. Temporary investments are A. recorded at cost but reported at fair market value B. recorded at cost and reported at cost C. recorded at cost but reported at lower of cost or fair market value D. recorded at fair market value and reported at fair market value. 3. Blanton Corporation purchased 17% of the outstanding chases of common stock of Worton Corporation as a long term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation? A. debited Investment in Worton Corporation; credit cash B. debit Cash; credit Dividend Revenue C. debit Investment in Worton Corporation; credit Income of Worton Corporation D. debit Cash; credit Investment in Worton Corporation 4. An investor purchased 500 shares of common stock $ 25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale. A. $4,350 gain B. $400 gain C. $400 loss D. 16,800 loss 5. On May 1, 2010 , Stanton Company purchased $50,000 of Harris Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2010. Stanton received its first semi-annular interest. On February 1, 2011, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on June 30, 2010 will include: A. a credit interest revenue for $2,000 B. a debit to cash for $3,000 C. a debit to cash for $2,000 D. a credit to interest receivable for $1,000
Question 2
Hello Tutor, From the document titled as "Business_and_Its_Environment_(7th_Edition)" I need some case study questions answered. See below. Chapter 1: Case study on page 16 (pharmaceutical) question 1 Case study on page 19 (mcdonalds) question 4 Chapter 2: Case study on page 47 ( facebook) question 1 Chapter 4: Case study on page 92 (shell) question 3 Case study on page 95 (nike) question 1 and 3 Chapter 5: Case study on page 124 ( walmart) question 1 Chapter 7: Case study on page on page 192 (walmart) question 2 Chapter 8: Case study on page 218 ( walmart) question 1 Case study on page 225 (amazon) question 1 Chapter 10: Case study on page 286 (Merck) question 1 on page 287 top right side Chapter 11: Case study on page 308 ( goldman) question 1 Chapter 12: Case study on page 348, question 1 Chapter 15: Case study on page on 442 ( the european), question 2 Chapter 16: Case study on page 470 (apple), question 3 Case study on page 472 (google), question 2 Chapter 20: Case study on page 586 (walmart), question 1 Case study on page 588 (facebook), question 1 Chapter 22: Case study on page 652 (genetic), question 2 Chapter 24: Case study on page 702 (debeers A), question 1 Case study on page 703 (debeers B), question 1 -All of these question can be found under the "preparation questions" -Each answer should be atleast a paragraph long Please let me know if you have any questions. Thank you
Question 3
Question 1. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING PERIOD AND THAT CAPTURES THE VALUE OF ALL SUBSEQUENT CASH FLOWS. ESTIMATE THE VALUE TODAY FOR EACH OF THE FOLLOWING SETS OF FUTURE CASH FLOW FORECASTS : A. CLAYMORE MINING COMPANY ANTICIPATES THAT IT WILL EARN FIRM FREE CASH FLOWS FCFs OF 4 MILLION PER YEARS FOR EACH OF THE NEXT FIVE YEARS. MOREOVER, BEGINING IN YEAR 6, THE FIRM WILL EARN FCF OF 5 MILLION PER YEAR FOR THE INDEFINITE FUTURE. IF CLAYMORE?S COST OF CAPITAL IS 10%, WHAT IS THE VALUE OF THE FIRM?S FUTURE CASH FLOWS ? B. SHAMELESS COMMERCE INC. HAS NO OUTSTANDING DEBT AND IS BEING EVALUATED AS A POSSIBLE ACQUISITION. SHAMELESS?S FCFs FOR THE NEXT YEARS ARE PROJECTED TO BE 1 MILLION PER YEAR, AND, BEGINNING IN YEAR 6, THE CASH FLOWS ARE EXPECTED TO BEGIN GROWING AT THE ANTICIPATED RATE OF INFLATION WHICH IS CURRENTLY 3% PER ANNUM. IF THE COST OF CAPITAL FOR SHAMELESS IS 10%, WHAT IS YOUR ESTIMATE OF THE PRESENT VALUE OF THE FCFs ? C. DUSTIN ELECTRIC INC. IS ABOUT TO BE ACQUIRED BY THE FIRM?S MANAGEMENT FROM THE FIRM?S FOUNDER FOR 15 MILLION IN CASH. THE PURCHASE PRICE WILL BE FINANCED WITH 10 MILLIOM IN NOTES THAT ARE TO BE REPAID IN 2 MILLION INCREMENTS OVER THE NEXT FIVE YEARS. AT THE END OF THIS FIVE YEAR PERIOD. THE FIRM WILL HAVE NO REMAINING DEBT. THE FCFS ARE EXPECTED TO BE 3 MILLION A YEAR FOR THE NEXT FIVE YEARS. BEGINING IN YEAR 6, THE FCFS ARE EXPECTED TO GROW AT A RATE FO 2% PER YEAR INTO THE INDEFINITE FUTURE. IF THE UNLEVERED COST OF EQUITY FOR DUSTIN IS APPROXIMATELY 15% AND THE FIRM?S BORROWING RATE ON THE BUYOUT DEBT IS 10% (BEFORE TAXES AT A RATE OF 10%), WHAT IS YOUR ESTIATE OF THE VALUE OF THE FIRM ? Question 2. Conceptual analysis of real options: Highland properties owns two adjacent four-unit apartment buildings that are both on 20,000 square feet of land near downtown Portland, Oregon. One of the properties is in very good condition, and the apartments can be rented or $2,000 per month. The units in the other property require some refurbishing and in their current condition can be rented for only about $1,500 per month. Recent zoning changes, combined with changes in market demand, suggest that both lots can be redeveloped. If they are redeveloped, the existing units would be torn down and new luxury apartment buildings would be built on the site, each with 10 apartment units. The cost of the 10-unit buildings is estimated to be about $1.5 million, and each of the 10-apartment unit can be rented for 2,500 per month under current market conditions. Similar properties that have been refurbished are selling for 10 times their annual rentals. a. Identify the real option(s) in this example. b. What are the basic elements of the option(s) (i.e., the underlying asset on which the option is based, the expiration date, and the exercise price)? c. Estimate the value of the option to develop the property. (Hint: make any assumptions you must to arrive at an estimate.),Yyes,I want to decrease the price up to 20$ ?,please let me know as soon as soon as possible because assignment due tonight thanks,Hello can you Do only problem 1for 40$ but the due date is Friday the 13 10pm plz let me Question 1. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING PERIOD AND THAT CAPTURES THE VALUE OF ALL SUBSEQUENT CASH FLOWS. ESTIMATE THE VALUE TODAY FOR EACH OF THE FOLLOWING SETS OF FUTURE CASH FLOW FORECASTS : A. CLAYMORE MINING COMPANY ANTICIPATES THAT IT WILL EARN FIRM FREE CASH FLOWS FCFs OF 4 MILLION PER YEARS FOR EACH OF THE NEXT FIVE YEARS. MOREOVER, BEGINING IN YEAR 6, THE FIRM WILL EARN FCF OF 5 MILLION PER YEAR FOR THE INDEFINITE FUTURE. IF CLAYMORE?S COST OF CAPITAL IS 10%, WHAT IS THE VALUE OF THE FIRM?S FUTURE CASH FLOWS ? B. SHAMELESS COMMERCE INC. HAS NO OUTSTANDING DEBT AND IS BEING EVALUATED AS A POSSIBLE ACQUISITION. SHAMELESS?S FCFs FOR THE NEXT YEARS ARE PROJECTED TO BE 1 MILLION PER YEAR, AND, BEGINNING IN YEAR 6, THE CASH FLOWS ARE EXPECTED TO BEGIN GROWING AT THE ANTICIPATED RATE OF INFLATION WHICH IS CURRENTLY 3% PER ANNUM. IF THE COST OF CAPITAL FOR SHAMELESS IS 10%, WHAT IS YOUR ESTIMATE OF THE PRESENT VALUE OF THE FCFs ? C. DUSTIN ELECTRIC INC. IS ABOUT TO BE ACQUIRED BY THE FIRM?S MANAGEMENT FROM THE FIRM?S FOUNDER FOR 15 MILLION IN CASH. THE PURCHASE PRICE WILL BE FINANCED WITH 10 MILLIOM IN NOTES THAT ARE TO BE REPAID IN 2 MILLION INCREMENTS OVER THE NEXT FIVE YEARS. AT THE END OF THIS FIVE YEAR PERIOD. THE FIRM WILL HAVE NO REMAINING DEBT. THE FCFS ARE EXPECTED TO BE 3 MILLION A YEAR FOR THE NEXT FIVE YEARS. BEGINING IN YEAR 6, THE FCFS ARE EXPECTED TO GROW AT A RATE FO 2% PER YEAR INTO THE INDEFINITE FUTURE. IF THE UNLEVERED COST OF EQUITY FOR DUSTIN IS APPROXIMATELY 15% AND THE FIRM?S BORROWING RATE ON THE BUYOUT DEBT IS 10% (BEFORE TAXES AT A RATE OF 10%), WHAT IS YOUR ESTIATE OF THE VALUE OF THE FIRM ?
Question 4
You are the new manager of the local Greatbuy Electronics store. Top management of Greatbuy Electronics is convinced that management training should include the active participation of store managers in the budgeting process. You have been asked to prepare complete master budget for your store June, July, and August. All accounting is done centrally so you have no expert help on the premises. In addition, tomorrow the branch manager and the assistant controller will be here to examine your work; at that time, they will assist you in formulating the final budget document. The idea is to have you prepare the initial budget on your own so that you gain more confidence about accounting matters. You want to make a favorable impression on your supervisors, so you gather the financial statement and sales data of may 31, 2008. Credit sales are 70% of the total sales. Seventy percent of each credit account is collected in the following the sale and the remaining 30% are collected in the subsequent month. Assume the bad debts are negligible and can be ignored. The accounts receivable on May 31 are the result of bad credit sales for April and May: (.30 * .70 * $130,000) + (1.0 * .70 * $130,000) = $118, 300. The policy is to acquire enough inventories each month to equal to the following month?s projected cost of goods sold. All purchases are paid for in the month following purchase. The average gross profit on sales is 37%. Salaries, wages, and commissions average 24% of sales; all other items are $9,000 monthly. Assume that these variable and fixed expenses require cash disbursements each month. Depreciation is $ 1,000 monthly. In June, $5,000 is going to be disbursed for fixtures acquired and recorded in furniture and fixtures in may. The May 31 balance accounts payable includes this amount. Assume that a minimum cash balance of $ 4,000 is to be maintained. Also assume that all borrowings are effective the beginning of the month and all repayments are made at the end of the month of repayment. Interest is compounded and added to the outstanding balance each month, but interest is paid only at the ends of months when principal is repaid. The interest is 9% per year; round interest computations and interest payments to the nearest dollar. Interest payment may be any dollar amount but all borrowing and repayments of principal are made in multiples of $ 1,000. 1. Prepare a budget income statement for the coming June- august quarter, a cash budget for each of the 3months, and a budgeted balance sheet for August 31, 2008. All Operations are evaluated on before-income- taxes may be ignored here. 2. Explain why there is need for a bank loan and what operating sources supply cash for repaying the bank loan. Cash $ 6,600 Recent and Projected Sales Inventory 151,200 April $130,000 Account receivable 118,300 May 130,000 Net furniture and fixtures 52,000 June 240,000 Total Assets $328,100 July 170,000 Accounts payable $ 156, 200 August 170,000 Owner?s equity 171,900 September 120,000 Total liabilities & O&E $328,100
Question 5
Consider each case below independently. (Ignore income taxes.) (refer to attached tables) 8. Required: 1a. Minden Company?s required rate of return is 15%. The company can purchase a new machine at a cost of $40,350. The new machine would generate cash inflows of $15,000 per year and have a four-year life with no salvage value. Compute the machine?s net present value. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Net present value $ 1b. Is the machine an acceptable investment? Yes No check my work 9. 2. Leven Products, Inc., is investigating the purchase of a new grinding machine that has a projected life of 15 years. It is estimated that the machine will save $20,000 per year in cash operating costs. What is the machine?s internal rate of return if it costs $111,500 new? (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return % check my work 10. 3a. Sunset Press has just purchased a new trimming machine that cost $14,125. The machine is expected to save $2,500 per year in cash operating costs and to have a 10-year life. Compute the machine?s internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return % 3b. If the company?s required rate of return is 16%, did it make a wise investment? Yes No
