Question 1
I have two questions need you help. see the attachment below: ?If you can answer part of them then it should be all right ? Seven years ago, after 15 years in public accounting, Fred Hooker, FCPA, resigned his positions as manager of systems for Cooke, Bray and Jackson Public Accountants and started Montage Software Limited. In the two years preceding his departure from Cooke Bray and Jackson, Fred had spent nights and weekends developing a sophisticated cost accounting software program that became Montage?s initial product offering. As the firm grew, Fred planned to develop and expand the software product offerings ? all of which would be related to streamlining the accounting process of medium ? to large sized manufacturers. Although Montage experienced losses during its first two years of operation ? 2007 and 2008 ? its profit has increased steadily from 2008 to the present (2013). The firms profit history, including dividend payments and contributions to retained earnings, is summarised in Table 1. Fred started the firm with a $100,000 investment ? his savings of $50,000 as equity and a $50,000 long-term loan from the bank. He had hoped to maintain his initial 100% ownership in the corporation, but after experiencing a $50,000 loss during the first year of operation (2005), he sold 60% of the shares to a group of investors in order to obtain needed funds. Since then, no other share transactions have taken place. Although he owns 40% of the firm, Fred actively manages all aspects of its activities; the other shareholders are not active in the management of the firm. The shares closed at $4.50 in 2012 and at $5.28 in 2013. Fred has just prepared the firm?s 2013 income statement, balance sheet and statement of retained earnings, shown in Tables 2, 3 and 4, along with the 2012 balance sheet. In addition, he compiled the 2013 ratio values and industry average values, which are applicable to both 2010 and 2013. These are summarised in Table 5. Fred is quite pleased to have achieved record earnings of $48,000 in 2013, but he is concerned about the firm?s cash flows. Specifically, he is finding it more and more difficult to pay the firm?s bills in a timely manner. To gain insight into these cash flow problems, he is planning to prepare the firm?s 2013 operating cash flow and free cash flow. Fred is further frustrated by the firm?s inability to afford to hire a software developer to complete development of a cost estimation package that is believed to have ?blockbuster? sales potential. Fred began development of this package two years ago, but the firms growing complexity has forced him to devote more of his time to administrative duties, thereby halting the development of this product. Fred?s reluctance to fill this position stems from his concern that the added $80,000 per year in salary and benefits for the position would certainly lower the firms earning per share (EPS) over the next couple of years. Although the project?s success is no way guaranteed, Fred believes that, if the money were spent to hire the software developer, the firm?s sales and earnings would rise significantly once the two to three year development, production and marketing process was completed. With all these concerns in mind, Fred set out to review the various data to develop strategies that would help to ensure a bright future for Montage Software. Fred believed that, as part of this process, a thorough ratio analysis of the firm?s 2013 results would provide important additional insights. Required 1. a) On what financial goal does Fred seem to be focusing? Is it the correct goal? Explain your answer. ?b) Could a potential agency problem exist in this firm? Explain. (1.5 Marks) 2. Calculate the firm?s earnings per share (EPS) for each year, recognising that the number of shares issued has remained unchanged since the firm?s inception. Comment on the EPS performance in view of your response to question 1a. (1.5 Marks) 3. Use the financial data presented to determine Montage?s operating cash flow (OCF) and free cash flow (FCF) in 2013. Evaluate your findings in light of Montage?s current cash flow difficulties. (1.5 Marks) 4. Analyse the firm?s financial condition in 2013 as it relates to a) liquidity, b) activity, c) debt and d) probability, using the financial statements provided in Tables 2 and 3 and ratio data included in Table 5. Be sure to evaluate the firm on both a cross-sectional and a time-series basis. (3 Marks) 5. What recommendations would you make to Fred about hiring a new software developer? Relate your recommendation here to your responses to question 1a. (1.5 Marks) /Users/Katherine/Desktop/???? 2014-08-14 ??11.42.25.png /Users/Katherine/Desktop/???? 2014-08-14 ??11.42.31.png /Users/Katherine/Desktop/???? 2014-08-14 ??11.42.43.png /Users/Katherine/Desktop/???? 2014-08-14 ??11.42.49.png /Users/Katherine/Desktop/???? 2014-08-14 ??11.42.53.png Question two Briefly describe the following theories of the general shape of the yield curve. (a) expectations theory; (b) liquidity preference theory; and (c) market segmentation theory (300 words).
Question 2
Review of Financial Research Report: This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment. Needs to be at least 5 pages, and it needs to cover the following topics: (Additional Comments: The firm has to be publicly-traded. Please only choose a corporation that is headquartered in the United States of America. It is fine if the firm does not have foreign operations, but if the firm does have foreign operations please state how the foreign operations affect the firm?s financial condition.) Company Overview. Conduct research and describe the company, its operations, locations, markets, and lines of business. Collect financial statements for the past three years, fiscal or calendar. (Additional Comments: The ?Company Overview? has two distinct sections. The first section concerns the corporation?s operations. You should separate each distinct section in the problem as follows: a. Describe the company in general (You could include the mission statement of the firm), b. Describe the company?s operations, c. Describe the company?s locations, d. Describe the company?s markets, e. Describe the company?s lines of businesses. You should do more than just cut-and-paste from the Internet. You may want to provide your own commentary on each of the topics when appropriate. The second section of the ?Company Overview? section is to collect the financial statements of the firm for the past three years. You should include all four of the financial statements: Balance Sheet, Income Statement, Cash Flow Statement, and the Statement of Owner?s Equity or this could be known as the Statement of Retained Earnings. Please be sure to include the last three fiscal years of financial statements. You may want to include these financial statements in an appendix to your project.) o Ratio analysis. Perform trend and ratio analysis on current and fixed assets, current and long term liabilities, owner?s equity, sales revenues, EBIT, net income, and earnings per share. Project these trends for three years. (Additional Comments: To complete the ?Ratio Analysis? section of the project you will need to address 9 separate items. Please note that to show a trend you should state each of the items for the past three fiscal years. Also note that you will need to project these trends out for the next three years. So in total you are stating the 9 items for 2008, 2009 and 2010, and then projecting the 9 items out for 2011, 2012 and 2013. The forecasting method used should be stated in the project. Some papers have included 9 separate graphs showing the historical figures and the forecasted figures. If you are producing a series of graphs, please make sure to state the figures out for each of the years either inside or outside the graph?s information.) o Stock price analysis. Research the company?s common stock price for the past five years. Research the Standard & Poor?s Stock Market Index (S&P 500) for the past five years. Chart the price movement in the company?s common stock against the S&P price movement. State and support your opinion on the company?s common stock as an investment opportunity. (Additional Comments: Please note that there are 4 distinct sections to the ?Stock Price Analysis? section of the project.,Hi RachelP How do I get a reply for my questions?,Hi Tutor My question shows "awaiting for answer" 1. How do I know if some one is working on that? 2. as I couldn't get access on my first e-mail, I created another e-mail. how can I inform you? if there is any way to contact you please lt me know asap. Thanks!,Thanks! have a successful work! but as I couldn't get access on my first e-mail I am going I have a new e-mail address albaalma1991@gmail.com,Hi Rachel Is this attachement done for my question or you made it by mistake? This looks like it was prepared before three years, second it doesn't include 9 ratio analysis. my question was : stating the 9 items for 2008, 2009 and 2010, and then projecting the 9 items out for 2011, 2012 and 2013. The forecasting method used should be stated in the project. Some papers have included 9 separate graphs showing the historical figures and the forecasted figures. If you are producing a series of graphs..... Could you please check it again?
Question 3
Chapter 10 6. The Hartford Telephone Company has a $1,000 par value bond outstanding that pays 11 percent annual interest. The current yield to maturity on such bonds in the market is 14 percent. Compute the price of the bonds for these maturity dates: a. 30 years. b. 15 years. c. 1 year. 13. Tom Cruise Lines, Inc., issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 12 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return ........................ 3% Inflation premium ......................... 5 Risk premium .............................. 4 Total return ............................... 12% Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 20 years remaining until maturity. Compute the new price of the bond. 24. Bedford Mattress Company issued preferred stock many years ago. It carries a fixed dividend of $8 per share. With the passage of time, yields have gone down from the original 8 percent to 6 percent (yield is the same as required rate of return). a. What was the original issue price? b. What is the current value of this preferred stock? Chapter 11 7. The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 8 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 20 percent higher; that is, firms that paid 10 percent for debt last year will be paying 12 percent this year. a. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on its cost last year and the 20 percent increase? b. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of the debt be? 15. The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 2 percent less than that for preferred stock. Based on the facts below, is she correct? Debt can be issued at a yield of 10.6 percent, and the corporate tax rate is 35 percent. Preferred stock will be priced at $50 and pay a dividend of $4.40. The flotation cost on the preferred stock is $2. 19. United Business Forms? capital structure is as follows: Debt ............................................ 35% Preferred stock ........................... 15 Common equity .......................... 50 The aftertax cost of debt is 7 percent, the cost of preferred stock is 10 percent, and the cost of common equity (in the form of retained earnings) is 13 percent. Calculate United Business Forms? weighted average cost of capital in a manner similar to Table 11?1 on page 332.,Table 11?1 Cost of capital?Baker Corporation (1) (2) (3) Cost (aftertax) Weights Weighted Cost Debt ............................................................... Kd 7.05% 30% 2.12% Preferred stock .............................................. Kp 10.94 10 1.09 Common equity (retained earnings) .............. Ke 12.00 60 7.20 Weighted average cost of capital .................. Ka 10.41%,Hopefully this works better :) Here is Ch 11. page 332 is the 2nd page, I think.,Hello, thanks for answering the first question. But, I paid 30$ for all six questions to be answered... are you going to answer them? The excel document only contained the first one...
Question 4
Continuous improvement (continuation of 7-24). The Monroe Corporation sets monthly standard costs using a continuous-improvement approach. In January 2012, the standard direct material cost is $45 per unit and the standard direct manufacturing labor cost is $15 per unit. Due to more efficient operations, the standard quantities for February 2012 are set at 0.980 of the standard quantities for January. In March 2012, the standard quantities are set at 0.990 of the standard quantities for February 2012. Assume the same information for March 2012 as in Exercise 7-24, except for these revised standard quantities. 1. Compute the March 2012 standard quantities for direct materials and direct manufacturing labor (to Required three decimal places). 2. Compute the March 2012 price and efficiency variances for direct materials and direct manufacturing labor (round to the nearest dollar). 7-24 Price and efficiency variances, journal entries. The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: Direct materials: 10 lb. at $4.50 per lb. $45.00 Direct manufacturing labor: 0.5 hour at $30 per hour 15.00 The number of finished units budgeted for January 2012 was 10,000; 9,850 units were actually produced. Actual results in January 2012 were as follows: Direct materials: 98,055 lb. used Direct manufacturing labor: 4,900 hours $154,350 Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage 1. Compute the January 2012 price and efficiency variances of direct materials and direct manufactur- Required ing labor. 2. Prepare journal entries to record the variances in requirement 1. 3. Comment on the January 2012 price and efficiency variances of Monroe Corporation. 4. Why might Monroe calculate direct materials price variances and direct materials efficiency variances with reference to different points in time 8-23 Straightforward coverage of manufacturing overhead, standard-costing system. The Singapore division of a Canadian telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data regarding production during June are as follows: Variable manufacturing overhead costs incurred $618,840 Variable manufacturing overhead cost rate $8 per standard machine-hour Fixed manufacturing overhead costs incurred $145,790 Fixed manufacturing overhead costs budgeted $144,000 Denominator level in machine-hours 72,000 Standard machine-hour allowed per unit of output 1.2 Units of output 65,500 Actual machine-hours used 76,400 Ending work-in-process inventory 0 1. Prepare an analysis of all manufacturing overhead variances. Use the 4-variance analysis framework illustrated in Exhibit 8-4 (p. 277). 2. Prepare journal entries for manufacturing overhead costs and their variances. 3. Describe how individual variable manufacturing overhead items are controlled from day to day. 4. Discuss possible causes of the variable manufacturing overhead variances. 10-24 Estimating a cost function, high-low method. Laurie Daley is examining customer-service costs in the southern region of Capitol Products. Capitol Products has more than 200 separate electrical products that are sold with a six-month guarantee of full repair or replacement with a new product. When a product is returned by a customer, a service report is prepared. This service report includes details of the problem and the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows: Week Customer-Service Department Costs Number of Service Reports 1 $13,700 190 2 20,900 275 3 13,000 115 4 18,800 395 5 14,000 265 6 21,500 455 7 16,900 340 8 21,000 305 1. Plot the relationship between customer-service costs and number of service reports. Is the relation- Required ship economically plausible? 2. Use the high-low method to compute the cost function, relating customer-service costs to the number of service reports. 3. What variables, in addition to number of service reports, might be cost drivers of weekly customerservice costs of Capitol Products?
Question 5
The centralia corporation in the U.S. manufacturer of small kitchen electrical appliance. I has decided to construct a wholly owned manufacturing facility in zaragoza, Spain, to manufacture microwave ovens for sale in the European Union. The plant is expected to cost 5,500,000 euros, and take about one year to complete, The plant is to be financed over its economic life of eight years. The borrowing capacity created byt his capital expenditure is $2,900,000 dollars; the reminder of the plant will be equity financed. Centralia is not well known in the Spanish or international bond market; consequently, it would have to pay 7 percent annum to borrow euros, whereas the normal borrrowing rate in the euro zone for well-known firms is equivalent risk is 6 percent. Alternatively, Centralia can borrow dollars in the US at a rate of 8 % a) Suppose Spanish MNC has a mirror-image situation and needs $2,900,000 dollars to finance a capital expenditure of one of it US subisidiaries. It finds that it must pay a 9 percent fiexed-rate int he US for dollars, whereas it can borrow euros at 6 percent. The exchange rate has been forecast to be 1.33/euros1.00 in one year. Set up a currency swap that will benefit each counterparty. b)Suppose that one year after the inception of the currency swap betwenn Centralia and the Spanish MNC, the US dollar fixed rate has fallen from 8 to 6 percent and the euro zone fixed rate for euros has fallen from 6 to 5.5 percent. In both dollar and euros, determine the market value of the swap if the exchage rate is $1.3343/1.00 euros,Hi I'm attaching another question thanks a lot for the help
