Question 1
Please assist! Using the data attached in the spreadsheet. ?Prepare an Income Statement for each of the alternatives (Current, Hi-Tech and Broker) from the data provided. ?Compare the results of the two new alternatives to the existing operations and explain the causes for the differences (contribution margins, volumes, leverage, fixed costs, sensitivity analysis, etc.) Assume for the Hi-Tech alternative the new equipment can be leased from the manufacturer for five years at a monthly cost of $23,000 and treated as an operating lease. ?Determine the weighted average cost of capital for the existing operations and each of the two alternatives. ?Assume the equity (market) value of the company is 0.70 sales and the market value of the debt is equal to the balance sheet value. ?Compute the required rate of return on equity using the CAPM formula: the risk free rate is 3%, the market rate is 12%, the beta for existing operations is 1.5, the beta for the hi tech alternative is 1.8 and the beta for the broker alternative is 1.2. The cost of debt and the tax rate are as given in the data provided. ?Discuss the factors that affect the risk of a typical project and how they might influence a project?s risk (discount rate) versus the firm?s risk (WACC).,Question? Where is the attachment mentioned in the paper? I only received the document version. The Excel version is missing. The $23,000 (assumption) monthly cost for Hi-Tech (five years) is not highlighted in the paper. Please provide guidance!!
Question 2
The Maxey stock was purchased by Qtip on January 1, 2002, for $23,000. The stock consistently pays an annual dividend to Qtip of $2,000. Qtip classifies the stock as available for sale. Its fair value at December 31, 2009, was $21,600. This amount was properly reported as an asset in the balance sheet. Due to the development of a new Maxey product line, the market value of Qtip?s investment rose to $27,000 at December 31, 2010. The Qtip management team is aware of the provisions of SFAS No. 115. The possibility of changing the classifi cation from available for sale to trading is discussed. This change is justifi ed, the managers say, because they intend to sell the security at some point in 2011 so that they can realize the gain. Required: a. Discuss the role that managerial intention plays in the accounting treatment of equity securities that have a readily determinable fair value under SFAS No. 115. b. What income statement effect, if any, would the change in classification have for Qtip? c. Discuss the ethical considerations of this case. d. Opponents of SFAS No. 115 contend that allowing a change in classification masks effects of unrealized losses and results in improper matching of market value changes with accounting periods. Describe how the accounting treatment and the proposed change in classifi cation would result in this sort of mismatching.
Question 3
"Tires for You" Case Study Refer to your reading for this Unit in the Coyle text for this assignment. Read the ?Tires for You, Inc.? Case Study, on p. 265. In a 1?2 page paper (excluding Title and Reference pages), answer Questions 1, 2 & 6 and attach your Tires4U Case worksheet with detailed calculations. Note that the Tables starting on pg 237 (Chapter 7) will come in very handy in completing the assignment. Tires for You, Inc. Tires for You, Inc. (TFY), founded in 1987, is an automotive repair shop specializing in replacement tires. Located in Altoona, Pennsylvania, TFY has grown successfully over the past few years because of the addition of a new general manager, Katie McMullen. Since tire replacement is a major portion of TFY?s business (it also performs oil changes, small mechanical repairs, etc.), Katie was surprised at the lack of forecasts for tire consumption for the company. Her senior mechanic, Skip Grenoble, told her that they usually stocked for this year what they sold last year. He readily admitted that several times throughout the season stock outs occurred and customers had to go elsewhere for tires. Although many tire replacements were for defective or destroyed tires, most tires were installed on cars whose original tires had worn out. Most often, four tires were installed at the same time. Katie was determined to get a better idea of how many tires to hold in stock during the various months of the year. Listed below is a summary of last year?s individual tire sales by month: Month Tires Used January 510 February 383 March 1,403 April 1,913 May 1,148 June 893 July 829 August 638 September 2,168 October 1,530 November 701 December 636 Total 12,752 Case Questions: Katie has hired you to determine the best technique for forecasting TFY demand based on the given data. 1. Calculate a forecast using a simple three-month moving average. 2. Calculate a forecast using a three-period weighted moving average. Use weights of 0.60, 0.25, and 0.15 for the most recent period, the second most recent period, and the third most recent period, respectively. 6. Based on the various methods used to calculate a forecast for TFY, which method produced the best forecast? Why? How could you improve upon this forecast?
Question 4
Note: Assignment due by 11:00 P.M Tonight! Please Help! Thanks!! Exercise 9-7 Percent of receivables method L.O. P2 Hecter Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 190,000 $ 132,000 $ 30,000 $ 12,000 $ 6,000 $ 10,000 Percent uncollectible 1 % 2 % 4 % 7 % 12 % a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 3.5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method. (Omit the "$" sign in your response.) Allowance for doubtful accounts $ 4,220 incorrect b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300 credit. (Omit the "$" sign in your response.) Date General Journal Debit Credit Dec 31 Allowance for doubtful accounts incorrect 3,720 incorrect Accounts receivable incorrect 3,720 incorrect c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $200 debit. (Omit the "$" sign in your response.) Date General Journal Debit Credit Dec 31 Allowance for doubtful accounts incorrect 4,220 incorrect Accounts receivable incorrect 4,220 incorrect
Question 5
9.7) How are the following valuation parameters related to each other? How do they affect the general free cash flow valuation model? Revenues- Investment- Net operating income- Profitability rate- Growth rate- 9.8 The Alcindor Company is similar to and is the same industry as the Walton Company. Both Alcindor Company and Walton Company have a cost of equity of 12%, cost of debt of 8%, and 30% debt. If Walton has revenues(R) of $1000, operating margin (m) of 15%, a tax rate (T) of 40%, investment rate (I) of 8%, growth rate (g) of 18%, and 5 years of supernormal growth (n) and zero growth thereafter, what value would Alcindor Company be willing to pay for Walton Company? 3) Suppose Alcindor Company is instead interested in the Elway Company, a firm in a completely unrelated (and riskier) industry. Elway Company has the same parameters as Walton Company (question 9.8), except Elway has a cost of equity of 15%, cost of debt of 10%, and 20% debt. What value should Alcindor Company be willing to pay for Elway Company? 4) Table P10.2.1 used model 10-04 to calculate the premerger stand-alone values of Dow and Union Carbide has a higher net operating margin and a higher-growth rate. Because of its higher credit rating it had a somewhat lower cost of capital. Analysts' reports predicted that the combined operating margin would reflect the benefits of synergies in the total amount of $2 billion. They also predicted that the combined growth rate would raise Union Carbide's growth rate toward the higher of Dow. In the combined column (Dow, the surviving company), of table 10.2.1, are blanks for the operating income margins and growth rate for the initial period and the terminal period. Make your best estimate to fill in the blanks to calculate the values for the third column of the table.
