Question 1
"Note?the attachments are the text book chapters, the following are the questions: Ch8: A6. (Calculating the WACC) Getty?s required return for equity, re , is 18%. Its required return for debt, rd , is 6%; its debt-to-total-value ratio, L, is 45%; and its marginal tax rate, T, is 40%. Calculate Getty?s WACC. A7. (Finding NPVs with differing project risks) Assume the expected return on the market portfolio is 15% and the riskless return is 9%. Also assume that all of the projects listed here are perpetuities with annual cash flows (in $) and betas as indicated. None of the projects requires or precludes any of the other projects, and each project costs $2,000. a. What is the NPV of each project? b. Which projects should the firm undertake? PROJECT A B C D E F Annual cash flow 310 500 435 270 385 450 Beta 1.00 2.25 2.22 0.65 1.37 2.36 Ch9: B3. (NPV) Truman State University is evaluating an investment in new air handling systems for some of its major buildings. The expected outlays and the expected savings, in millions of dollars, are given here: TIME 0 1 2 3 4 THROUGH 10 Outlays 2.0 3.0 4.0 0 0 Savings 0 0.5 1.0 1.5 2.0 B6. (Investment criteria) Consider the cash flows for the two capital budgeting projects given here. The cost of capital is 10%. a. Calculate the NPV for both projects. b. Calculate the IRR for both. c. Calculate the PI for both. d. Calculate the MIRR for both. e. Calculate the payback for both. f. Which is the better project? Why? YEAR 0 1 2 3 4 Project A ?25,000 10,000 10,000 10,000 10,000 Project B ?12,500 5,000 5,000 5,000 5,000 Ch10: B2. (Incremental cash flows and NPV) The Canton Sundae Corporation is considering the replacement of an existing machine. The new machine, called an X-tender, would provide better sundaes, but it costs $120,000. The X-tender requires $20,000 in setup costs that are expensed immediately and $20,000 in additional working capital. The X-tender?s useful life is 10 years, after which it can be sold for a salvage value of $40,000. Canton uses straight-line depreciation, and the machine will be depreciated to a book value of zero on a six-year basis. Canton has a tax rate of 45% and a 16% cost of capital on projects like this one. The X-tender is expected to increase revenues minus expenses by $35,000 per year. What is the NPV of buying the X-tender?""
Question 2
Gopher, Inc. developing its upcoming budgeted Costs of Quality (COQ) with the following information: Expense Item Budget Raw Materials Inspection $ 15,000 EPA Fine 200,000 Design Engineering 15,000 Product Testing 25,000 Rework Costs 50,000 Preventive Maintenance 10,000 Customer Returns 125,000 Scrap 60,000 The budgeted units produced and sold = 125,000. Sales price per unit = $50.00 Recent low customer satisfaction ratings have lead Gopher's management team to propose a Quality Initiative Program to improve product quality and lower expected COQ. The Quality Initiative would include the following costs: ? Product design changes that provide better product functionality $ 65,000 ? Preventive equipment maintenance 20,000 ? Increase inspection of direct materials from suppliers 20,000 ? Increase product testing 30,000 Expected results from the Quality Initiative Program are as follows: ? Reduce the EPA fine by $150,000 ? Reduce Customer Returns by 38.20% ? Reduce Scrap Costs by 65% ? Reduce Rework by 50% Based on the information above, provide answers to the following questions. Show calculations to support/validate your answers and clearly show your answer to each of the following questions. 1. For budgeted Expense Items in the table above (i.e. BEFORE the Quality Initiative Program), sort the Expense Items by COQ by category, provide total COQ by category and calculate the percentage of each COQ category to Total Quality Costs. ? 2. What is the budget Total COQ BEFORE the Quality Initiative Program as a percentage of Revenue? 3. Assume Gopher Inc. includes the Quality Initiative Program in its upcoming budget. Recalculate the budget amounts for each expense item by COQ category including the Quality Initiative Program costs and expected results for each COQ category. Calculate the new COQ budget by COQ category, and as a percentage of budgeted Total Quality Costs. 4. What is the budget Total COQ AFTER the Quality initiative Program as a percentage of Revenue (assume no changes to budgeted units or sales price)? ? 5. Discuss the expected results of the Quality Initiative Program for each COQ category and Gopher Inc. in total. Prevention ? Appraisal ? Internal Failure - External Failure ? Gopher Inc. -
Question 3
As members of the senior management team of Able Corporation, your group has been asked to prepare a neat and organized report for the Strategic Officers Steering Committee (SOS-C) of Walden International, the parent company of Able Corporation. The purpose of this paper is to obtain permission from them to go forward with the next step (developing a full blown business plan) for Able's strategic initiative to break into the global marketplace. Your group's paper should discuss (at a minimum): * A complete SWOT analysis (strengths, weaknesses, opportunities and threats, including at least five factors from each category and full explanations of why each factor is important and why it was placed in the category) of the environment that exists within Able and the environment Able is proposing. * A preliminary outline of the business plan to be developed for Able's strategic initiative * A rudimentary mission statement * Key operating principles * A preliminary market analysis * The one-year, five-year, and ten-year strategic objectives of the strategic initiatives presented as one strategic proposal for each timeframe (three strategic proposals in all) complete with implementation plans, potential ramifications, and feedback mechanisms * The additional material that your group considers necessary to support the case for going forward with Able's global strategic initiative?this is not optional, you must input additional material. Notes: * Background information on Able Corporation can be found in the Unit 1 Individual Project assignment. Your work MUST include a reference list. All research should be cited in the body of the paper. Reports without citations may not earn any higher grade than a ?C? letter grade. Your report should contain an abstract, a short introduction, and conclusion in addition to the body of the paper. Please note that if you have a source in your reference section, you need to cite it in the body of the paper per APA guidelines and vice-versa. Deliverable Length: There is no set deliverable length for this assignment. As a graduate business student, you are required to provide a well-researched and analyzed comprehensive response to every assignment question. Brief, vague, generic, or non-definitive responses will not earn good grades. This assignment requires a minimum of nine (9) scholarly sources. You are welcome and encouraged to use the David text book and the course materials that came for this course; however, make sure to use a minimum of at least nine (9) scholarly sources as well.,. The one-year, five-year, and ten-year strategic objectives of the strategic initiatives presented as one strategic proposal for each timeframe (three strategic proposals in all) complete with implementation plans, potential ramifications, and feedback mechanism this section of the project is lacking considerable content, subsequent direction from the instructor indicates that this section is a significant emphasis for the project. The rest of the report looks very good. The section above is not very well formulated. Could you breakout each section, the one year, 5 year and 10 year plans in provide additional planning to fit the requirements. I will apply a bonus for your efforts to go back an improve this section. I will start compiling the work already done, but the 1,5,10 years plans will not work. Please help. they have to be stand alone plans. it is a good start, but considerable more is needed
Question 4
In June 2010, Wallace King opened a photography studio that provides services to public and private schools. His firm?s financial activities for the first month of operations and the chart of accounts appear below. INSTRUCTIONS 1.Journalize the transactions. Number the journal page 1 and write the year at the top of the Date column. Describe each entry. 2.Post to the ledger accounts. Before you start the posting process, open the accounts by entering the names and numbers in the headings. Follow the order of the accounts in the chart of accounts. Assets 101 Cash 111 Accounts Receivables 121 Supplies 141 Office Equipment 151 Photographic Equipment Liabilities 202 Accounts payable Owner?s Equity 301 Wallace King, Capital 302 Wallace King, Drawing Revenue 401 Fees Income Expenses 511 Office cleaning expense 514 Rent expense 517 Salaries expense 520 Telephone expense 523 Utilities expense DATE TRANSACTIONS June 1 Wallace King invested $16,000 cash in the business. June 2 Issued Check 1001 for $900 to pay the June rent. June 5 Purchased desks and other office furniture for $3,750 from Brown, Inc., received Invoice 5312, payable in 60 days. June 6 Issued Check 1002 for $950 to purchase photographic equipment. June7 Purchased supplies for $238; paid with Check 1003. June 10 Issued Check 1004 for $200 for office cleaning service. June 12 Performed services for $650 in cash and $650 on credit. (Use one compound entry.) June 15 Returned damaged supplies; received a $75 cash refund. June 18 Purchased a computer for $1,025 from Craft Office Supply, Invoice 304;issued Check 1005 for a $500 down payment. The balance is payable in30 days. (Use one compound entry.) June 20 Issued Check 1006 for $2,100 to Brown, Inc., as payment on account for office furniture, Invoice 5312. June 26 Performed services for $1,000 on credit. June27 Paid $290 for monthly telephone bill; issued Check 1007. 30 Received $1,050 in cash from credit clients on account. June 30 Received $1050 in cash from credit clients on account. June 30 Issued Check 1008 to pay the monthly utility bill of $275. June 30 Issued Checks 1009?1011 for $2,800 for salaries. Analyze: What was the Cash account balance after the transaction of June 27 was recorded?,Any updates on this?
Question 5
1. Hickock Mining is evaluating when to open a gold mine. The mine has 79,200 ounces of gold left that can be mined, and mining operations will produce 7,200 ounces per year. The required return on the gold mine is 11 percent, and it will cost $14 million to open the mine. When the mine is opened, the company will sign a contract that will guarantee the price of gold for the remaining life of the mine. If the mine is opened today, each ounce of gold will generate an aftertax cash flow of $453 per ounce. If the company waits one year, there is a 58 percent probability that the contract price will generate an aftertax cash flow of $503 per ounce and a 42 percent probability that the aftertax cash flow will be $413 per ounce. Required: What is the value of the option to wait? Round your answer to 2 decimal places. 2. L.J.'s Toys Inc. just purchased a $250,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for $23. The variable cost per toy is $6, and the firm incurs fixed costs of $345,000 each year. The corporate tax rate for the company is 36 percent. The appropriate discount rate is 9 percent. Required: What is the financial break-even point for the project? (Round your answer to the nearest whole number.
