Question 1
The Final Project is due at the end of Unit 5 and is worth 150 points. Overview The purpose of the assignment research paper is to examine capital structure theory, issues, and debates, while showing how capital structure choices affect a firm?s return on investment (ROE) and its risk profile. Directions Your assignment is to select a publicly held company and to analyze its capital structure, applying the theories and principles found in chapter 15 of the text. The structure of your research paper should include: ? A preview of capital structure issues ? Business and financial risks related to capital structure ? Modigliani and Miller?s [MM] capital structure theory ? Criticisms of the MM model and assumptions ? Capital structure evidence and implications ? Estimating the firm?s optimal capital structure A firm?s optimal capital structure is that mix of debt and equity that maximizes the stock price. At any point in time, management has a specific target capital structure in mind, presumably the optimal one, though this target may change over time. For example, financial management may choose a 50% equity financing [stock] and 50% debt [bond] financing. Several factors influence a firms? capital structure, including: ? Business risk ? Tax position ? The need for financial flexibility ? Managerial conservativeness ? Growth opportunities Business risk is the riskiness inherent in the firm?s operations if it uses no debt. This report is intended to be a capital structure analysis of your selected public company. Your paper is intended to be an executive summary of your analysis, and is limited to a maximum of 5-7 pages of text, excluding the title page, table of contents, graphs, charts, tables, etc. This summary report of your selected company?s capital structure should convey the quality, depth, and completeness of your capital structure analysis, without going into excessive detail. Unit 5 [GB550: Financial Management] APA Style Required The report should adhere to APA format. A minimum of 4 reference sources are required in addition to the text. Directions for Submitting the Final Project Compose your research paper in a MS Word document and save it as Username-GB550 Final Project-Unit#.doc (Example: TAllen- GB550 Final Project-Unit 5.doc). Submit your file by selecting the Unit 5: Final Project Dropbox by the end of Unit 5. Unit 3: Final Project Assignment There are three parts that are due in this unit towards the final research paper that is due in unit 5: Part I - The Abstract Part II - Table of Contents Part III - Preliminary reference list Part I - The Abstract Research papers, theses and dissertations include an abstract?a short, concise summary of your research. Your abstract should approximate 200 words. The abstract should briefly: ? Establish the topic of the research. ? Articulate the research problem, question, and/or purpose/objective of the research. ? Indicate the methodology used. ? Present the expected findings. ? Present the anticipated conclusions The abstract should include, if possible, the keywords of your research. An abstract generally emphasizes the main findings and conclusions of the research study. Part II - Table of Contents Submit a brief one page table of contents, outlining the proposed structure, organization, and logic of your graduate research paper. Unit 5 [GB550: Financial Management] Part III - Preliminary reference list Submit your preliminary reference list, detailing your anticipated reference sources. A minimum of four references are required, excluding the textbook. Sources should be from academic, scholarly, refereed journals. Use of Internet-retrieved and cited sources should be minimized. Wikipedia, dictionaries, encyclopedias or any open source Web sites are not permitted. Schedule of Deliverables Unit 1: Review Final Project and start working on Part I, Part II, and Part III (Nothing to submit) Unit 2: Continue working on Part I, Part II, and Part III (Nothing to submit) Unit 3: Complete and submit Part I, Part II, and Part III Unit 4: Work on the draft of you Final Project (Nothing to submit) Unit 5: Complete and submit the Final Project I have attached the following document I started on to help with the paper or you can start over.,5-7 pages
Question 2
1. Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $80,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment? a 23.15% b 16.17% c 20.96% d 19.96% e 22.16% ________________________________________ 2. Your grandmother just died and left you $132,500 in a trust fund that pays 6.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account? a $37,769.20 b $39,221.86 c $37,406.03 d $33,774.38 e $36,316.54 ________________________________________ 3. TSW Inc. had the following data for last year: Net income = $800; Net operating profit after taxes (NOPAT) = $700; Total assets = $3,000; and Total operating capital = $2,000. Information for the just-completed year is as follows: Net income = $1,000; Net operating profit after taxes (NOPAT) = $925; Total assets = $2,600; and Total operating capital = $2,500. How much free cash flow did the firm generate during the just-completed year? a $383 b $425 c $468 d $514 e $566 ________________________________________ 4. Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $520,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15.0%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constant? a 10.71% b 9.41% c 10.82% d 8.11% e 12.66% ________________________________________ 5. Suppose you inherited $870,000 and invested it at 8.25% per year. How much could you withdraw at the beginning of each of the next 20 years? a $67,543.38 b $76,715.94 c $99,230.40 d $83,386.89 e $97,562.66 ________________________________________ 6. Your aunt has $350,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $50,000 left in the end? a 9.47 b 10.76 c 13.35 d 11.41 e 12.38 ________________________________________ 7. Your father is about to retire, and he wants to buy an annuity that will provide him with $91,000 of income a year for 25 years, with the first payment coming immediately. The going rate on such annuities is 5.15%. How much would it cost him to buy the annuity today? a $1,248,843.27 b $1,408,270.07 c $1,474,697.91 d $1,328,556.67 e $1,169,129.87 ________________________________________ 8. Your uncle has $1,025,000 and wants to retire. He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account? a $85,538.08 b $65,864.32 c $88,104.22 d $103,501.08 e $73,562.75 ________________________________________ 9. What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $2,500? a $138.13 b $191.75 c $144.63 d $199.88 e $162.50 ________________________________________ 10. Your Aunt Ruth has $450,000 invested at 6.5%, and she plans to retire. She wants to withdraw $40,000 at the beginning of each year, starting immediately. How many years will it take to exhaust her funds, i.e., run the account down to zero? a 13.82 b 15.11 c 23.03 d 15.29 e 18.43 ________________________________________ 11. Wells Water Systems recently reported $8,250 of sales, $4,500 of operating costs other than depreciation, and $950 of depreciation. The company had no amortization charges, it had $3,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Wells generate? a $1,770.00 b $1,858.50 c $1,951.43 d $2,049.00 e $2,151.45 ________________________________________ 12. Last year Altman Corp. had $205,000 of assets, $303,500 of sales, $18,250 of net income, and a debt-to-total-assets ratio of 41%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $152,500. Sales, costs, and net income would not be affected, and the firm would maintain the 41% debt ratio. By how much would the reduction in assets improve the ROE? a 4.69% b 4.93% c 5.19% d 5.45% e 5.73% ________________________________________ 13. Bae Inc. has the following income statement. How much net operating profit after taxes (NOPAT) does the firm have? Sales $2,000.00 Costs 1,200.00 Depreciation 100.00 EBIT $ 700.00 Interest expense 200.00 EBT $ 500.00 Taxes (35%) 175.00 Net income $ 325.00 a $370.60 b $390.11 c $410.64 d $432.25 e $455.00 ________________________________________ 14. A new firm is developing its business plan. It will require $635,000 of assets, and it projects $450,000 of sales and $355,000 of operating costs for the first year. Management is reasonably sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. What is the maximum debt ratio the firm can use? (Hint: Find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.) a 50.87% b 59.34% c 49.87% d 62.34% e 42.89% ________________________________________ 15. Last year Rennie Industries had sales of $240,000, assets of $175,000, a profit margin of 5.3%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs. Had it reduced its assets by this amount, and had the debt ratio, sales, and costs remained constant, how much would the ROE have changed? a 3.55% b 3.19% c 3.66% d 3.01% e 3.59% ________________________________________ 16. Rao Corporation has the following balance sheet. How much net operating working capital does the firm have? Cash $ 10 Accounts payable $ 20 Short-term investments 30 Accruals 20 Accounts receivable 50 Notes payable 50 Inventory 40 Current liabilities $ 90 Current assets $130 Long-term debt 0 Net fixed assets 100 Common equity 30 Retained earnings 50 Total assets $230 Total liab. & equity $230 a $54.00 b $60.00 c $66.00 d $72.60 e $79.86 ________________________________________ 17. Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm's total-debt-to-total-assets ratio was 60.0%. Based on the DuPont equation, what was the ROE? a 22.61% b 17.86% c 19.00% d 23.18% e 23.56% ________________________________________ 18. Last year Ann Arbor Corp had $300,000 of assets, $305,000 of sales, $20,000 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE? a 5.34% b 5.82% c 6.59% d 8.67% e 6.93% ________________________________________ 19. Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio? a 4.72 b 4.97 c 5.23 d 5.51 e 5.80 ________________________________________ 20. Brookman Inc's latest EPS was $2.75, its book value per share was $22.75, it had 280,000 shares outstanding, and its debt ratio was 44%. How much debt was outstanding? a $4,704,700 b $5,355,350 c $5,205,200 d $4,054,050 e $5,005,000 ________________________________________
Question 3
I need this done by noon 25 EST. My subject is The Home Depot and its customer service to homeowners that want to do it themselves and Home Depot's service to those who do not. Throughout this class you have examined the product or service of a company and addressed market segmentation, pricing strategies, the micro and macro-environments, and the important role customers play in the success or failure of a given product. Thinking about the company and product or service you have explored during this class, imagine that you are now a competitor of that company. You are responsible for promoting a product that is in direct competition with the product or service you have been exploring. Develop a marketing plan for your new company's product or service. The plan should be indicative of how your company's market share will increase and include the following: ? Create a mission statement that best defines your company's goals and objectives and recognizes the company's responsibilities to its customers, its employees, and the environment. ? Describe the company's target market for the product or service and how it differs from the company you have been exploring. Include any secondary markets that you see as a potential target market. ? Describe at least three micro-environment factors and at least three macro environment factors that may have an impact on the company's marketing of this product. ? What pricing strategy will you use for your product or service? How will you implement that strategy? ? Describe three promotional efforts you could use to promote this product or service to your intended consumer. ? Describe at least one additional product or service the company might add to the product mix that would compliment the current product or service. ? A summation of why you believe your plan will succeed and put your product in the lead. Be sure to cite examples from the company and product or service you explored throughout the modules and compare them to your plan for your new company and product or service. Assignment 1 Grading Criteria Maximum Points Created a mission statement that defines your company's goals and objectives and recognizes the company's responsibilities to its customers, its employees, and the environment. 36 Described the company's target market for the product or service, how it differs from the company previously examined, and included any secondary markets that may be a potential target market. 32 Described at least three micro-environment factors and at least three macro environment factors which may have an impact on the company's marketing of this product. 36 Described pricing strategy for your product or service and how strategy will be implemented. 32 Described three promotional efforts which could be used to promote product or service to intended consumer. 36 Described at least one additional product or service the company might add to the product mix that would compliment the current product or service. 32 Included a summation of why the plan will succeed and put this product in the lead. 36 Written Components: Organization (16), Usage and Mechanics (16), APA Elements (24), and Style (4) 60 Total: 300
Question 4
Question 1.1. (TCO 1) A common starting point in the budgeting process is _____. (Points : 5) expected future net income past performance to motivate the sales force a clean slate, with no expectations Question 2.2. (TCO 2) ?Groupthink? is a primary disadvantage of which qualitative forecasting method? (Points : 5) Executive opinions Sales force polling Delphi method Consumer surveys Question 3.3. (TCO 3) Which of the following is not used to evaluate the accuracy of regression results? (Points : 5) Mean absolute deviation Coefficient of determination Prediction confidence interval T-statistic Question 4.4. (TCO 4) Which of the following is not a reason why capital expenditures are incurred? (Points : 5) Changes in production methods Changes in style Reduced costs Reduced sales Question 5.5. (TCO 5) Which of the following is true when ranking proposals using zero-base budgeting? (Points : 5) Nonfunded packages should not be ranked. Adjustments are not allowed once the ranking is complete. Due to changing circumstances, a low-priority item may later become a high-priority item. Decision packages are ranked in order of increasing benefit. Question 6.6. (TCO 6) When using the payback period technique, the payback period is expressed in terms of _____. (Points : 5) a percentage dollars years months Question 7.7. (TCO 6) The profitability index is computed by dividing the _____. (Points : 5) total cash flows by the initial investment present value of cash inflows by the present value of each outflow initial investment by the total cash flows initial investment by the present value of cash flows Question 8.8. (TCO 6) A company projects annual cash inflows of $85,000 each year for the next 5 years if it invests $300,000 in new equipment. The equipment has a 5-year life and an estimated salvage value of $75,000. What is the accounting rate of return on this investment? (Points : 5) 28.3% 13.3% 15% 43.3% Question 9.9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____. (Points : 5) 5 years 6 years 7 years 8 years Question 10.10. (TCO 6) Selma Inc. is comparing several alternative capital budgeting projects as shown below. Projects A B C Initial Investment $40,000 $60,000 $80,000 Present value of cash inflows $60,000 $55,000 $100,000 Using the profitability index, rank the projects, starting with the most attractive. (Points : 5) A, C, B A, B, C C, A, B C, B, A Question 11.11. (TCO 6) A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for 3 years. The approximate net present value of this project is _____. (Points : 5) $177,170 $35,000 $17,718 $2,191 Question 12.12. (TCO 7) Which of the following would not appear as a fixed expense on a selling and administrative expense budget? (Points : 5) Freight-out Office salaries Property taxes Depreciation Question 13.13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals? (Points : 5) 107,400 units 102,000 units 96,600 units 138,000 units Question 14.14. (TCO 8) Which of the following is not a cause of profit variance? (Points : 5) Changes in sales price Changes in sales mix Changes in sales volume All of the above are causes of profit variance. Question 15.15. (TCO 9) A static budget is appropriate for _____. (Points : 5) variable overhead costs direct materials costs fixed overhead costs None of the above Question 16.16. (TCO 9) If the activity level increases 10%, total variable costs will _____. (Points : 5) remain the same increase by more than 10% decrease by less than 10% increase 10% Question 17.17. (TCO 9) Using the high-low method, what is the unit variable cost for the following information? Month Miles Total Cost January 80,000 $96,000 February 50,000 $80,000 March 70,000 $94,000 April 90,000 $130,000 (Points : 5) $1.44 $1.25 $1.60 $1.50 Question 18.18. (TCO 10) Which of the following statements regarding budget reports is incorrect? (Points : 5) The cost of budget reports should not outweigh the benefits. Budget reports are used for planning, control, and information. Reports prepared for upper management typically have fewer details than reports prepared for lower level managers. Reports are prepared more frequently for upper management than for lower level managers.
Question 5
I just want to know how to post the journal to the general ledger "Ocean Atlantic Co. is a merchandising business. the account balances for Ocean Atlantic co. as of July 1, 2012 (unless otherwise indicated), are as follows: 110 Cash 63,600 112 Accounts Receivable 153,900 115 Merchandise Inventory 602,400 116 Prepaid Insurance 16,800 117 Store Supplies 11,400 123 Store Equipment 469,500 124 Accumulated Depreciation-Store Equipment 56,700 210 Accounts Payable 96,600 211 Salaries Payable - 310 Capital stock 75,000 311 Retained earnings, Aug 1 2011 480,300 312 Dividends 135,000 313 Income summary 410 Sales 3,221,100 411 Sales Returns and Allowances 92,700 412 Sales Discounts 59,400 510 Cost of Merchandise Sold 1,623,000 520 Sales Salaries Expense 334,800 521 Advertising Expense 81,000 522 Depreciation Expense - 523 Store Supplies Expense - 529 Miscellaneous Selling Expense 12,600 530 Office Salaries Expense 182,100 531 Rent Expense 83,700 532 Insurance Expense - 539 Miscellaneous Administrative Expense 7,800 During July, the last month of the fiscal year, the following transactions were completed: July 1, Paid rent for July, $4000. 3, Purchased merchandise on account from Lingard Co., Terms 2/10,n/30,FOB shipping point, $25,000. 4, Paid freight on purchase of July 3, $1000. 6, Sold merchandise on account to Holt Co., terms 2/10,n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $24,000. 7, Received $18000 cash from Flat Co. on account, no discount. 10, sold merchandise for cash $90,000. The cost of the merchandise sold was $50,000. 13, Paid for merchandise purchased on July 3, less discount. 14, Received merchandise returned on sale of July 6, $7000. The cost of the merchandise returned was $4500. 15, Paid advertising expense for last half of July, $9000 16, received cash from sale of July 6, less return of July 14 and discount. 19, purchased merchandise for cash, $22000. 19, Paid $23,100 to Corino Co. on account, no discount Record the following transactions on page 21 of the journal 20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. The cost of the merchandise sold was $25000. 21, for the convenience of the customer, paid freight on sale of July 20, $1100. 21, received $17600 cash from Owen co. on account, no discount. 21, purchased merchandise on account from Munson Co., terms 1/10, n/30, FOB Destination, $32000. 24, Returned $5000 of damaged merchandise purchased on July21, receiving credit from the seller. 26, Refunded cash on sales made for cash, $12000. The cost of the merchandise returned was $7200. 28, paid sales salaries of $22800 and office salaries of $15200. 29, purchased store supplies for cash, $2400. 30, Sold merchandise on account to Dix co., terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250. 30, received cash from sale of July 20, less discount, plus freight paid on July 21. 31, Paid for purchase of July 21, less return of July 24 and discount. Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare and unadjusted trial balance. 4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). a) Merchandise inventory on July 31 $ 565000 b) Insurance expired during the year $ 13400 c) Store supplies on hand on July 31 $3900 d) Depreciation for the current year $11500 e) Accrued salaries on July 31: Sale salaries $3200 Office salaries $1300 ($4500) 5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on page 22 of the journal. 7. Prepare an adjusted trial balance 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account. 10. Prepare a post-closing trial balance
