Question 1
Faldo Corp sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $435,000, and its year-end receivables were $60,000. If its DSO is less than the 45-day credit period, then customers are paying on time. Otherwise, they are paying late. By how much are customers paying early or late? Base your answer on this equation: DSO - Credit Period = Days early or late, and use a 365-day year when calculating the DSO. A positive answer indicates late payments, while a negative answer indicates early payments. 5.18 4.86 5.29 5.34 5.40 -------------------------------------------------------------------------------- 2. Stewart Inc.'s latest EPS was $3.50, its book value per share was $22.75, it had 215,000 shares outstanding, and its debt ratio was 46%. How much debt was outstanding? $3,393,738 $3,572,356 $3,760,375 $3,958,289 $4,166,620 -------------------------------------------------------------------------------- 3. 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 37.5%. Based on the DuPont equation, what was the ROE? 14.71% 12.16% 11.92% 11.43% 13.74% -------------------------------------------------------------------------------- 4. Last year Ann Arbor Corp had $160,000 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? 13.00% 14.17% 11.31% 10.14% 15.73% -------------------------------------------------------------------------------- 5. What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $2,950 at the end of Year 4 if the interest rate is 5%? $11,133.74 $8,740.50 $10,405.36 $8,532.40 $12,590.49 -------------------------------------------------------------------------------- 6. Last year Kruse Corp had $275,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $252,500. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total debt). By how much would the reduction in assets improve the ROE? 1.50% 1.23% 1.85% 1.13% 1.19% -------------------------------------------------------------------------------- 7. Wie Corp's sales last year were $365,000, and its year-end total assets were $355,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.4. The firm's new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average, holding sales constant? $202,917 $221,179 $213,063 $160,304 $184,654 -------------------------------------------------------------------------------- 8. 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? 23.15% 16.17% 20.96% 19.96% 22.16% -------------------------------------------------------------------------------- 9. Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges, it had $5,000 of bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $750. By how much will net after-tax income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting purposes. -463.13 -487.50 -511.88 -537.47 -564.34 -------------------------------------------------------------------------------- 10. Pace Corp.'s assets are $625,000, and its total debt outstanding is $185,000. The new CFO wants to employ a debt ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio? $158,750 $166,688 $175,022 $183,773 $192,962 -------------------------------------------------------------------------------- 11. Last year Hamdi Corp. had sales of $500,000, operating costs of $450,000, and year-end assets of $350,000. The debt-to-total-assets ratio was 17%, the interest rate on the debt was 7.5%, and the firm's tax rate was 35%. The new CFO wants to see how the ROE would have been affected if the firm had used a 50% debt ratio. Assume that sales, operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure? 3.79% 3.69% 3.18% 3.53% 2.48% -------------------------------------------------------------------------------- 12. 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? 10.71% 9.41% 10.82% 8.11% 12.66% -------------------------------------------------------------------------------- 13. 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? 3.55% 3.19% 3.66% 3.01% 3.59% -------------------------------------------------------------------------------- 14. Last year Kruse Corp had $355,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $252,500. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total debt). By how much would the reduction in assets improve the ROE? 5.67% 5.30% 4.40% 4.18% 5.98% -------------------------------------------------------------------------------- 15. 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? 5.34% 5.82% 6.59% 8.67% 6.93% -------------------------------------------------------------------------------- 16. Last year Hamdi Corp. had sales of $500,000, operating costs of $450,000, and year-end assets of $355,000. The debt-to-total-assets ratio was 17%, the interest rate on the debt was 7.5%, and the firm's tax rate was 35%. The new CFO wants to see how the ROE would have been affected if the firm had used a 50% debt ratio. Assume that sales, operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure? 3.17% 3.42% 3.48% 3.08% 2.99% -------------------------------------------------------------------------------- 17. Edwards Electronics recently reported $11,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow? $3,284.75 $3,457.63 $3,639.61 $3,831.17 $4,032.81 -------------------------------------------------------------------------------- 18. 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? $162.50 $164.13 $123.50 $185.25 $128.38 -------------------------------------------------------------------------------- 19. Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $13,500 at the end of the 5th year. What is the expected rate of return on this investment? 12.91% 10.46% 11.49% 15.23% 12.39% -------------------------------------------------------------------------------- 20. You have a chance to buy an annuity that pays $2,350 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? $6,688.85 $7,090.18 $7,825.96 $6,822.63 $6,956.41,Do the best that you can do. I only have 54 minutes left. Please...hurry,I now have 45 minutes
Question 3
Rachel, can you have this completed by tomorrow at 1pm central time? I will pay you $80 if possible. Brian,In this Team Project assignment you and you team members will incorporate the concepts learned in this course. The following is information you and your fellow team members should use to formulate a proposal the objective of which is to address the requirements of this assignment. Scenario John and Mary Smith have been your friends for many years and they have called to set-up an appointment to discuss their financial plans for retirement. During the first appointment you learn that both John & Mary plan on retiring in one year. Currently, John owns a mid-size electronics firm which he has operated for many years. Mary is a university professor. Below is additional information you developed during the first appointment with John & Mary. Item Description John Mary Item Descriptions John Mary Age in One Year At Retirement 56 55 Current Annual Salary $100,000 $60,000 Current Value of Residence $250,000 (Joint) Mortgage on Residence $0 $0 Children None None Health Ins. Continuing In Retirement (Spouse) Yes Cost of Health Ins. In Retirement $0 $0 Estimaed Retirement Income (Annual) None $20,000 Social Security Benefits (At Age 66) $24,000 None Est. Personal Exp. After Retired (Annual) $30,000 $30,000 Current Vehicles Value $25,000 $20,000 Amt. Owed on Vehicles $0 $0 Additional Information John plans to sell the electronics company to another individual who has already expressed interest. The agreed selling price for equipment, building, inventory, goodwill and customer list will be $2,000,000 in cash. There is no remaining basis in any fixed assets and the value of inventory is $150,000. All capital gain amounts will be taxed at long-term income tax rate of 15%. Both John & Mary have strongly indicated during the first appointment that they are conservative investors and want a minimum risk of any losses. You are a partner in a regional investment brokerage firm together with several other partners. Each partner is considered an expert in one area. The areas within your firm of expertise are: Risk Analysis Mutual Funds & Stocks Bonds Options & Futures Foreign Investments Income Tax Project Requirements You and your fellow investment partners are to present a proposal that specifically meets the retirement investment objectives of John & Mary listed below. Your proposal should be from 3 ? 5 pages double spaces, Times Roman 12 pt. In addition, your team should include a cover page listing each member of your team and a separate list of any references used in preparing the proposal. The proposal must follow APA rules in structure and presentation. John & Mary?s Retirement Investment Objectives Provide $90,000 of withdrawals from the investment account each year. Minimize income tax. Include at least three types of investments. Provide for active management of the portfolio with an annual fee of 1% - 1 ?% of value in the investment portfolio. Provide an annual growth after all withdrawals and fees of 4% - 5%. Team Project Due Date By Sunday of Week 7 compile and submit the team members? findings in a report of three to five pages, as a Microsoft Word document, double-spaced, in Times Roman 12 pt font. There should be only one (1) completed proposal for each team and the completed proposal should be submitted to the appropriate Drop Box. Your report should be your own?original and free from plagiarism. Make sure to follow current established APA.,I just need the Income Tax portion of this project.,I understand this in the evaluation stage, but is there any way I can have this before noon tomorrow?,Rachel P, How is this assignment coming along? Brian,I appreciate the help, but where is the portion with the income tax information?,I need to know where you are at with this in regards to the "Income Tax" portion. I specifically asked that my portion was the "Income Tax." I appreciate the help with the paper, but I need to get this sent in this evening before midnight. Please, I spent $80 for needing just the income tax portion, and I ask that I can have this part before midnight this evening. Thanks again, Brian,OK, no reply means that you didn't fully oblige with the contract that was asked. If I don't have my answer by midnight tonight, I will stop payment on the $80 transaction I posted because of breach of contract and I will be contacting the Better Business Bureau with this website. Thanks, Brian
